Paul Krugman says worst of economic crisis over

(ATTN: ADDS comments on regulation in 7-8 paras)
SEOUL, May 19 (Yonhap) -- Nobel prize laureate Paul Krugman said Tuesday the
worst phase of the global economic crisis is over but massive lingering debts
make any early recovery unlikely.
"I share the optimism that the worst is maybe over," said Krugman, who was
awarded the Nobel Memorial Prize in Economic Sciences in 2008, in a speech to an
international forum held here.
Although various indicators suggest that growth worldwide continues to slow, they
also indicate that the pace of the decline has eased, said Krugman, also a
professor of economics at Princeton University.
He added that credit is beginning to flow, bolstered by large, unconventional
interventions by the U.S. Fed and other central banks to limit the stress on
financial markets.
Krugman, however, warned that any talk of recovery is premature due to the
massive over-leveraging of banks and excessive debt -- not just in the financial
system, but also among households worldwide.
"We are left with all of that excessive debt and will have an extended process of
global de-leveraging taking place," he said, noting that "by no means are we at
the end of the story."
In an effort to prevent a repeat of the global financial crisis, Krugman called
for tighter government regulation of the financial market.
"Governments have to act as backstop for financial institutions," he said. "We
have to in effect extend conventional bank regulations to a very much wider range
of institutions. And that will help."
pbr@yna.co.kr
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