Washington, DC: Diminished Capacity.

In his editorial in the NYT today, Paul Krugman actually stated: "Our capacity hasn’t been diminished; our workers haven’t lost their skills; our technological know-how is intact."

I feel like we need Lewis Black after reading that claptrap: "bdabdabdabda....whaa?"

We've vaporized enough wealth in the last year to have paid off the entire $10Trillion national debt, and set sail on a course to double it instead. That's decreased capacity, Mr Important Economist.
Every citizen with savings has seen the earnings from them disappear....interest earnings that they can no longer spend, interest earnings no longer there for the State and Federal governments to tax: again, Nobel prize winning economist, an eight year old knows that's diminished capacity (DC).
The shadow banking system is a shadow of its former self and no business plan to reinvigorate it. In fact the very institutions that generated the majority of investment capital no longer even exist...how is that not DC? And the real Banking system is insolvent...again, DC; Washington: DC...Military prowess and respect: DC; students leaving college with $120,000 in debt: DC; armed with a useless MBA in Finance: DC; industrial infrastructure dismantled and shipped overseas: DC; workers on forced time-off without pay: DC.

Item after item, by any metric you wish to employ, the US capacity to do anything has been immensely diminished . You can't set out to destroy the middle class and not expect such a decrease; it's insulting to suggest otherwise. The US Upper Class has seen to it that their ability to enrich themselves without the onus of having those riches taxed is the only capacity that has not diminished, and with Summers, Rubin , and Geithner in the new administration, they've seen to it that it won't be in the future.

The Friedmanite-mare is upon us. You can try to perform the new job description of journalism of lying to our faces all you want, it won't disguise that fact, it'll only suggest that Paul Krugman?: DC.