In his morning op-ed, New York Times economist Paul Krugman turns his Noble prize-winning, piercing brown eyes to Georgia’s growing army of failed banks and wonders “What’s wrong with Georgia?”

I’m not sure how many people know that Georgia leads the nation in bank failures, accounting for 37 of the 206 banks seized by the Federal Deposit Insurance Corporation since the beginning of 2008. These bank failures are a symptom of deeper problems: arguably, no other state has suffered as badly from banks gone wild.

To appreciate Georgia’s specialness, you need to realize that the housing bubble was a geographically uneven affair. Basically, prices rose sharply only where zoning restrictions and other factors limited the construction of new houses. In the rest of the country — what I once dubbed Flatland — permissive zoning and abundant land make it easy to increase the housing supply, a situation that prevented big price increases and therefore prevented a serious bubble.

What makes Georgia so special?  According to Krugman, it basically boils down to a lack of consumer protections, which allowed “homeowners to treat their homes as piggybanks, extracting cash by increasing the size of their mortgages.”  Texas, with its similarly sized, limitless growth, mega-opolises, has such protections in place and isn’t feeling quite the level of bank-failing pain as the Peach State.

Krugman’s Monday morning lesson?  While all the focus in the national press has been on breaking down the country’s largest banks, good old-fashioned predatory lending was also a major contributor to the greatest of recessions.

Thanks to Judy for pointing out the Op-Ed!

OK, I don’t mean to freak anybody out, but I think that Paul Krugman is stalking me. Either that or we just think alike and have the same experiences.

Acckkk! There he is!

Just look at his latest op-ed piece in the NYT. (thanks Scott!) It’s like he’s read my posts about transportation and travel to Berlin over the past week and summed it up in a better-written, little package!

Here’s the scariest part…

“To see what I’m talking about, consider where I am at the moment: in a pleasant, middle-class neighborhood consisting mainly of four- or five-story apartment buildings, with easy access to public transit and plenty of local shopping.

It’s the kind of neighborhood in which people don’t have to drive a lot, but it’s also a kind of neighborhood that barely exists in America, even in big metropolitan areas. Greater Atlanta has roughly the same population as Greater Berlin — but Berlin is a city of trains, buses and bikes, while Atlanta is a city of cars, cars and cars.

And in the face of rising oil prices, which have left many Americans stranded in suburbia — utterly dependent on their cars, yet having a hard time affording gas — it’s starting to look as if Berlin had the better idea.

Changing the geography of American metropolitan areas will be hard. For one thing, houses last a lot longer than cars. Long after today’s S.U.V.’s have become antique collectors’ items, millions of people will still be living in subdivisions built when gas was $1.50 or less a gallon.

Infrastructure is another problem. Public transit, in particular, faces a chicken-and-egg problem: it’s hard to justify transit systems unless there’s sufficient population density, yet it’s hard to persuade people to live in denser neighborhoods unless they come with the advantage of transit access.”

Weirdness.

OK but seriously…since I live in one place and just visited the other, let me belabor Krugman’s comparison for a moment. Not only does Berlin have an enviable public transportation system and bike network as I mentioned previously, but as Krugman states, cars are generally smaller. Now we’re not talking about a city of smart cars and mopeds…we’re talking about lots of VW Golfs/3 series BMWs and not many SUVs.

Also, while Berlin is more compact than Atlanta, it has hardly any skyscrapers. Most buildings are shorter than 8 stories and small, street-level retail is abundant and strongly supported. This is an important example that a high-density city doesn’t have to look like midtown Manhattan, Midtown or the often-cited Buckhead. It can be 8 story commercial/residential and easily support smaller, street-level retail. Sound familiar?

Decatur’s plans are based on Berlin’s ideals. Now we just need the rest of Atlanta to follow suit.