Economics: The columnist who worries about Washington not spending enough also blames the financial crisis on "free-market fundamentalism" and "letting bankers do what they want." When did Uncle Sam do that?

In his new book "The Great Money Binge," legendary newspaper editor George Melloan calls attention to New York Times writer Paul Krugman's "novel theory that the New Deal had failed to pull the country out of the Depression during the 1930s because government had not spent enough!" Melloan calls Krugman "even more Keynesian than Keynes himself."

The reality is different. By May 1939, even Treasury Secretary Henry Morgenthau was renouncing John Maynard Keynes. Testifying to the House Ways and Means Committee, as Hillsdale College historian Burton Folsom put it in his book "New Deal or Raw Deal?," Morgenthau "bared his soul before his fellow Democrats."

With joblessness at 20% well into FDR's second term, Morgenthau admitted: "We are spending more than we have ever spent before and it does not work ... we have never made good on our promises ... we have just as much unemployment as when we started . .. and an enormous debt to boot!"

At least Roosevelt's crony was honest enough to admit fault.

That can't be said of Krugman, who this week misrepresented a comparison of the recent U.S. and Irish financial crises by Irish economists Gregory Connor, Thomas Flavin and Brian O'Kelly.

Far from being "an Irish mirror" of American woes, as Krugman contends, the economists repeatedly point to clear differences between the two collapses. They write that "the situation in Ireland is dramatically different from that in the USA, where corporate, financial regulatory, securities and bankruptcy laws are enforced with unusual strictness and severity by international standards."

In addition, "Three of the four main catalysts for the Irish crises are absent from the U.S. case," they note. "An obvious big difference between the U.S. and Irish crises is the troubled assets behind them," they said. "At the time of the crisis, Irish banks had not yet adopted the 'originate and distribute' model for mortgage financing which was dominant in the U.S."

"Despite its centrality to the U.S. crisis," say the authors, "this particular moral hazard problem has no relevance to the Irish credit crisis."

Connor, Flavin and O'Kelly caution that "the seeds of the U.S. crisis lie in the subprime mortgage market" and stress that "it is important for comparative purposes to note that this market is almost uniquely American."

Make no mistake: The three Irish economists are pro-regulation. But regarding the causes of the two crises they, unlike Krugman, make it clear that intrusive government has a lot to answer for.

They argue, for instance, that "the bailout to the U.S. financial system" after the 1998 LTCM collapse "served to reinforce the belief that certain participants were 'too big to fail' and would receive government support if trouble flared. U.S. financial institutions proceeded to pursue riskier strategies in the search for higher yield and from 2002 to 2007 they were largely successful."

Echoing U.S. free-market commentators who blame liberal Democrats for politicizing mortgage lending, the Irishmen note how "the subprime mortgage market serves a politically important role in U.S. housing policy. In effect, it supplements or replaces the burdensome government expenditures on social-housing programs that are common in other developed nations (including Ireland)."

The three wrongly assert that "securitized subprime mortgages represented an entirely free-market solution to a social problem."

What exactly is "entirely free-market" about Washington politicians bullying banks into lending to people with lousy credit ratings, while the Fed lends money at artificially low interest rates?

Far from "letting bankers do what they want," as Krugman claims, the worst downturn since the Great Depression largely stems from the federal government shaming and threatening lenders into abandoning traditional, sound banking practices so that mortgages could serve a liberal social justice agenda. It failed horribly.

Melloan calls the success of Reaganomics "the revival of classical economic principles that had been proven out over centuries but had been submerged in a neo-Keynesian cant that was a cover for old-fashioned statism."

As economic historian Thomas Woods notes in his 2009 book on the financial crisis, "Meltdown," long-suffering Japan "engaged in every single activity that Keynesians like Paul Krugman recommended. As a result, its slump went on for a decade and a half."

Tale-telling is a national pastime in Ireland. But in this case, Krugman's familiar statist jig distracts us from the tale told by this often-insightful Irish study of economic missteps.