Sadly, he appears to have lost his ability to understand economics. He lost, several years ago, credibility as a New York Times columnist because of his inability to understand politics, which he had apparently never studied, making him the perfect "Accidental Theorist" on the subject.
Krugman has long railed against people who present ideas without having thought them through. Indeed, he even coined the phrase "accidental theorist" to describe people who "imagine that their conclusions simply emerge from the facts, unaware that they are driven by implicit assumptions that could not survive the light of day."
Since he began writing regular op-ed columns for The New York Times, however, Krugman has become increasingly difficult to take seriously. In his columns, Krugman repeatedly imagines that his conclusions simply emerge from the facts. They don't.
For example, Krugman has argued that the invasion of Iraq was an unnecessary diversion of resources from the real war on terror that engendered needless hostility toward the US throughout the Muslim world. He bases this argument on the fact that Iraq posed no immediate threat to the US and was not involved in 9/11.
This argument is a classic example of accidental theory. Krugman's facts are accurate, but his conclusions do not follow from them. Consider an analogy: Vichy France was neutral during World War II. Yet Roosevelt responded to Pearl Harbor by mounting an invasion of Vichy North Africa.
Does it therefore follow that Operation Torch was an absurd diversion of resources from the Pacific Theater that only engendered hostility in neutral France toward the Allies? Maybe, but clearly considerably more analysis would be required before reaching such conclusions.
For those who don't remember, here is his classic article on the "Accidental Theorist". After you read it, you'll feel great about him. Keep that feeling. Don't read anything other than purely professional papers after 1999, and you'll continue to think well of him.