The second post is most remarkable for its title, Economics Is Not a Morality Play. This seems to be too frequently forgotten:
The market economy is a system for organizing activity — a pretty good system most of the time, though not always — with no special moral significance. The rich don’t necessarily deserve their wealth, and the poor certainly don’t deserve their poverty; nonetheless, we accept a system with considerable inequality because systems without any inequality don’t work.
This is very right. When dealing with any systemic issue in the social sciences, not just economics, it is important to remember that this is all part of the amoral realm. You're analyzing effects and what works and what doesn't. It would be nice if things played out so that personal morality could be applied across the system but this is rarely the case. This observation probably has its earliest detailed explanation in Machiavelli, who gets an unnecessarily bad rap for saying this, who argues that the morality that guides the individual can cause great harm if a ruler acts upon this morality when he is head of state. The same goes for economics or politics.
The systemic effects are about the uncoordinated, and often unknown, unintended consequences of our actions. These are very real and subject to analysis but they have no real agency, they happen because these are the things we aren't thinking about when we do something we intend to do. On a political level, organizing ourselves to achieve domestic peace and tranquility threatens another state because the high level of organization needed for organized economic and social life can be readily used to create military power. This can militarize neighboring states, creating an arms race unintended by the economic and social reforms of the originating state.
On a more individual level, for example, our desire to drive cars can create global warming. There's no agency, it's a systemic level effect arising from our uncoordinated activities; as one individual making a choice there's nothing wrong with what each of us individually is doing, it's all the other bastards doing the same thing that's causing the problem. I'm completely clear morally but we are not. This is where morality can come back into play (I'm actually building off Machiavelli here, I strongly recommend reading The Discourses on Livy, Machiavelli has some very good thoughts on how different moral systems operate at the individual and at the systems level and how these contradict each other, though he uses different terms, unfortunately us moderns rarely think in moral terms anymore so you've got to go back to the Renaissance to get this stuff), how we respond as an organization (this can be a civic group, company, or state, I disagree with the notion that there is much of a difference between "private" and "public" organizations when discussing things on this level) has a distinct moral dimension that is lacking on the individual level.
Which brings us back to Krugman. The economic system is amoral, we can get out of the slump with any sort of a demand shock, it works, even if it is messy. However, as rational, social entities we are subject to our conscience and have an obligation to proceed morally. Which is why there is a difference between getting out of a slump through digging up buried bottles of money, blowing stuff up, or building infrastructure. The first two mean abrogating our moral responsibility as social beings, while we may still have unclouded consciences as individuals because these choices represented no failing of our individual moral responsibility, the organizations we form as social beings did fail in the second type of organized morality that Machiavelli writes about.
Far too little thinking is devoted to the second type of morality, earlier moral systems focused almost entirely on the individual, after all few people in most societies used to have any form of power so there was no need for detailed moral systems on the actions of organizations. However, today with democratic political ideas that give all of us responsibility for the actions of the organizations we are part of, there is a desperate need for moral thinking at this level. Unfortunately, there is far too little attention payed to morality and moral systems in mainstream modern thought and what there is mostly involves trying to reconcile the earlier, personal form of morality with life in the modern world and participatory political system. As Machiavelli observes, the moral system that operates at the individual level does not necessarily lead to moral outcomes at the social level, you have some sort of moral system operating here but it is poorly understood (in Machiavelli it comes across that there is some sort of system of responsibilities, he doesn't endeavor to build a system himself however beyond the implication that a system is there, even if he cannot fully explicate it) and certainly operates differently than the moral system for individuals. I believe many people today perceive this and are bothered by its lack, so far though no attempts at building this system have successfully caught on with the public at large. If there is a real moral challenge to be faced today that we need a moral and religious revival for it is meeting this need. So far I see no mass movement in this direction.