You know things are bad in the economy when what passes for good news is the hope that we’re probably not on the verge of the second Great Depression. “I think we know more than we did then, and just the fact that we have a big federal government is a stabilizing factor,” Paul Krugman of Princeton (and the New York Times) tells Fortune in a lengthy interview about the crisis. “But the current problem is still pretty awesome.” Krugman’s predictions: recession at least until mid-2010, $1 trillion in losses on mortgage-backed securities and 20 million Americans with negative equity in their homes. And yet, he allows that the crisis in the financial markets may not devastate Main Street as much as Wall Street. “Maybe it’ll turn out that all this Wall Street stuff is just less important than we think it is,” he says. Let’s hope so.