Got to remember that media thought "everything was fine" in 2007 when the Dow Jones was at 14k, a year before the 2008 crash (from which we still have to recover yet).
The author of the Guardian's article wrote and I quote :
"The value of Bitcoins has dropped dramatically since June 2011 when they peaked at $33: now they are between $1 and $2. (Black line: closing price on MTGox Exchange. Red and green lines: volumes.)"
Now last time I checked, the exchange rate on MtGox is still around 2.5$ and didn't drop below 2.26 or so... That tells you quite a bit about the author's ability to double check his facts, his basic math skills or his intelligence... It's ridiculously bad journalism and makes me instantly dismiss whatever conclusion he reaches as pure garbage...
I'm not saying price couldn't fall in that range, but misquoting the price of something by between 25% and 150% like he did is just not what I would expect from a journalist at a "reputable" institution like the Guardian.
Mainstream media is about the worst source of information for anything related to financial decisions / investments / currencies and so on. Their interest is in having people read their shit, not predicting tendencies successfully... The more controversial their views are, the better their ratings!
Regarding Krugman's views on bitcoin, remember this guy is just another Keynesian hypocrite, who serves as a mouthpiece for the government-backed financial elite of the world who are robbing / fleecing us slowly with inflation.
Occupy Wall Street should move their picket lines to Capitol Hill... That's where the source of the problem really is.
Bank of America's MBNA rolled back credit limits on credit cards by almost 90% over the last few months, and now 5 out of 6 biggest lenders in the US announced late payments on credit cards balances spiked in september. Remember in the 70-80s how having a credit card was really a big deal? Now 8 year-olds can have one...
When lenders don't want to lend money to consumers anymore, how will people conduct their day-to-day business online? If you guessed bitcoin, you might be unto something.
PS: Sorry for grammar and typos, english is not my native language.
EDIT : Added link to the Guardian article : http://www.guardian.co.uk/technology/2011/oct/18/bitcoin-value-crash-cryptocurrency?newsfeed=true