By ADI IGNATIUS Deputy Editor, TIME Asia

Is it miracle time again? All across Asia, stock markets are booming, trade balances are robust and growth rates are revving up. Japan last week stunned the world with news that during this year's first quarter its economy expanded by an annualized 7.9%. Asia's back!

Or is it? After two shaky years, the latest figures, strong as they are, seem hard to trust. But what do we know? When things are this murky, it's best to turn to the pros, and in this issue we've tapped the one economist who has consistently called things right in Asia: Paul Krugman, the unusually readable deep thinker at the Massachusetts Institute of Technology. For the uninitiated, Krugman rocked Asia's world with a 1994 Foreign Affairs article that proclaimed the region's then-raging economic miracle as a myth. In a particularly memorable passage, he equated Singapore's high levels of growth with the force-fed gains of the Soviet Union. The piece won Krugman few friends in Asia but seemed uniquely prescient when the region's economies tumbled one by one a few years later. Krugman shook things up again last year with an article in Fortune that proposed--gasp!--currency controls in crisis-hit nations. Malaysian Prime Minister Mahathir Mohamad apparently took note, as he adopted just such a scheme. And--double gasp!!--it seems to have worked.

Krugman, whose new book The Return of Depression Economics (W.W. Norton; 176 pages) has just gone on sale in the United States and elsewhere, was characteristically modest in accepting our assignment. "If nothing else, my track record at predicting the unfolding of the crisis has been terrible," he says. "Sometimes I have been far too optimistic, sometimes far too pessimistic. I have no illusions of guruhood." He quickly adds: "Of course, nobody else has done any better, and some have done much worse."

This week's cover story, which doubles as the latest installment of our successful TIME Finance quarterly report, concludes that it's way too early for an Asian victory dance. The region, Krugman writes, has learned few lessons from the crisis and is fraught with peril. "The opportunity to remind TIME's readers that the risks have not been eliminated, that we may be no better prepared for the next crisis than we were for this one, was too important to pass up. I hope that my wariness about Asia's prospects turns out to be unwarranted, but this way nobody can say that they weren't warned." And when Krugman issues a warning, Asians have learned that it's a good idea to listen.

THIS WEEK'S TABLE OF CONTENTS