The Right Financial Fix by Laurence J. Kotlikoff and Perry Mehrling
Fortunately, the Treasury and Fed are looking for a “comprehensive approach to address the illiquid assets on bank balance sheets.” Their idea is to swap up to $700 billion in Treasuries for the...
View ArticlePaulson Plan Compared with Kotlikoff-Mehrling Plan
Three possible pricing structures can be contemplated: distress prices (current), support prices, and normal prices (pre and post crisis). The table below shows the relationship between the price paid...
View ArticleDisaster insurance is the answer
So now Uncle Sam has an additional $700 billion to work with. Will it be enough? It depends on what he does with the money. The original idea was to buy assets outright, $700 billion worth and then...
View ArticleRunning a National Sale
The demise of financial titans and the incessant warnings of economic Armageddon have unleashed a tidal wave of asset sales across the globe, eviscerating trillions in personal wealth. Stock prices are...
View ArticleRecapitalizing the Banks is Not Enough
The infusions of equity in a score or so of major banks in the U.S., UK, and EMU will help prevent a deep and prolonged world-wide recession. So will the Fed's new Money Market Investor Funding...
View ArticleFinally, system-risk insurance
As we advocated two months back (Bagehot plus RFC: The Right Financial Fix), Uncle Sam is finally starting to sell systematic risk insurance on high-grade securities in exchange for preferred stock....
View ArticleLimited Purpose Banking: Putting an End to Financial Crises
T’was the year the country stood still. Not a car, truck, or bus rode the roads. No one drove to work, no one drove to shop, no one drove to visit. No one drove anywhere. The reason was simple. No...
View ArticleHow to fix US healthcare
The US federal government faces a long-term fiscal gap, which exceeds, from all indications, $70 trillion. This gap is the present value difference between all projected future expenditures and all...
View ArticleThe Geithner-Summers Plan Is Worse Than You Think
The Geithner-And-Summers Plan (GASP) to buy toxic assets from the banks is rightly scorned as an unnecessary give-away by virtually every independent economist who has looked at it. Its only friends...
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