“How to Stop a Second Great Depression”
Financial Times, September 29, 2011
Financial markets are driving the world towards another Great Depression with incalculable political consequences. The authorities, particularly in Europe, have lost control of the situation. They need to regain control and they need to do so now.
Three bold steps are needed. First, the governments of the eurozone must agree in principle on a new treaty creating a common treasury for the eurozone. In the meantime, the major banks must be put under European Central Bank direction in return for a temporary guarantee and permanent recapitalization. The ECB would direct the banks to maintain their credit lines and outstanding loans, while closely monitoring risks taken ...