Friday, October 3, 2008
Senior economist cuts through the cr&p!
William Buiter, professor at LSE etc etc talks complete sense. The solution is neither to allow banks to fail nor to nationalise them, or in the case of B&B or NR the worst of both worlds - nationalise them and THEN allow them to fail. The solution is for banks to cancel a proportion of the bonds that banks have issued and give the bondholders new shares instead. I have been trying to explain this for ages, to little avail. At least I am not alone.