By Michael Pomerleano
In an article this month, “Promising signs of progress in the ‘Bad Bank’ Plan” I wrote that the approach sketched out by Tim Geithner, US Treasury secretary, deserved consideration and support from the policymaking and financial communities for the following reasons: Read more
By Christopher D. Carroll
Maybe it was worth the wait.
Judging from preliminary details, the US Treasury’s plan to rescue the financial system is a lot savvier about the relationship between financial markets and the macroeconomy than are the usual-suspects: critics from both left and right who are already pouncing on the Geithner plan.
Unlike the critics, the Treasury has absorbed the main lesson from the past 30 years of academic finance research: asset price movements mainly reflect changes in investors’ collective attitude toward risk. Read more
By Photis Lysandrou
The financial sector is widely blamed for the financial crisis, with banks and their investment vehicles considered responsible for the products at its epicentre.
By contrast, investors who bought these products are seen as having played a largely passive role. In fact, demand-side pressures were the main driving force behind the growth of these products. As a result, governments will be unable to prevent crises if they restrict themselves to changing the global financial architecture. Read more