As Europe’s financial markets spin down into the vortex created by the US credit crisis, every new day will contain new surprises. Only a few months ago, the real economy looked solid, with the euro providing an impressive shield from financial disruption (imagine last year without the ECB!).
Rescuing our jobs and savings: What G7/8 leaders can do to solve the global credit crisis
Richard Baldwin, Barry Eichengreen, 9 October 2008
Edited by Barry Eichengreen and Richard Baldwin
Published 9 October 2008
What Europe should do in the shadow of the financial meltdown
Michael Burda, 9 October 2008
The wrong financial crisis
J. Bradford DeLong, 10 October 2008
All of us from Lawrence Summers to John Taylor were expecting a very different financial crisis. We were expecting the ‘Balance of Financial Terror’ between Asia and America to collapse and produce chaos. We are not having that financial crisis. Instead we are having a very different financial crisis.
An efficient rescue plan
Roger Craine, 9 October 2008
Financial events moved like a firestorm during the last three weeks, easily jumping the firebreaks put in place by the Federal Reserve and US Treasury. Saving most financial institutions requires a quick and decisive responsive programme that strikes at the source of the financial implosion.
Governments should buy straight preferred stock in their banks
Charles W Calomiris, 9 October 2008
The G7 needs to follow the UK's plan, and do so on a coordinated basis. That plan has two parts. First, the governments must work together to share the burden of standing behind interbank borrowing in the LIBOR market for a brief time (probably not to exceed a month), and also continue to support the commercial paper market.
A proposal to tackle the crisis in Europe
Luigi Guiso, Marco Pagano, 9 October 2008
While the US is trying to attack the bank solvency crisis with the Paulson Plan, no comparably comprehensive response is emerging in Europe. No single political institution in Europe can enact a comprehensive rescue package comparable to that of the US.
Why government responses need to be comprehensive and coordinated
Charles Wyplosz, 9 October 2008
The Lehman Brothers story has shown two things – banks cannot be simply allowed to go bankrupt and a piecemeal approach will not bring banking systems back into minimal functioning condition. The lesson is that there will have to be a bailout. The contagion from the US to Europe and now to most other parts of the world further shows that the bailout will have to be global.
The content of coordination
Barry Eichengreen, 9 October 2008
If the events of the last week have a silver lining, it is that they have driven home the fact that we are all in this together. The crisis is global. We will sink or swim together. The hurried decision of G7/8 finance ministers to meet in Washington on Friday is belated recognition of this fact.
The need for a comprehensive and global solution
Stijn Claessens, 9 October 2008
We are facing a global financial crisis and bold steps by policy makers gathering this week in Washington are urgently needed. It has become clear that the policy interventions to date have not restored confidence in markets. Rather, at times, by being ad-hoc, interventions have actually created more turmoil. A comprehensive and global approach is needed.
A strategy emerges: The right policies to deal with the crisis
Richard Portes, 9 October 2008
The acute phase of the crisis was triggered by the failure of Lehman Brothers. This and the associated confusion in the markets about government policies caused a sharp rise in perceived counterparty risk, which completely blocked the short-and medium-term money markets.
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