The perfect storm: lack of international cooperation and flawed policies will prolong the recession

Resumo

The Harvard professor says the crisis marks the end of easy credit for consumption and under capitalized banks. He believes that a global bail out will be very difficult because of political obstacles. He argues that US Keynesian policy will not be very effective and will cause volatility in financial markets. For him the crisis is essentially a problem of excessive debt. To solve it requires a major restructuring of household mortgages and banks.