Okay, da Krug has me a bit stumped:
Y'day on his NYT blog he wrote:
Nouriel Roubini has a characteristically scathing takedown of the
Paulson plan, and here’s the thing: language aside, his economic
analysis is similar to mine. The fundamental problem in the
financial system is too little capital;
But, IIRC, at the outset of this $700b mess, he wrote that the Fed's
logic is flawed because they assume that the problem is the lack of
liquidity. Rather, da Krug felt, the problem was lack of trust.
Everyone, including the very scheming bankers under suspicion, was
unwilling to take the money out of the mattress and put it elsewhere.
Is that true from your recollection, or am I reading da Krug wrong?
--ravi
--
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