Luigi Zingales
speaking sense as always (PDF).This time it’s regarding the incoming US Secretary of the Treasury, Timothy Geithner. Zingales proposes a plan to allow banks to split in to two separate entities, one with good assets and the other with bad assets. The beauty of the plan is that the toxic assets will not affect the bank’s lending any more. The only problem with this practical solution, which would cost little/nothing to the taxpayer, is that I agree with Luigi on the issue of implementation. “The “nay-sayers” will say it is impossible,” he writes. Surely passing a stimulus of $825 billion is more complicated than this?
N.B. If you haven’t already read Zingales’ plan B (PDF again) then you’re missing out; I think it’s the best idea to come out of this financial crisis so far.
