Monday, February 09, 2009

Martin Wolf Interview.

This interview is well worth your time. It poses the fundamental question upon which everything else (financially speaking) depends. To wit: is the banking crisis a solvency issue or a liquidity issue? Policy-makers in both the Bush and Obama Administrations seemed and seem to believe that it's a liquidity issue. Martin Wolf believes that it's a solvency issue. If Mr. Wolf is correct (and Mr. Happy thinks he is), then the Obama economic team is heading down the wrong policy path.