In his new book, David Stockman, former Republican U.S. Congressman and a founding partner of Heartland Industrial Partners, levies blame for the dire straits of the global financial system on central bankers, economists and politicians of both parties.
Gold prices continued to hover near all-time record levels following the spectacular push by speculative funds on Tuesday. The $10 overshoot of the previous $1,265 pinnacle brought with it a rising and louder chorus calling for more of the same.
The Paulson Plan addresses market illiquidity for toxic assets but the real problem is a lack of bank capital and the risk of widespread insolvency. Fixing this requires a government injection of new bank capital or a forced conversion of bank debt into equity. This article argues against the former as it would further socialise the U.S. financial system. The Package needs some work, but Congress must stop its infantile posturing and act soon.