Andrew Hughes

The Economic Policies of Failure

Nicely argued Nicholas. The fact that an overinflated economy cannot tolerate a liquidity / credit reduction explains exactly where we are now. The only resolution I can see is not repeating the same process over again. But, as we have seen from the TARP, injecting liquidity in to an already overleveraged system cannot cover the basics nor repair the damage caused. The way forward involves returning to a more sustainable model where balance sheets reflect Real value and where the Financial sector is brought to heel. Unhinged speculation by the latter must be cleansed from the system.