Clark Center Forum

The message? Highly leveraged institutions gambling heavily on risky, low-transparency securities are simply asking for trouble. To avoid future financial crises, subprime mortgages need to move to moderately leveraged institutions – pension plans, 401(k) plans, mutual funds, sovereign funds, endowments, insurance companies and investment vehicles with conservative balance sheets like Berkshire Hathaway. Investment banks, and […] 

Federal Reserve Bank of Chicago At this writing in early October, 2008 it appears that the first phase of the financial crisis is ending and the second is about to or has begun. The phase that is ending entails flushing the worst assets created during the sub-prime lending boom out of the financial system. It […] 

October 16, 2008 Steven Kaplan provides a primer on the crisis. What is the problem? How did we get here? What do we need to do? What does the bailout do and not do? What else should be done? View PDF> 

Forbes – October 17, 2008 In the latest chapter of the credit crisis, the U.S. Government announced this week that it would take equity stakes in the country’s top financial institutions. As has been the case been throughout the crisis, there has been a huge amount written about whether the Treasury’s actions will be effective. […] 

Freakonomics blog – October 15, 2008 When the financial crisis was just beginning to appear, I did one of the smartest things I’ve ever done: I asked my colleagues Doug Diamond and Anil Kashyap to explain to me what was happening. What they said was so enlightening that I begged them to write it up […] 

The idea that the government would move in to take over some banks in the U.S. goes against the principles of many free market economists. Hollywood producer Samuel Goldwyn once said, “Nobody knows anything.” So now who knows anything in the world of economics and what are the truths? Listen now > 

Op-ed The Wall Street Journal – October 9, 2008 Until last week, the conventional wisdom in Europe was that the financial crisis originated in the U.S. and that therefore the U.S. had to be first in line to respond to it. Now that the crisis has become a much more serious threat to Europe and […] 

Testimony of Luigi Zingales on “Causes and Effects of the Lehman Brothers Bankruptcy” before the Committee on Oversight and Government Reform, United States House of Representatives – October 6, 2008 Read PDF > 

Credit Crisis Solutions: An Overview of Each Plan’s Main Features Download Word document > 

Financial markets are in panic. Central banks are willing to lend against all manner of collateral.  Yet inter-bank credit markets are freezing up. Why? Have central banks contributed to the problem? And what do we do now? View PDF >