Tuesday, December 15, 2009

Lever Up

Like Felix, I'm rather wary of the idea that the best way to recover from a debt economy disaster...is to return to the debt economy.

I'm sure there are some legitimate liquidity issues at times, with firms unable to get necessary and perfectly reasonable credit, but the idea that the most important thing is that banks need to start lending again is, I think, the fatal flaw of the Obama administration's economy policy.

They need to boost demand directly, and not hope for the middlemen to do it for them through lending channels.