Another US Treasury Secretary speaks out

James Baker left.jpg

James Baker was Treasury Secretary to President Reagan. When he says that the US is “repeating Japan’s mistake by viewing our banking crisis as one of liquidity and not solvency”, the blog listens.

His prescription is stark: “we should divide the banks into 3 groups – the healthy, the hopeless and the needy”. And he suggests policymakers should “leave the healthy alone, and quickly close the hopeless. The needy should be re-organised.”

Baker also argues in today’s Financial Times that “this crisis demands a pragmatic, comprehensive plan. We simply cannot continue to muddle through it with a Band-Aid approach.” And he goes on to echo former Treasury Secretary Brady’s concern that policymakers have not yet realised “the true scope of the problem”.

About Paul Hodges

Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry. He also serves as a Global Expert for the World Economic Forum. The aim of this blog is to share ideas about the influences that may shape the chemical industry and the global economy over the next 12 – 18 months. It looks behind today’s headlines, to understand what may happen next in critical areas such as oil prices, China and Emerging Markets, currencies, autos, housing, economic growth and the environment. Please do join me and share your thoughts. Between us, we will hopefully develop useful insights into the key factors that will drive the industry's future performance.

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