Thomas Palley

The recent massive sell-off in global stock markets, despite an earlier coordinated half-point interest rate reduction in the U.S. and Europe, reflects the continuing failure of policy to come to grips with the scale of the problem. Policy has been consistently marked by “Too little, too late” – and in some instances there have been outright blunders, as in the U.S. Treasury’s decision to let Lehman Brothers fail. (more…)

The Federal Reserve and U.S. Treasury continue to fail in their attempts to stabilize the U.S. financial system. That is due to failure to grasp the nature of the problem, which concerns the parallel banking system. Rescue policy remains stuck in the past, focused on the traditional banking system while ignoring the parallel unregulated system that was permitted to develop over the past twenty-five years. (more…)