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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: carranza2 who wrote (57525)	11/5/2009 8:02:40 PM
From: TobagoJack	Respond to of 217671

just in in-tray [recommendation: getmoregold, to counteract defibrillation therapy] blogs.wsj.com November 5, 2009, 6:00 AM ET.Economy Had a Heart Attack and Defibrillators Are Scarce.In the long search for the right metaphor to describe the terrible financial experience we all had last year, MIT economist Ricardo Caballero is casting his vote for one of the scariest: sudden cardiac arrest. And he warns that the world still suffers from a dangerous lack of defibrillators. In a paper imf.org to be presented Thursday in Washington, D.C. at the International Monetary Fund’s annual research conference, Mr. Caballero says that no matter what regulators do, every economy with a modern financial system is at risk of what he calls “sudden financial arrest” — a malady in which trust breaks down, credit stops flowing and even healthy financial institutions fail. The best way to deal with it, he says, is to provide a sort of emergency insurance to banks and even hedge funds, like the defibrillators strategically located in buildings and ambulances. He proposes “tradable insurance credits,” which would automatically turn into central-bank guarantees in the event of a systemic crisis. His idea is likely to give heartburn to many economists and policy makers, who worry about “moral hazard” — the idea that if financial institutions know they’ll be saved in an emergency, they’ll take even greater risks that will inevitably lead to greater disasters. Don’t fret, says Mr. Caballero: “this moral hazard perspective is the equivalent of discouraging the placement of defibrillators in public places because of the concern that, upon seeing them, people would have a sudden urge to consume cheeseburgers.”