More lessons from subprime crisis

I posted a while back on lessons from subprime crisis from Stephen Ceccheetti. Here is another superb analysis from Willem Buiter.

It is fairly detailed analysis and a must read. He divides his analysis into microeconomic and macroeconomic pathologies that contributed to the crisis. I also liked his way of calling solutions to the problem as ‘partial solutions’. As no one is really sure how far this crisis is going to go, it is better to be conservative and suggest what could be tentative solutions.

Highly recommended.

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