The European Union must concretely answer the question of whether member states are jointly responsible for each other’s debts. ++ ‘Kissinger-style’ ambiguity is useful in diplomacy, but dangerous in the market. ++ Politicians must understand that market forces will always test ambiguous economic policies. ++ Fannie Mae and Freddie Mac were backed by similar ambiguous policy in the
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We are witnessing the worst economic conditions since the banking shutdown of 1932. ++ After rescuing Fannie Mae and Freddie Mac, and reluctantly doing so with AIG, the Fed declined to bail out Lehman Brothers or Merrill Lynch; the Fed had to draw the line. ++ Buying assets for US bonds is one method of stabilizing these failing institutions. ++ The collapse of this second financial system
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