Richard Baldwin, Barry Eichengreen, Thursday, October 9, 2008

Without rapid and coordinated action by G7/8 leaders, this financial crisis could turn into a jobs crisis, a pension crisis and much more. This column introduces a collection of essays by leading economists on what the G7/8 leaders should do this weekend. The dozen essays present a remarkable consensus on a few points: we need immediate, coordinated global action that includes recapitalisation of the banks.

Michael Burda, Thursday, October 9, 2008

European fundamentals are in good shape, but its banks are suffering from contagion. To avoid further real damage, EU leaders should guarantee intra-bank lending and recapitalise the banks.

J. Bradford DeLong, Friday, October 10, 2008

Catastrophic failures of risk management throughout the entire banking sector multiplied a relatively minor collapse in housing prices into a paralysis of the global finance system not seen since the Great Depression. To fix it, governments should embark on a coordinated fiscal and monetary expansion and a coordinated bank recapitalisation.

Roger Craine, Thursday, October 9, 2008

Policies are needed to unfreeze the credit market and recapitalise banks. Here is a plan to do both.

Charles W Calomiris, Thursday, October 9, 2008

To give banks capital and liquidity while protecting taxpayers, governments of the G7 should buy straight preferred stock in their banks.

Luigi Guiso, Marco Pagano, Thursday, October 9, 2008

While the US is trying to attack the bank solvency crisis with the Paulson Plan, no comprehensive response is emerging in Europe. Finance ministers must agree on a common set of rules to recapitalise European banks and establish a European institution to manage this recapitalisation.

Charles Wyplosz, Thursday, October 9, 2008

Various governments are moving to absorb toxic assets, recapitalise banks, restart the interbank market, and guarantee deposits. They should do all four in a comprehensive plan and coordinate internationally.

Barry Eichengreen, Thursday, October 9, 2008

Now is the time for action, as empty promises will only exacerbate the panic. We need coordinated measures to help banks – international policymakers led by the US should emulate the UK’s recapitalisation plan.

Stijn Claessens, Thursday, October 9, 2008

On top of more transparency, guarantees, and capital injections, international policy coordination is urgently needed to restore confidence in markets.

Richard Portes, Thursday, October 9, 2008

The UK strategy to recapitalise banks and unfreeze the term funding markets is the right approach. It should be the template for international coordination by the G7/8 and others.

Douglas W Diamond, Anil K Kashyap , Raghuram Rajan, Thursday, October 9, 2008

If the panic of the second week of October 2008 worsens, governments need to be prepared to stop it using auditing, recapitalisation, and liquidation. A stopgap stabilisation plan would be to guarantee all banks’ short-term liabilities, audit their assets, and then clean up the mess.

Avinash Persaud, Thursday, October 9, 2008

Five separate national and international initiatives are needed to contain the crisis, reverse some of its effects, and prevent its reoccurrence.

Daniel Gros, Thursday, October 9, 2008

To save the European banking system, Daniel Gros suggests a coordinated approach by all EU member countries under which the large banks are re-capitalised and each government guarantees the lending of its own banks to other EU banks.

Guido Tabellini, Alberto Alesina, Thursday, October 9, 2008

The current crisis is a case of financial panic that risks a self-fulfilling nightmare. Governments should guarantee bank loans to end the panic.

Klaus F. Zimmermann, Thursday, October 9, 2008

Governments need to adopt a mixed strategy of short-term and long-term measures to handle the crisis. The key is worldwide concerted action, based on similar policies executed by national governments. Some of the measures necessary have already been undertaken – but without the international coordination essential for their effectiveness.

Barry Eichengreen, Richard Baldwin, Thursday, October 9, 2008

Without rapid and coordinated action by G7/8 leaders, this financial crisis could turn into a jobs crisis, a pension crisis and much more. This column introduces a collection of essays by leading economists on what the G7/8 leaders should do this weekend. The dozen essays present a remarkable consensus on a few points: we need immediate, coordinated global action that includes recapitalisation of the banks.

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