We’ve often complained that the press, much less politicians and the regulators, are still playing three-yards-and-a-cloud-of dust ball between the forty yard lines in the response to this crisis.
But check out this paragraph deep in today’s New York Times profile of Mervyn King, the head of the Bank of England:
One who has had his ear is Laurence J. Kotlikoff, a professor at Boston University who wants all financial institutions — from hedge funds to private equity funds as well as investment and commercial banks — to reconstitute themselves as mutual funds, meaning they would not be allowed to borrow to increase the size of their investments. The goal would be to prevent the types of debt-fueled bets that had such dire consequences.
Talk about deleveraging!
Of course, its chances of actually being put into place are somewhere less than instituting collectivism or agrarian republicanism—I haven’t read Kotlikoff’s book, but I’d wonder how he’d propose to cut lending by that much without crushing the economy—but it’s fascinating that such a radical plan has the ear of one of the most powerful officials in the world.
What other craaazy ideas to fix the financial system are respectable people putting out there or listening to?
