He seems to be in the camp that says if we can just “unclog” bank balance sheets then we’ll get credit “flowing again.” But the problem isn’t a lack of liquidity, it’s insolvency. A gangrenous leg can’t be “fixed” with blood transfusions. The only “solution” is amputation.

A man will make himself believe most anything if his salary depends on it. Lots of salaries are at risk, so lots of heels are digging themselves in.

Anyway, as I’ve argued for awhile, the only way to “solve” the crisis is to let asset prices fall. And that means the balance sheets on which those assets currently reside need to recognize substantial losses. Call it the “Fight Club” solution*—everyone goes back to $0. This would be highly painful for ALL Americans. But it would be most painful for those with the most to lose . . .