Delenda Crisis Est

From UBS:

+ There are three key conditions for resolving this crisis. First, bank balance sheets must be repaired. The private sector does not have the resources to do this. Governments must inject capital into banks. There is no alternative.

+ A piecemeal approach to recapitalising will not work. We need a system wide solution to a system wide problem. This will enable confidence in the system to be restored. There is no alternative.

+ Central banks must cut rates (Australia cut 100bp today). This will allow borrower balance sheets to be repaired, gradually. It will not boost growth (because there is no lending). It gives money to borrowers. There is no alternative.

+ Policy measures are anti-deflationary. They are not inflationary. There is no inflation threat in the OECD. Swift action is required to bring about stability to the financial system. Policy makers must listen to economists. There is no alternative.