History repeats itself

This crisis is part of a 'normal' credit cycle. It is a classic refinancing crisis and not a deeper insolvency crisis. It has felt more vicious in part because of the forced 'marking-to-market' of bank asset values: a feature absent from other crises, and which created a negative feedback loop. The solution is straightforward: more liquidity and sustained steeper yield curves. The consequences are lower interest rates and ultimately a much stronger gold price; a wake-up call for Europe, and probably the 'renationalisation' of central banks by finance ministries. Money malfunctions Stock...