Paulson’s Moment of Truth

With major firms imperiled, the US government has had to up-end its economic policies by intervening and extending rescues to private investment banks, government-sponsored lenders and a major insurance firm. The bail-outs have added to US debt while deflating value of the US dollar. By refusing to bail out investment bank Lehman Brothers, US Treasury Secretary Henry Paulson signaled that rescues are not available for all. A few failures could bring sense to the system. “The longer the financial turbulence goes on, the greater the likely backlash against U.S.-style financial globalization,” warns Sebastian Mallaby in his column for the Washington Post. He concludes that the challenge for the US government and other regulators is to sort through the complicated investments and procedures, and discern which work and which do not. The economic crisis could help US citizens and companies in the long run by forcing them to live within their means. – YaleGlobal