Brown knows

NOT only did he avoid a protracted, public, and embarrassing governmental showdown over his chosen bank rescue policy, prime minister Gordon Brown also seems to have tailored his policy to better fit the state of the crisis as best understood by analysts, focusing on recapitalisation of financial institutions via the taking of equity stakes. This partial nationalisation is discomfiting to many economists (understandably), but there is a case to be made that recapitalisation is likely to be a more effective use of taxpayer money than purchases of troubled assets, which is sure to be appreciated by taxpayers. Mr Brown's approach has earned him plaudits from a number of prominent American economists. Brad DeLong says the prime minister has done good, noting that his colleague Barry Eichengreen also... [read full story]