More optimism

Barry Eichengreen:

With storm clouds this dark, it is hard to see a silver lining. Perhaps with uncharacteristic optimism, I see three.

The denial is over. Leaders now understand the gravity and worldwide scope of the crisis.
Central banks are now pulling out all the stops, as they should. Even the European Central Bank has acknowledged that inflation is yesterday's problem.
There is now a willingness to use taxpayer funds to recapitalise the banks. The UK has shown the way. The US needs to abandon its lengthy preparations for reverse auctions of toxic assets and use the $700bn of the recently passed financial rescue plan to recapitalise its banks. There should be enough wiggle room under the Tarp to do this if the treasury secretary, Henry Paulson, has the courage.