Paul Krugman speaks:
In past financial crises — the stock market crash of 1987, the aftermath of Russia’s default in 1998 — the Fed has been able to wave its magic wand and make market turmoil disappear. But this time the magic isn’t working.Why not? Because the problem with the markets isn’t just a lack of liquidity — there’s also a fundamental problem of solvency.
I’m personally divided on Krugman – I often categorize his opinions as bellyaching, sometimes borderline inane. In this case it is the exact opposite – flawless.