Wall Street Voodoo The New York Times (Jan 18, 09) Paul Krugman on How to Deal with Troubled Financial Crisis

Financial crisis  central bank  release liquidity  lenders  mortgage  subprime borrowers  monthly payments  hedge funds  default (n., v.)  go bankrupt  The Federal Reserve

Paul Krugman  Nobel Prize in Economic Sciences 2008 (analysis of trade patterns and location of economic activity)

Headings in Krugman’s text?  2 different rescue approaches  “Voodoo” economics and troubled banks  A middle solution?  Real reason

Position of headings  Voodoo economics and troubled banks (pgs. 1,2)  2 different rescue approaches (pg.3)  A middle solution? (pgs.4-6)  Real reason? (pgs.7-9)

Pg.1, 2  supply-side cult  shrink  bank regulators  trillion  assets & liabilities  net worth  fraction  mortgage-backed securities  go bust  market capitalisation

Pg.3-9  solvent  excessive risk- taking  seize, seizure  bad assets, bad debts  reportedly (4)  fair value (4)  alleged (5)  government takeover  rescue plan