Kill the Zombies

James Baker lays out an aggressive plan in the Financial Times for addressing the financial crisis - and avoiding a sluggish Japanese economic fate.

He observes that banks are facing not merely a liquidity problem, but a solvency problem.  He notes, in advocating his triage approach:

This approach is not pretty or easy. It will cost a lot of money, with the lion's share coming from US taxpayers, at least in the short to medium term. But the alternative – a piecemeal pumping of more public money into insolvent banks in the vague hope that things will improve down the road – could truly be historic folly.