Financial crisis: How to stop the panic

Peter Coy and Stanley Reed, BusinessWeek The world's governments are shocked and dismayed by their inability to stop the increasingly grave financial crisis. Nothing they have attempted has gotten lending flowing normally. Profitable companies are cut off from borrowing. Confidence is shot. Through Oct. 7 the U.S. stock market had its worst five-day performance since 1932 on fears of a severe economic downturn. Says Stephen Jen, currency economist at Morgan Stanley in London: "The choices for the real economy are between a recession and a depression." Can anything be done to halt this panic? As a matter of fact, yes. It won't be quick or easy. But the prerequisite for a new approach is unlearning doctrines that were developed in the aftermath of the Great Depression, the last time financial conditions were worse than this.... [read full story]