Publication

IT'S ONE thing for the US Treasury Department to overpay banks for their toxic assets on the prayer that bank shareholders will do something besides pocket it - something that will help the economy. It's another thing to set up a complex leveraged auction scheme to surreptitiously make the transfer. And it's yet a third thing to set up a scheme that will lead the banks to overbid for their own toxics to garner even larger windfalls and end up with the toxics still in their hands.

Alan Auerbach, Robert D. Burch Professor of Economics and Law University of California at Berkeley

Laurence Kotlikoff, Professor of Economics Boston University

Japan has experienced disappointing economic performance since the early 1990s, and there is little sign of an end to this “lost decade.” Economic growth remains very slow, unemployment is historically high, prices are falling, and the financial sector remains in a precarious state.