Theglobal credit bubble is bursting. This bubble is primarily leveragefinancing for owning risky assets. The people who were responsible forwhat happened played with other people's money, marketed arcanefinancial products with false promises of fat profits, but stuffedtheir own pockets with big bonuses. Neither these masters of theuniverse nor their greedy but naïve investors deserve to be bailed out.They deserve what is coming to them.
The central banks bear equalresponsibility in the current debacle. After 9/11, central banks cutinterest rates dramatically and provided the cheap money for thisleverage bubble. They must not flood the world with liquidity again tosustain this bubble or create another. The central banks should focuson price stability, not financial market stability, and should provideliquidity only to contain the multiplier effect of the bubble burstingon the economy.
