This is important, scary reading

over at The Atlantic, by a former chief economist of the IMF, who argues that the US economy is showing the signs that emerging market economies that were about to fail, not least the capture by an oligarchy. This quote highlights what remains the key, unsolved issue:

Even leaving aside fairness to taxpayers, the government’s velvet-glove approach with the banks is deeply troubling, for one simple reason: it is inadequate to change the behavior of a financial sector accustomed to doing business on its own terms, at a time when that behavior must change. As an unnamed senior bank official said to The New York Times last fall, “It doesn’t matter how much Hank Paulson gives us, no one is going to lend a nickel until the economy turns.” But there’s the rub: the economy can’t recover until the banks are healthy and willing to lend.

I smell revolution, within the next three years. Perhaps.

More insightful commentary here.