it had all happened before, fractal scaled different, but not new, as they say, this generation did not invent fraud, theft, mania, and panic
speaking of which, just in and out of e-mail trays
Player 1: How in the world is this any different than what the Japanese tried to do for over a decade .... and failed spectacularly.
From the Wall Street Journal:
online.wsj.com
SNIP:
Federal bank regulators issued guidelines allowing banks to keep loans on their books as "performing" even if the value of the underlying properties have fallen below the loan amount.
The volume of troubled commercial real-estate loans is skyrocketing. Regulators said that the rules were designed to encourage banks to restructure problem commercial mortgages with borrowers rather than foreclose on them. But the move has prompted criticism that regulators are simply prolonging the financial crisis by not forcing borrowers and lenders to confront, rather than delay, inevitable problems.
The guidelines, released on Friday by agencies including the Federal Deposit Insurance Corp., the Federal Reserve and the Office of the Comptroller of the Currency, provide guidance for bank examiners and financial institutions working with commercial property owners who are "experiencing diminished operating cash flows, depreciated collateral values, or prolonged delays in selling or renting commercial properties." Restructurings are often in the best interest of both lenders and borrowers, the guidelines point out.
player tj: get with the program spin, for it will be different than the japanese experience, because the america is flexible, dynamic, etc etc etc :0)
i got the book, "lords of finance" amazon.com by liaquat ahamed, now newly sold out at dynabook sellers, and yes, the debates back in 1930s do seem to be repeated these days, and so we might well end up on the same path, with the difference in outcome caused by fact that fiat money not backed by gold, but the ultimate destination still the same, as gold standard does not have to stop working just because G and S are not capitalized this time around.
imo, what happened at the peripheries, in ex-rich argentina, ex-leveraged s.e.asia, soon to be ex-savings japan, and ex-paper-money-champion zimbabwe, will for sure happen in still-have-not-learned usa.
re the book mentioned, recommended Christmas present for all who wish to survive, here is the review ft.com
Bowled over by a forceful lesson from financial history
By Andrew Hill
Published: October 30 2009 02:00 | Last updated: October 30 2009 02:00
Those who cannot learn from history are doomed to repeat it, as George Santayana famously put it. On that basis, Lords of Finance - winner of the 2009 Financial Times and Goldman Sachs Business Book of the Year Award - teaches a forceful lesson to the world's economic policymakers.*
Liaquat Ahamed's vivid history of how central bankers' mistakes helped precipitate the Great Depression bowled over the judges and swept away a strong field of finalists for the 2009 prize.
It was not only
that the book was "beautifully written", in the words of Lionel Barber, the FT's editor. Its selection as the "most compelling and enjoyable" business book of the past year was also due to the strong parallels between the events
Mr Ahamed describes and the events leading to the past two years of economic and financial turmoil. The book "reminds us that tumult in financial markets wasn't created in the 21st century", says Lloyd Blankfein, chief executive of Goldman Sachs and co-chair of the judging panel with Mr Barber.
Completing Lords of Finance last October, Mr Ahamed wrote that the world's central bankers and finance officials were "coping daily with unexpected and startling shifts in market sentiment". Since the book was published, the author - whose career has included working at the World Bank, a period in investment management and as an adviser to hedge funds - has expanded on these comparisons.
Like the recent crisis, the Depression followed a bubble (in stocks, rather than real estate). It was caused by mistakes in Federal Reserve policy and exacerbated by a malfunctioning financial system and by imbalances between the US and other countries (in Europe then; in Asia now).
The high level debates were eerily similar: how do you identify a bubble? Should it be pricked, or left to deflate, with central banks dealing with the consequences? So were the repercussions, which included runs on both actual banks and, last year, the shadow banking system.
In fact, Mr Ahamed believes a snapshot of the world economy this spring, nearly 18 months into the crisis, looked very similar to the picture in 1930-31, at the same point in the Great Depression: stocks down 50 per cent, corporate profits down by a similar percentage, global industrial production off by a fifth.
Why has that initial decline not worsened into outright depression this time? As Mr Ahamed told the Fall for the Book literary festival in Fairfax, Virginia, last month, some of the lessons of the Depression have already been learnt. The central bankers at the heart of Lords of Finance were "like 18th century doctors who thought the cure for disease was to draw blood from the patient". They raised tax rates and interest rates in an effort to keep their crumbling economies tied to the gold standard. In other words, they risked their reputations - and, in some cases, their fragile health - on a misguided and unsuccessful campaign to dodge economic disaster. But at least they showed their successors how not to handle a crisis.
* Liaquat Ahamed won the £30,000 award for Lords of Finance: 1929, The Great Depression, and the Bankers who Broke the World (William Heineman/Random House UK; The Penguin Press USA)
Copyright The Financial Times Limited 2009. Print a single copy of this article for personal use. Contact us if you wish to print more to distribute to others. |
