" The asian problems been there for years and will take years to solve."
I agree that the bad financial decisions corporately, politically, and by the banks have been going on for years......however, the impact of those bad decisions has been delayed through shell games and more bad lending.....now the falling real estate values and currencies have removed the ability to hide the losses, and the liquidity shortage has brought in the outside regulators and auditors, and these people are uncovering the whole nest of worms.
The US had a similar experience in the banking industry in the late 80s and early 90s which brought about the RTC. Our banking practices hadn't changed, but the tax reform act of 1986 resulted in the removal of tax shelters for certain types of real estate ventures, the real estate values plummeted, people found that their mortgages were higher than resale value, they couldn't sell for what they owed, so they walked away, filing for bankruptcy......this caused banks to have large numbers of bad debt on the books and forced them into bankruptcy themselves. The regulators and auditors were brought in and the whole mess of speculation was unearthed. Credit underwriting practices were reviewed and tightened and the resultant tightening of credit standards froze our economy by freezing credit.
The major problem with Asia that I see is the denial.....they have lost another war and don't want admit it.....because this war was one of their own making and the defeat is by their own hand.....while we were fighting the cold war with government spending on military, they were fighting an economic war for control of the world economy....they used their government spending to subsidize corporate market capturing strategies based on selling below cost and forcing competetion out of business because of the advantage. The problem seems to have occurred when not enough businesses went under, they down-sized and got leaner and meaner and more technological.....in other words we did the unthinkable, we changed our paradigm!........Our cold war with Russia is over so the drain on our resources has slacked off considerably, giving our economy a tremendous boost from all those redirected dollars.......Their cold war can't end until they change their paradigm....I don't see that happening without a lot of chaos first....BWDIK? |
