How America resolve the problems with American corporation in the 1980's? Is Asian problem the same?
Short gun marriages, by mergers and acquistions. Where large losses were concerned, good will was amortized. As late as 1995, FEDS were still passing out coupons. Did any corporations or banks get liquidated. Yes, used up all the funds at FDIC. Then $80 billion additional funds were spend by Congress on Resolution Trust, with nothing in return. Domino effect from banks liquidated, resulted in small corporations getting their rugs pulled as well. Fortunately, FEDS did "interest gain is equal to interest lost" program on banks to rescue them until economy was build back. The "interest" program works, because it is based on the member banks borrowing at overnight discount rate, from the FEDS, on some multiples of their deposits. Then they buy Treasury bonds which gives the member banks a definite income. That income provided the banks' customers continued financial support until economy recovered.
IMF never learned. While they are correct; "to accelerate the export and cut out the imports" concept is sound, to get their own US dollars back. The economical expansion which is not allowed, is not sound; typical IMF economical recovery takes ten years. The economical cycles are only four years in the past. Chile is an example, nobody wants. Mexico taken away from the IMF by refunding US loans, gets a much faster two year economical recovery. Far East countries with corruptions and other problems should take notice. Self sufficiency in your own economy is more important than expansion with US dollars, that you have to borrow then repay.
Enough said. Show and tell in the American new economy is right in front of you. |
