Ramsey - wonderful news. That means balance is rapidly returning to lending, investment and expectation. Now that the music has stopped, all are rushing for a chair - those left standing are out of the game.
Those who didn't have excessive debt or expectations of growth in a luxury expenditure area will do very well. Dom Perignon salespeople in South Korea and Indonesia will as we speak be seeking employment in cdmaOne cellphone sales.
Qualcomm will be happily investing in distressed cdmaOne producers in Korea using their MightyQ balance sheet with USA Federal Reserve backing.
The article said there would be foregone economic growth. On the contrary, this will lead to resurgent growth as Dom-Perignon/Mercedes/Air Travel sales are cancelled and people get back to work producing products which give a return on investment. Not all economic activity is valuable. Drinking Gin is measured in GNP, but it ends up down the dunny.
"The cost of a banking crisis is expressed most
obviously in foregone economic growth, where risk
aversion in banks coincides with domestic liquidity
tightening, which results in reduced lending."
and therefore higher interest rates. So what? Savers benefit at the expense of the profligate. Good for them. No foregone economic growth - just a big shift in human activity to something else. I bet they are going even faster than they were before so "production" will actually be up.
"Another cost is in fiscal and monetary terms as
authorities try to prevent systemic risk, through
direct liquidity injections, exchange-rate subsidies
on foreign debt repayments, and buying out NPLs."
See, that's what I've been saying all along. The governments will rip off the money holders by printing heaps [which is what a liquidity injection means - it is not a shot of sherry]. They'll inflict loss on their taxpaying and money holding citizens.
"Such measures were often inflationary, as they
meant creating extra liquidity. They also served to
destabilise the currency and create higher real
interest rates."
Exactly. They are of course inflationary. Which of course means a lower valued currency. And higher interest rates. Good eh! You money holders do okay [except that the higher interest rates won't be enough to offset your inflation caused losses and tax on those extra interest payments you get].
"Methods to bail out a banking sector included
increasing government spending on bank support,
but would mean diverting spending from other
areas."
Oh damn! The governments won't be able to afford holidays in Bermuda, conferences on human rights in Timbuktu, woeful jamborees about rain forests in Brazil. If they have to spend money, it might as well be on keeping the financial system steady and joining the conspiracy of central banks to transfer saver's money to my increased share values. I consider that a noble cause. I have increased my holding of shares so that they can have the full satisfaction of knowing that the money will be properly appreciated.
I suppose the crisis isn't over yet and there will be lots more losses by various parties. But Qualcomm won't be one of them.
Maurice
Dow 16000
Feb 2002
[Heck, the way they are printing, they might exceed even my expectations.] |
