Tom,
<<Instead of attempting to "make good" on such extensive amounts of private sector debt, many of the enterprises should have folded, period.>>
Absolutely. Capitalism without bankruptcy is like Christianity without hell. Been said before, but still true.
<<the creditors should make their demands and then be compensated in accordance with a thorough review of the rating assigned the original obligation.>>
I've always felt that some of these loans were made on extraordinarily shaky ground. In the Philippines, for example, banks made huge loans to wildly leveraged companies, knowing perfectly well that the money was not being invested in productive activity. The IMF, under US pressure, held the door open for reasons of political expedience. I wonder how prevalent this has been in other places. In such cases I think it's only fair for the lenders - and those who defined the political expediency - to assume some responsibility and share the risk.
<<this type of "high finance" is going to get this nation into a whole heap of trouble again one day.>>
That day may come soon, especially if Americans can't lift their attention from the Oval Orifice long enough to notice what's going on around them. It scares me to think of how much money has been effectively "created" by banks lending far more money then they've actually got. When that money gets lent to borrowers who do not invest it productively, what will happen in the long run?
Steve |
