The global economic crisis has revealed the folly of large U.S. budget and trade deficits, as well as of the strong dollar that makes them possible. If it is serious about recovery, the United States must balance the budget, stimulate private saving, and embrace a declining dollar.
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Regulations
While better regulations may address the causes of this recession, it is only a matter of time until years of financial success convince the next generation of policymakers that such laws are no longer necessary. The financial sector may need a more fundamental change of structure and ideology to become fully sustainable.
Most residential loans are Freddie and Fannie Mae conforming.
"U.S. government's refusal to regulate subprime mortgages."
Not accurate. Most residential mortgages are sold back to Freddie or Fannie Mae who will only buy mortgages that conform to to their requirements.
Not Just Correctable Policy Mistakes
To say that the current depression (no longer just a recession) is the result only of "correctable policy mistakes" is to fail to recognize the broad scope and numerous causes of the downturn.
Actually there was a single cause - the irresponsible assumption of massive amounts of debt - but financial institutions and private individuals were responsible as well as government officials.
What most concerns me about the actions of the federal government now is that its method of addressing the depression is to burden us with more of the cause of the problem - massive debt - at an historically unprecedented rate.
Already we have seen the Obama Administration base its budgets on unrealistically optimistic economic forecasts (a long-standing presidential tradition), fail to restrict earmarks and announce its intention to cut the deficit in half within the next four years without providing any credible specifics on how it would do so (sound familiar?). On what therefore can we base the optimism about our financial future that is necessary to bring about an end to the current downturn?
The Japan Fallacy and debt worries
David M. raises the often expressed worry about increasing government debt, though he doesn't add the worry about the printing press (think Zimbabwe or Germany early 20s). Consider, however, whether a new Gold Rush would be unwelcome. Imagine that a retired IMF accountant disclosed his little secret: $3 trillion in gold safely stored in London, New York and Tokyo and at the IMF's disposal. That instant Gold Rush would be almost unmitigated good news. So what is wrong with the US creating the next best thing to gold in the shape of long term bonds with a negative, or very low real interest rate? It is easy to overlook that the low interest bonds (with no indexation to inflation) of the past provided virtually free money to the government and, to the extent that it wasn't a matter of theft by inflation (like the Romans and other successful imperialists theft of others' precious metals which stimulated economic activity) it was paid for by the increase in economic activity and, if it matters who got the cash flow, in increased tax revenue.
banking crisis
I see the banking crisis as a repeat of the Enron affair.
G. W. Bush K. Lay
B. Obama J. Skilling
T. Geithner A. Fastow
Geithner, the Wall St wiz kid, has been asked to build a house of cards to cover up the banks' collapsed house of cards.
This doesn't work. Japans' banks' books were cooked, they never addressed it and after ten years they still haven't dug themselves out because their house of cards cancels the effectiveness of fiscal or monetary policy. There is no exit strategy to recover the government's infusion.
The foundation of the capitalistic free market is accurate accounting records. Americans believe in honesty and believe cheaters should get punished.
It is inevitable that the bank ownerships will change. The government is not tackling the banking problem in the right order. The government should restore the accuracy of banking records first. Then, it would clearly know how much to prop up the banks. With accurate records and government support, trust will be restored to the credit market, the banks can be sold at a better price because new owners don't have to the discount the unknown and the on-going shape of the market is healthy.
There is an honest approach to solving the banking problem. If you believe in capitalism, you will see that it is the right solution.
The government consolidates all bundled securitized mortgages, uses a task force of Audit firms to re-value them, then re-distributes the actual mortgages back to eligible holders.
The banks will properly show mortgages in their long-term assets instead of current assets when they held the securitized slices (An improper accounting shift to enhance executive bonus's).
We will end up with a mortgage market true to capitalism.
Detailed explanation.
Securitized mortgages means mortgages were bundled then tranches of the bundle were sold off. Every mortgage is local so this instrument is invalid.
1)Collect all bundled mortgages.
2)Classify the Mortgages
Within each bundle is a list of mortgages.
All the mortgages must be placed on a master list.
This list must be sub-divided in the following order:
Region/city New England, Rust belt, New York, East coast, Florida, Nevada etc
Interest rate Standard prime, escalating interest rates including subprime
Current market value divided by mortgage
Mortgagee income to mortgage amount -ability to repay
Within each region you will be able to determine three categories
Low, medium and high risk.
3)Calculate the write down.
4)Collect all holders of bundled mortgages
5)Pro-rate the write down according the portion of the bundled mortgage holding.
6)Classify holders
Banks allowed to issue Mortgages in US and those not allowed.
7)Re-distribute the gathered mortgages to the banks allowed to issue mortgages in the US.
The US government only has jurisdiction over banks allowed to issue mortgages in
the US. The other holders will get no mortgages, it's a risk they took. If this is too severe offer silent partner relationships with the banks with title.
The redistribution will have to depend on what the data looks like. Redistribution must be as fair as possible so should be done before a tribunal using a lottery if necessary. Ideally regions would be distributed to a regional bank but markets may have to be tranched among several banks to fairly spread the risk.
The treasury will have to engage external auditors who just completed auditing the bankers books to staff the project and will need information technology assistance.
Credit Default Swaps
Now that we have valued the bundled mortgages, the credit default swaps (CDS) can be valued. The swap issuers wanted to be unregulated, so be it. The government voids all credit default swaps to any purchaser who has received TARP funds. This should provide relief to the financial institutions who issued CDS. If the outstanding payout is still too much, the government declares that under exceptional circumstances (economic distress) the issuers of CDS are not obligated to fully honor payment on an illegitimate financial instrument, the securitized mortgages. So, only a partial payout will be required.
There is no need for a government bailout. This government intervention is doing for the public what an individual citizen cannot do, in the fairest way possible.
We will have restored, as fairly as possible, a mortgage market true to capitalism.
Japan Fallacy
"Not the result of structural flaws"? Had the U.S. financial crisis not plunged the global economy into its current tailspin, had long could it have limped along with the gross imbalances in trade between surplus and deficit nations? In particular, how much longer could the US have continued to soak up 70% of the global surpus, while the nations pursuing "export-led growth" externalized their structural deficiencies in demand? Once we exported production and jobs to China, Japan, South Korean and Taiwan, now we've exported our unemployment. The export-led model, like our consumer-driven one is gravely-ill. And that's a long-term, structural problem. Like many of our banks, US consumers exhibit "zombie-like" features--dead but still walking. Obama's stimulus paddles may spark a heart beat, but the gravely ill patient will need exhorbitantly expensive life-support--financed by China?-- until the global structural imbalances are rectified. Wish I could be sanguine about the prospects.
On what therefore can we base
On what therefore can we base the optimism about our financial future that is necessary to bring about an end to the current downturn?
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Reply
This should provide relief to the financial institutions who issued CDS.
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In the past fifty years we
In the past fifty years we have seen recessions of all hues. But this time it is going to stay much longer. It is going to etch its mark even in third world countries. In the capitalist business cycle, recessions are but common place. To some extent, recessions are good in the sense that they help wash out excesses in the system by clearing away inefficient companies in the fray. It paves way for new competitors who present competition to keep the demand and supply in perfect sync on a long term basis.
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The Astrology of the Financial Crisis
In astrology planets are symbolic representations that have uncanny reflections in reality back on earth. There is no scientific basis that we can measure for this; but the symbols and meanings can help us gleam messages that help us understand our world somewhat the same fashion of dream interpretations.
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The financial crisis
The financial crisis of 2007–2009 has been called the most serious financial crisis since the Great Depression by leading economists, with its global effects characterized by the failure of key businesses, declines in consumer wealth estimated in the trillions of U.S. dollars, substantial financial commitments incurred by governments, and a significant decline in economic activity.
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p>It was very important to
p>It was very important to realize that the rules set by Basel
2 and other existing financial regulations had to be adapted to reality. The
financial system based on virtual wealth or unlimited risk could not survived.
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There are many loans for bad
There are many loans for bad credit specialist and bad credit loans specialist online but you need to be very careful. Most of them are scams so doing your due diligence is important. Your best bet is to try and consolidate your loans. There are many legitimate debt consolidation loans available online.
It has been suggested
It has been suggested that this article or section be merged with Global financial crisis of 2008–2009 and Late-2000s recession.
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Cyte Annotation Tool.
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In the 1990s,
In the 1990s, Japan experienced a financial crisis after the bursting of a bubble. Although outside the scope of this paper, the seeds of the crisis might have been sown during the financial deregulation in the 1980s before the formation of asset bubbles. When the gap between competitive pressures in the financial markets and a "convoy" style of banking supervision and regulation that, in effect, ensured the viability of the weakest banks became unsustainable, the crisis erupted. In this regard, it may be argued that the crisis was accentuated by the formation and bursting of the bubble.
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There are many types of ways
There are many types of ways to consolidate your debt. When consolidation is not an option maybe cash advance loans could be an alternative. People will always need a quick cash fix and a cash advance or unsecured credit card in most cases is a good source. If you have bad credit or no credit and need bad credit loans cash advances don't perform credit checks so it's another option.
Japan's main export goods
Japan's main export goods are cars, electronic devices and computers. Most important single trade partner is the USA which imports more than one quarter of all Japanese exports. Other major export countries are Taiwan, Hong Kong, South Korea, China and Singapore.
regards,
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Sliding stock and real estate prices
Sliding stock and real estate prices marked the end of the "Japanese asset price bubble" of the late 1980s, and ushered in a decade of stagnant economic growth. These problems may have been exacerbated by domestic policies intended to wring speculative excesses from the stock and real estate markets. Real GDP in Japan grew at an average of roughly 1.5% yearly between 1991-1999, compared to growth in the 1980s of about 4% per year.
regards,
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The Japanese and U.S. crises
The Japanese and U.S. crises differ in many ways, but the starkest contrast is in the response of policymakers. U.S. banks have been rapidly writing off their bad debt. Although Tokyo did eventually apply many fiscal stimulus measures, it did so too late and too erratically to have a sufficient impact.
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The Japanese and U.S. crises
The Japanese and U.S. crises differ in many ways, but the starkest contrast is in the response of policymakers. U.S. banks have been rapidly writing off their bad debt. Although Tokyo did eventually apply many fiscal stimulus measures, it did so too late and too erratically to have a sufficient impact.
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Current crisis is
Current crisis is fundamentally different, its scope is far smaller, and the response of policymakers has been quicker and more effective.
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Japan suffered from chronic
Japan suffered from chronic dysfunction in the general economy, one of whose symptoms was a banking crisis. Even if policymakers had responded properly, the country was still doomed to years of malaise.
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In Japan, the primary problem
In Japan, the primary problem was pervasive dysfunction in the economy, which caused a banking crisis. In the United States, pervasive dysfunction in the financial sector has caused a deep recession in the economy as a whole.
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The U.S. financial crisis is
The U.S. financial crisis is smaller, and Washington has responded far more quickly than Tokyo did. Most important, the current crisis is the result of correctable policy mistakes rather than deep structural flaws in the U.S. economy.
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The Fifth Generation Fallacy'
The Fifth Generation Fallacy' is a fascinating work that vividly portrays Japan's paranoia, the panic felt in America and Europe,
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May be in 2008, but did you
May be in 2008, but did you check now its beeen changed a lot.....
Keep updating..
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economy
the economy will restore itself i am sure when there is a one world government
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Japan's tough Financial crisis
The Country Japan faced the financial crisis due to global decline in the market. This crisis may also help to over come their mistake in the future.
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Financial Crisis !!!!
The financial crisis in 2008 is due to fall in the global market. Which affected not only Japan even other countries. This fall in the market wil help to avoid and correct their mistakes in future...
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2008 Japan Financial crisis@@@
In the capitalist business cycle, recessions are but common place. To some extent, recessions are good in the sense that they help wash out excesses in the system by clearing away inefficient companies in the fray.It is not fair when such a country is in financial crisis...as they are largest electronic and automobile manufacturers...
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2008 Japan Financial crisis@@@
In the capitalist business cycle, recessions are but common place. To some extent, recessions are good in the sense that they help wash out excesses in the system by clearing away inefficient companies in the fray.It is not fair when such a country is in financial crisis...as they are largest electronic and automobile manufacturers...
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Redistribution must be
Redistribution must be controlled. Regulations is a must.
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I never thought that GM and
I never thought that GM and Chrysler will filing bankruptcy form. Their share are bigger than Honda actually...not Honda doesn't have any enemies.
Applying sufficient stimulus
Applying sufficient stimulus and calming panicky financial markets will keep the United States from suffering anything worse than a very deep, but temporary, recession.
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Foreign Affairs ,,,!!!!!!!!!!!!!!!
The site gives us all a clear view of Foreign Affairs ...that everyone needs to know...
this would help not only a country's economy but also one's own economy,,,,,,,,,......................
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