naked capitalism Thu 2010-02-25 19:45 EST

The U.S. opts for the bailout hustle over the Swedish banking crisis response

Edward Harrison of Credit Writedowns

...my post: The Swedish banking crisis response -- a model for the future? from August 2008 which describes a piece by former Riksbanks head Urban Bäckström from way back in 1997! This is the number one entry on the Internet when you search for `Swedish banking crisis.' Now, this was before the Lehman debacle. And I anticipated massive credit writedowns for the global financial system which would precipitate a major financial crisis. Of course, this is what happened. But, pre-Lehman, I was looking for a banking crisis response model which would prove effective. I looked at the Japanese model and found it wanting. The Nordic model is more promising... Now, the information about these financial crisis strategies was readily available in the public domain for years. I mean, my blog post was based on a 1997 article for goodness sake. Clearly, the Obama people didn't want this solution because they are captured by the financial services industry. That's why the U.S. is going the Japanese route of bailouts and accounting dodges.

Bailout Hustle; naked capitalism; Swedish banking crisis response; U.S. Opts.

Thu 2010-01-07 19:18 EST

'Greater Depression' More Bullish for Gold than 1930s -- Seeking Alpha

...The current, global financial system is in the process of coming to an end -- one way or another. History teaches us it is highly unlikely that this transition can be accomplished without economic catastrophe. As the only superior currencies in existence, it is inevitable that gold and silver will benefit, as the inferior paper currencies (which we mistakenly call ``money'') suffer the same deaths that have awaited every other fiat currency, throughout history.

1930s; bullish; gold; Greater Depression; Seeking Alpha.

Debtor's prison Thu 2009-12-17 10:24 EST

Did Greenspan predict the inevitable collapse of the USD?

MAAA

Much of our recent discussion has focused on the seemingly inevitable collapse of the US-debt-backed global financial system. In continuation of that theme, today we will explore a specific aspect of this problem: the likelihood of a US default...

Debtor s Prison; Greenspan predictions; inevitable collapse; USD.

The Big Picture Sun 2009-10-11 17:12 EDT

Andy Xie: Why One Bubble Burst Deserves Another

...Lehman died in vain. Today, governments and central banks are celebrating their victorious stabilizing of the global financial system. To achieve the same, they could have saved Lehman with US$ 50 billion. Instead, they have spent trillions of dollars -- probably more than US$ 10 trillion when we get the final tally -- to reach the same objective. Meanwhile, a broader goal to reform the financial system has seen absolutely no progress...The lesson from the Lehman collapse seems to be, ``Take whatever you can and, when it crashes, you get to keep it.'' How governments and central banks have dealt with this bubble will encourage more people to join bubble making in the future.

Andy Xie; Big Picture; bubble burst deserves.

naked capitalism Sun 2009-09-20 11:53 EDT

Financial Reform: Not happening but the need is clear

Edward Harrison of Credit Writedowns

If you are looking for reform in the financial sector, the moment has passed. And only to the degree that the underlying weaknesses in the global financial system are made manifest and threaten the economy will we see any appetite for reform amongst politicians. So, as I see it, the Obama administration has missed the opportunity for reform...Steve Keen, an Australian economist whose theories are heavily influenced by Hyman Minsky, has a cogent analysis of the true structural deficits in the current economic model...today we have finally reached a level of debt which is so great that another reflation is impossible. The collapse is now....unlike Keen, I am not convinced the time is now...What I would like to see is economic thought leaders developing a blueprint of a financial crisis strategy which tackles both the immediate crisis issues (liquidity) and the structural, regulatory and monetary issues that create financial volatility (solvency). When crisis does occur, I believe it will be systemic in nature due to the forces Keen so lucidly explains. Therefore, a blueprint which is 1) heavy on tactics and, 2) if implemented in a real systemic crisis, is likely to work, builds credibility. This is political capital which will carry over to longer-term preventive strategies and reforms.

clear; Financial reform; happened; naked capitalism; needed.

Tue 2009-04-21 00:00 EDT

naked capitalism: Guest Post: What Do Pensions Have in Common with AIG?

by Leo Kolivakis; ``Both were claiming to run a core business when in reality they were fueling a Ponzi scheme using "sophisticated instruments" or "alternative investments" that threaten the security of the global financial system''

AIG; common; Guest Post; naked capitalism; pension.

Wed 2009-04-01 00:00 EDT

naked capitalism: Why the Failure to Understand the Global Financial System?

failure; global financial system; naked capitalism; understanding.

Tue 2008-08-26 00:00 EDT

The End of the Beginning -- Developments in the Credit Crisis

The End of the Beginning - Developments in the Credit Crisis, by Satyajit Das (Prudent Bear); 2008-05-27; ``limited recognition of the massive de-leveraging of the global financial system that is under way.'' ``The banking systems ability to supply credit is significantly impaired and will remain so for the foreseeable future.'' ``Changes in financial markets will have a significant impact on many companies that now rely on financial engineering rather than real engineering'' Das proposes: ``holdings and values of risky assets held by banks and investment banks must be accurately determined...Risky assets must be valued on a hold-to-maturity basis...Mark-to-market accounting should be suspended...Capital levels should be set on a bank-by-bank basis by regulators...Capital requirements should be eased...government [should] guarantee of all major bank liabilities''

Begins; credit crisis; develop; ending.

Tue 2008-05-13 00:00 EDT

RGE - The de facto nationalization of the global financial system

by Brad Setser; perhaps "the rise in inflation in the Gulf and China and the difficulties both are facing trying to sterilize the rapid growth in the foreign assets is an indicator that there is a small risk that the US also might end up being a bit too large for the emerging world to save"

de facto nationalization; global financial system; RGE.