US can learn from Japan's crisis

[Whoha]

Originally posted by DanS
And here's the lede on a sister article from the WSJ (chosen by your's truly)...

http://online.wsj.com/article_print/SB120631726238558267.html

That is certainly good news considering that growth in exports fell in 2007 compared to 2006.

[Colon™]

Originally posted by Blake


Is excess liquidity a problem?

Unless you believe asset bubbles and/or accelerating inflation to be a problem, no.

[Colon™]

Originally posted by DanS
And here's the lede on a sister article from the WSJ (chosen by your's truly)...

http://online.wsj.com/article_print/SB120631726238558267.html

Any sign it's diminishing protectionist sentiment?

[Blake]

Originally posted by Colon™


Unless you believe asset bubbles and/or accelerating inflation to be a problem, no.

That's a relief .

[Imran Siddiqui]

[Vanguard]

The financial crisis has basically been caused by mark-to-market accounting and inadequate risk control by banks and financial firms. Start using historical pricing and let banks go bust and the financial markets will sort themselves out.

What we have to ask ourselves is: Who do we want to help? Do we want to help millionaires compete with each other to circumvent financial regulations? No. We want to help the majority of people maintain their standard of living.

We want to prevent the crisis from affecting the general economy. If you want to do that, don't provide price supports for real estate---- go out and help the general economy.

Lowering interest rates is fine. Rebate checks are..... ok, I guess. But what you really want to do is buy cars. Lots of cars.

The Federal government should immediately order 1 million electric cars from US manufacturers and give them away to poor people.

This solves a lot of problems at once. It helps the auto industry, currently depressed. It helps poor people get to work. It reduces gasoline consumption, which would help the US trade balance and reduce the cost of gasoline for everyone else. And it stimulates alternative energy, which we want to do anyway.

It wouldn't even be that expensive. 40 billion dollars? Chicken feed. We can just cut back on Presidential helicopters.

[Bosh]

Let's see:

1. American banks give loans to people who shouldn't be loaned large amounts of money.
2. American banks sell various financial instruments based on those mortgages to a variety of international banks and financial institutions, notably Japanese ones.
3. People who shouldn't be loaned large amounts of money have a difficult time making loan payments.
4. Investments held by Japanese banks tank.
5. Japanese government recommends bailouts.

What a surprise!

[classical_hero]

Their is no liquidity crisis, it is just that they money is not going to banks ATM. If you look at the Gold price, you can see where a lot of the money has gone. People are just putting their money in a better investment, since it i s rising very fast an the sharemarket is going down, That has been a trend in just about every sharemarket crash, the money has to go somewhere and since it is not in the market, the banks are not getting their usual supply of fnds that they would like to.

[DanS]

Bosh, you're a genius, but that's only half of it. He wants the US to intervene on the dollar such that Japan can continue to have a large trade surplus to the US.

[snoopy369]

The problem is that it's affecting non-banks. For example, my former employer (Borders) is currently seeking sale and/or investment because it's unable to borrow money. It's generally in reasonable financial shape, rebuilding but not anything close to bankrupt; but it's so hard to borrow money right now that they don't have much choice.

Perhaps the Fed should just start lending money on its own right now

[Kidlicious]

Originally posted by snoopy369
Perhaps the Fed should just start lending money on its own right now

That's actually something to think about. I wouldn't rule it out if things get too bad. The Japanese have done something like that.

[The Mad Monk]

Would you consider Borders to be an investment opportunity? I've always liked them, and their discount tables have contributed greatly to my overly large library.

[Sarxis]

I don't even know how we can compare the recession in 2001 to the one happening now. A bad presidential election and blowing up 3000 citizens is likely to cause a 'false recession' anywhere..

but the current recession is something different.

[snoopy369]

Originally posted by The Mad Monk
Would you consider Borders to be an investment opportunity? I've always liked them, and their discount tables have contributed greatly to my overly large library.

I don't have any useful insider information, unfortunately I won't be buying any stock, but that's more the fact that I don't plan on buying any stock outside of 401(K) mutual fund purchases any time soon (not enough money). Certainly their current valuation is outrageously low compared to where it would be if they recovered (it used to be high teens to low 20s, and not THAT long ago it was in the 30s), but I have no clue how likely the recovery is. They're definitely in hard-rebuilding mode, and have a hard-rebuilding CEO (former rebuilder of Saks IIRC), so it's quite possible... but who knows.

[DanS]

If the Swiss are so far into it, I wonder where the Japanese losses on this are...

It must be quite something to have the pace of deterioration increase in March, what with the torrid pace at the beginning of the year. I guess we haven't set a clearing price yet.

Here's FT's lede...

http://www.ft.com/cms/s/0/5bc18e5c-ff4c-11dc-b556-000077b07658.html?nclick_check=1

UBS set to reveal further writedowns

By Haig Simonian in Zurich and Chris Hughes in London

Published: March 31 2008 22:01 | Last updated: March 31 2008 22:01

UBS is poised to reveal further writedowns of up to $18bn and seek a capital increase of about SFr13bn ($13.1bn) just weeks after shareholders approved a similar-sized injection from outside investors.

Switzerland’s largest bank, which wrote off $18bn last year as it became the most serious European casualty of the US subprime mortgage crisis, has suffered from further falls in the value of mortgage and other credit securities during the first quarter, especially in March.