Thursday, September 18, 2008

"Mark to Market" And The Law of Unintended Consequences - Updated!

Steve Forbes has spoken up with an insightful prescription to cure this mess.  Again, one of the chief issues is "mark to market" elimination.  He's got a very effective analogy that helps explain the impact of this deadly rule:
How to Cure This Sick System
Steve Forbes 09.11.08 Forbes Magazine dated October 06, 2008


Not even during the Great Depression did we witness what is now unfolding--a sizable number of big financial institutions going under. What enabled their taking on so much debt and so many questionable assets was, primarily, the easy-money policy of the Federal Reserve. Chairmen Alan Greenspan and Ben Bernanke created massive amounts of excess liquidity. If the dollar had been kept stable relative to gold, as it was between the end of WWII and the late 1960s, the scale of the bingeing in recent years would have been impossible.....
Also of immediate urgency is for regulators to suspend any mark-to-market rules for long-term assets. Short-term assets should not be given arbitrary values unless there are actual losses. The mark-to-market mania of regulators and accountants is utterly destructive. It is like fighting a fire with gasoline.
Think of the mark-to-market madness this way: You buy a house for $350,000 and take out a $250,000 30-year fixed-rate mortgage. Your income is more than adequate to make the monthly payments. But under mark-to-market rules the bank could call up and say that if your house had to be sold immediately, it would fetch maybe $200,000 in such a distressed sale. The bank would then tell you that you owe $250,000 on a house worth only $200,000 and to please fork over the $50,000 immediately or else lose the house.
Absurd? Obviously. But that's what, in effect, is happening today. Thus institutions with long-term assets are having to drastically reprice them downward. And so the crisis feeds on itself.
The SEC should immediately reverse its foolish decision to get rid of the so-called uptick rule in short-selling. That would provide a small road bump to the short-selling that's helping to destroy financial institutions.
At the same time the SEC should promulgate an emergency rule (which we thought was already the rule): No naked short-selling. That is, you have to own or borrow shares in a company before you can short it. The rules should make clear that short-sellers must have ample documentation proving they truly possess the shares at the time of the short sale. Otherwise, each violation will result in heavy fines. Thatwouldn't be a road bump but a wall of Everest-like proportions. Regulators should also be told to instruct banks to keep their solvent customers solvent. The last thing the economy needs right now is for the banking system to seize up.
The federal government should also consider setting up a new Resolution Trust Corp., which was devised during the savings and loan crisis nearly 20 years ago as a dumping ground for bad S&L assets. Today's bad assets could then be liquidated in an orderly way. And, finally, the financial industry should be encouraged to create new exchanges for exotic instruments. This would result in the standardization of these things, which would mean more transparency.
These steps would quickly revive financial markets. Already mortgage rates are coming down. It won't be long before American homeowners start an avalanche of refinancings, which would be an enormous boon to confidence and the economy. MORE....


Since the beginning of the housing bust and subsequent banking / financial meltdown I've been having discussions with one of my sons and daughter-in-law.  I'm just a marketing and sales guy, they're both finance people with MBA's.  My contention all along has been that the "mark to market" requirement that FASB and the SEC initiated after Enron are the main cause of the problem.  They're not in agreement with me.
When a mortgagee defaults on the loan and the house goes into foreclosure, it still has an intrinsic value way above zero.  It's still worth a hell of a lot, even if there may be a time element involved in realizing that value.
"Mark to market" however, requires that the institution holding that financial instrument that's now in default value it at zero.  Now, however, that debt has been sold, re-sold, bundled with other like-structured obligations, and then re-bundled in some very interesting and artful ways, then fractionalized so that a number of investors can share in bearing the risk. This has gone on to such an extent that the end holders can't determine if the investments that they hold have been devalued by any of the original defaults.  So.....they're required to value them at zero.  The chaos that has ensued is not hilarious - far from it.
I may not be skilled at manipulating number, but I’m fairly good on understanding concepts.  My initial perspective that “mark to market” has been the causal element in the current financial crisis seems to be validated.  It’s not the only problem, but to me it’s been the absolute catalyst for the entire mess. I now seem to have some support in the argument.  In today's Wall Street Journal, Zachary Karabell lays out a persuasive argument that the current crisis has been unintentionally designed by Congress, and then unintentionally engineered by FASB and the SEC.  MORE....
Bad Accounting Rules Helped Sink AIG
 ......Let's get a few canards out of the way: First, yes, stupidity and cupidity and complacency and hubris are involved, and yes, there is gambling in Casablanca. Second, the idea that there is this thing called "the free market" that governments tame or muck up with regulation is a fiction. Governments create the legal conditions for markets; markets shape what governments can do or are willing to do. Regulation versus free-market is a false dichotomy. Maybe in some theoretical universe, if we could start with a blank slate and construct society anew, it wouldn't be. But we exist in a web of markets and regulations, and the challenge is to respond to problems in such a way so that we decrease the odds of future crises.
And that is where AIG becomes instructive. Even good regulations can't prevent all future crises, especially ones that are the result of new technologies and changes that result from them. The capital flows, derivatives contracts and nearly frictionless interlinking of global markets today are the direct result of the information technologies of the 1990s. The implications weren't known until very recently, so it would have been nearly impossible for regulations to have prevented what is happening. But if good regulation can't prevent crises, bad regulations can cause them.
The current meltdown isn't the result of too much regulation or too little. The root cause is bad regulation.
Call it the revenge of Enron. The collapse of Enron in 2002 triggered a wave of regulations, most notably Sarbanes-Oxley. Less noticed but ultimately more consequential for today were accounting rules that forced financial service companies to change the way they report the value of their assets (or liabilities). Enron valued future contracts in such a way as to vastly inflate its reported profits. In response, accounting standards were shifted by the Financial Accounting Standards Board and validated by the SEC. The new standards force companies to value or "mark" their assets according to a different set of standards and levels.
The rules are complicated and arcane; the result isn't. Beginning last year, financial companies exposed to the mortgage market began to mark down their assets, quickly and steeply. That created a chain reaction, as losses that were reported on balance sheets led to declining stock prices and lower credit ratings, forcing these companies to put aside ever larger reserves (also dictated by banking regulations) to cover those losses.
In the case of AIG, the issues are even more arcane. In February, as its balance sheet continued to sharply decline, the company issued a statement saying that it "believes that its mark-to-market unrealized losses on the super senior credit default swap portfolio . . . are not indicative of the losses it may realize over time." Unless one is steeped in these issues, that statement is completely incomprehensible. Yet the inside baseball of accounting rules, regulation and markets adds up to the very comprehensible $85 billion of taxpayer money.
What AIG was saying then, and what others from Lehman to Bear Stearns to the world at large have been saying since, is that the losses showing up aren't "real." Yes, the layer upon layer of derivatives built on the foundation of mortgages is mind-boggling. One reason that AIG had floated beneath the radar screen of the business media (relative to Wall Street investment firms) is that its business model is so complex and opaque that it is impossible to describe simply. It was briefly in the news in 2005, after it was accused of improper accounting by the SEC and the New York attorney general. Then it faded from view, until now.
Among its many products, AIG offered insurance on derivatives built on other derivatives built on mortgages. It priced those according to computer models that no one person could have generated, not even the quantitative magicians who programmed them. And when default rates and home prices moved in ways that no model had predicted, the whole pricing structure was thrown out of whack.
The value of the underlying assets -- homes and mortgages -- declined, sometimes 10%, sometimes 20%, rarely more. That is a hit to the system, but on its own should never have led to the implosion of Wall Street. What has leveled Wall Street is that the value of the derivatives has declined to zero in some cases, at least according to what these companies are reporting.
There's something wrong with that picture: Down 20% doesn't equal down 100%. In a paralyzed environment, where few are buying and everyone is selling, a market price could well be near zero. But that is hardly the "real" price. If someone had to sell a home in Galveston, Texas, last week before Hurricane Ike, it might have sold for pennies on the dollar. Who would buy a home in the path of a hurricane? But only for those few days was that value "real."
The regulations were passed to prevent a repeat of Enron, but regulations are always a work of hindsight. Good regulatory regimes can mitigate future crises, and over the past hundred years, economic crises world-wide have become less disruptive. The panics of the late 1800s, the bank runs, the Great Depression in Europe and the United States, were all far more severe than what is unfolding today in terms of business failures and jobs, homes and savings lost.
But bad regulation is something to be feared, especially as industries become more complicated. Legislators and agencies would be wary of passing rules regulating how a semiconductor chip is programmed; they would recognize that while the outcomes those chips produce might be simple, the way they produce them is not. Yet financial service regulations sometimes act as if we still live in a time when deposits consisted of sacks of money in a vault.
A few years from now, there will be a magazine cover with someone we've never heard of who bought all of those mortgages and derivatives for next to nothing on the correct assumption that they were indeed worth quite a bit. In the interim, there will almost certainly be a wave of regulations designed to prevent the flood that has already occurred, some of which are likely to trigger another crisis down the line. Until we can have a more rational, measured public discussion about what government and regulations can and should do vis-à-vis financial markets, we are unlikely to break the cycle.
Mr. Karabell is president of River Twice Research. His "Chimerica: How the United States and China Became One," will be published next year by Simon & Schuster.

Take his money and give it to someone else?

This is an example of the type of person that some have been ranting about for years, as those who have been receiving unwarranted tax breaks – the so called "richest Americans". 
Can you imagine Biden , Obama, Pelosi, Dodd, Rangle, Schumer, or any other politician (even Bush, McCain, Giulianni, or Ron Paul) getting as much bang for the buck in terms of energizing the economy, creating jobs, and building wealth for others, by taking his money and then having the government attempting to multiply the loaves and fishes as he did?  I can’t. 
I also can’t imagine this story happening in most other countries….here's a great report from Forbes
 The Forbes 400
Layers
Emily Lambert 10.06.08
After making a fortune in printing, perennial tinkerer Glen Taylor stumbled into the egg business. Whatever turns a dollar.

Glen Taylor likes businesses with problems, and he seems to fall into them serendipitously. Nine years ago, for example, he received a letter from someone he'd sold land to: Michael Gidley, a frustrated pullet farm manager who wanted to start an egg company and needed a backer. Taylor--who owns quite a bit of real estate in rural north central Iowa, where he is a minor celebrity--had made his mark in specialty printing. But he was intrigued, especially by his quick insight that a little investment in new technology could make a big difference in an inefficient business. So he briefly met Gidley's prospective partners, a father-son combo who were second- and third-generation egg men. "Where'd you grow up, what have you been doing, where did you go to school? What are you about?" he asked, recalls the son, David Rettig. That led to another meeting, and soon Taylor put down $35 million on Rembrandt Enterprises. Today the privately run egg company does $100 million in sales. The Rettigs run the whole shebang; Gidley heads up a division. Taylor is content to own 95% of it--and tinker at the margins.
Forty-nine years of curiosity tempered by practicality have led him to challenges in corn and soybean farming, graphics, professional basketball and, most recently, med tech. Today, at age 67, Taylor is worth an estimated $3.3 billion. What drives him to knotty predicaments? "Maybe it's the uniqueness of it, the people. It's hard to tell you why," says Taylor, who is amused by managing 7 million layers at a distance. "Maybe it's the timing."
Read the rest of the story about how he's built wealth for himself and so many others, here.... 

Fantastic Pictures Of Ike's Path

The Boston Globe has some riveting picture of locations touched by Ike.




See More Here....

Now Maybe There's A Chance....

Google teams up with General Electric on grid problems






Google Inc. will work with General Electric Co. to develop electricity grid technology to better support renewable energy alternatives like wind power and hybrid-electric vehicles.
To make real progress in increasing the amount of alternative energy like solar, geothermal and wind power into the electric system, the grid problem needs to be solved, said Jeff Immelt, Chairman and CEO of GE (NYSE: GE).
“There’s going to have to be more capacity if we really want to drive renewable energy to where it could be in this country we need more transmission and distribution,” Immelt said.
Mountain View-based Google (NASDAQ: GOOG) and GE are aiming to enhance an electricity grid by providing new energy technology from GE and the information technology of Google.
Schmidt also said Google and GE will advocate for policy changes in Washington, D.C., to allow grid solutions to be more easily adopted and implemented. In a fact sheet released with the announcement, Google said it will be looking to work with other companies to advance its policy agenda.
With wind power now about cost competitive with power generated by coal-fired power plants at 6 cents or 7 cents per kilowatt, “We’re now getting to the point where you can choose wind over other terrible terrible choices,” said Eric Schmidt, CEO of Google.  MORE....

12-year-old Revolutionizes the Solar Cell

Did Congress have anything to do with this innovative approach?  Not a chance!


Give people an incentive and the possibilities are infinite.  Have Congress "invest" our taxes in attempting to develop new technologies and we'll be bankrupt and trying to heat our homes with windfall wood....

Un-leash innovation and free the uman spirit.  Get all governments out of the way, and the world would be better off.



William YuanWilliam Yuan, a seventh-grader from Portland, OR, developed a three-dimensional solar cell that absorbs UV as well as visible light. The combination of the two might greatly improve cell efficiency. William's project earned him a $25,000 scholarship and a trip to the Library of Congress to accept the award, which is usually given out for research at the graduate level.   MORE....
“Current solar cells are flat and can only absorb visible light,” he said. “I came up with an innovative solar cell that absorbs both visible and UV light. My project focused on finding the optimum solar cell to further increase the light absorption and efficiency and design a nanotube for light-electricity conversion efficiency.”

How To Find North - Find A Cow!


Cattle that were eating or resting tended to align their bodies in a north-south direction, a team of German and Czech researchers reports.  (Question still remains - which end north?)
A German-Czech team has shown that cattle and deer have an unsuspected magnetic sense that lets them line up with the north-south direction of Earth’s magnetic field. The scientists note that it’s amazing that “this ubiquitous phenomenon does not seem to have been noticed by herdsmen, ranchers, or hunters.  Story....

Russia's Newest Gambit - Missles to Iran

The Times On Line (UK) reporter in Moscow, Tony Halpin has reported that Russia has announced plan to sell additional military equipment to Iran.  Once again ratcheting up the tension with the US and the West, by moving another pawn down board.  

  1. Invasion of Georgia
  2. Recognizing South Ossetia and Abkhazia
  3. Sending Bomber to 'visit' Chavez
  4. Signing mutual defense agreements with S. Ossetia and Abkhazia
  5. Signing contracts with Iran for S-300 surface to air missiles, adding on to the 29 Tor -M1 Missiles they've already delivered
  6. Negotiating with Venezuela for missile defense systems, SU-35 jets, and other military hardware.
So far, NATO has done nothing but lose pawns; Georgia's two breakaway provinces. But this will continue until a strong and united front is formed among the NATO to 'persuade' Putin that his chess game is over.


Russia snubbed its nose at the United States today by announcing plans to sell military equipment to both Iran and Venezuela.
The head of the state arms exporter said that Russia was negotiating to sell new anti-aircraft systems to Iran despite American objections.
"Contacts between our countries are continuing and we do not see any reason to suspend them," Anatoly Isaikin, general director of Rosoboronexport, told Ria-Novosti at an arms fair in South Africa.
Reports have circulated for some time that Russia is preparing to sell its S-300 surface-to-air missile system to Iran, offering greater protection against a possible US or Israeli attack on the Islamic republic's nuclear facilities. The missiles have a range of more than 150 kilometres and can intercept jets approaching at low altitudes.

Ruslan Pukhov, director of the Centre for Analysis of Strategies and Technologies in Moscow, said that it was logical to conclude a lucrative contract with Iran "in the current situation, when the US and the West in general are stubbornly gearing toward a confrontation with Russia".
Russia has already delivered 29 Tor-M1 missile systems under a $700 million deal with Iran in 2005.
Sergei Chemezov, the head of state-owned Russian Technologies also disclosed that Venezuela's leader Hugo Chavez wanted to buy anti-aircraft systems, armoured personnel carriers, and new SU-35 fighter jets when they come into production in 2010.
US plans to site an anti-missile shield in eastern Europe to deter surprise attacks from Iran have outraged Russia, which believes the system in Poland and the Czech Republic is aimed at weakening its defences.  MORE....

"Mark to Market" and the Law of Unintended Consequences - Updated!

Steve Forbes has spoken up with an insightful prescription to cure this mess.  Again, one of the chief issues is "mark to market" elimination.  He's got a very effective analogy that helps explain the impact of this deadly rule:

How to Cure This Sick System
Steve Forbes 09.11.08 Forbes Magazine dated October 06, 2008


Not even during the Great Depression did we witness what is now unfolding--a sizable number of big financial institutions going under. What enabled their taking on so much debt and so many questionable assets was, primarily, the easy-money policy of the Federal Reserve. Chairmen Alan Greenspan and Ben Bernanke created massive amounts of excess liquidity. If the dollar had been kept stable relative to gold, as it was between the end of WWII and the late 1960s, the scale of the bingeing in recent years would have been impossible.
The first prescription for a cure is to formally strengthen the dollar and announce it publicly. A year ago August the price of gold was more than $650 per ounce. In late 2003 it had breached $400. The Fed should declare that its goal for gold is around $500 to $550. That would stabilize the buck--and stability is essential if animal spirits and risk taking are to revive.
Also of immediate urgency is for regulators to suspend any mark-to-market rules for long-term assets. Short-term assets should not be given arbitrary values unless there are actual losses. The mark-to-market mania of regulators and accountants is utterly destructive. It is like fighting a fire with gasoline.
Think of the mark-to-market madness this way: You buy a house for $350,000 and take out a $250,000 30-year fixed-rate mortgage. Your income is more than adequate to make the monthly payments. But under mark-to-market rules the bank could call up and say that if your house had to be sold immediately, it would fetch maybe $200,000 in such a distressed sale. The bank would then tell you that you owe $250,000 on a house worth only $200,000 and to please fork over the $50,000 immediately or else lose the house.
Absurd? Obviously. But that's what, in effect, is happening today. Thus institutions with long-term assets are having to drastically reprice them downward. And so the crisis feeds on itself.
The SEC should immediately reverse its foolish decision to get rid of the so-called uptick rule in short-selling. That would provide a small road bump to the short-selling that's helping to destroy financial institutions.
At the same time the SEC should promulgate an emergency rule (which we thought was already the rule): No naked short-selling. That is, you have to own or borrow shares in a company before you can short it. The rules should make clear that short-sellers must have ample documentation proving they truly possess the shares at the time of the short sale. Otherwise, each violation will result in heavy fines. Thatwouldn't be a road bump but a wall of Everest-like proportions. Regulators should also be told to instruct banks to keep their solvent customers solvent. The last thing the economy needs right now is for the banking system to seize up.
The federal government should also consider setting up a new Resolution Trust Corp., which was devised during the savings and loan crisis nearly 20 years ago as a dumping ground for bad S&L assets. Today's bad assets could then be liquidated in an orderly way. And, finally, the financial industry should be encouraged to create new exchanges for exotic instruments. This would result in the standardization of these things, which would mean more transparency.
These steps would quickly revive financial markets. Already mortgage rates are coming down. It won't be long before American homeowners start an avalanche of refinancings, which would be an enormous boon to confidence and the economy.

Since the beginning of the housing bust and subsequent banking / financial meltdown I've been having discussions with one of my sons and daughter-in-law.  I'm just a marketing and sales guy, they're both finance people with MBA's.  My contention all along has been that the "mark to market" requirement that FASB and the SEC initiated after Enron are the main cause of the problem.  They're not in agreement with me.
When a mortgagee defaults on the loan and the house goes into foreclosure, it still has an intrinsic value way above zero.  It's still worth a hell of a lot, even if there may be a time element involved in realizing that value.
"Mark to market" however, requires that the institution holding that financial instrument that's now in default value it at zero.  Now, however, that debt has been sold, re-sold, bundled with other like-structured obligations, and then re-bundled in some very interesting and artful ways, then fractionalized so that a number of investors can share in bearing the risk. This has gone on to such an extent that the end holders can't determine if the investments that they hold have been devalued by any of the original defaults.  So.....they're required to value them at zero.  The chaos that has ensued is not hilarious - far from it.
I may not be skilled at manipulating number, but I’m fairly good on understanding concepts.  My initial perspective that “mark to market” has been the causal element in the current financial crisis seems to be validated.  It’s not the only problem, but to me it’s been the absolute catalyst for the entire mess. I now seem to have some support in the argument.  In today's Wall Street Journal, Zachary Karabell lays out a persuasive argument that the current crisis has been unintentionally designed by Congress, and then unintentionally engineered by FASB and the SEC.  MORE....

Bad Accounting Rules Helped Sink AIG

 ......Let's get a few canards out of the way: First, yes, stupidity and cupidity and complacency and hubris are involved, and yes, there is gambling in Casablanca. Second, the idea that there is this thing called "the free market" that governments tame or muck up with regulation is a fiction. Governments create the legal conditions for markets; markets shape what governments can do or are willing to do. Regulation versus free-market is a false dichotomy. Maybe in some theoretical universe, if we could start with a blank slate and construct society anew, it wouldn't be. But we exist in a web of markets and regulations, and the challenge is to respond to problems in such a way so that we decrease the odds of future crises.
And that is where AIG becomes instructive. Even good regulations can't prevent all future crises, especially ones that are the result of new technologies and changes that result from them. The capital flows, derivatives contracts and nearly frictionless interlinking of global markets today are the direct result of the information technologies of the 1990s. The implications weren't known until very recently, so it would have been nearly impossible for regulations to have prevented what is happening. But if good regulation can't prevent crises, bad regulations can cause them.
The current meltdown isn't the result of too much regulation or too little. The root cause is bad regulation.
Call it the revenge of Enron. The collapse of Enron in 2002 triggered a wave of regulations, most notably Sarbanes-Oxley. Less noticed but ultimately more consequential for today were accounting rules that forced financial service companies to change the way they report the value of their assets (or liabilities). Enron valued future contracts in such a way as to vastly inflate its reported profits. In response, accounting standards were shifted by the Financial Accounting Standards Board and validated by the SEC. The new standards force companies to value or "mark" their assets according to a different set of standards and levels.
The rules are complicated and arcane; the result isn't. Beginning last year, financial companies exposed to the mortgage market began to mark down their assets, quickly and steeply. That created a chain reaction, as losses that were reported on balance sheets led to declining stock prices and lower credit ratings, forcing these companies to put aside ever larger reserves (also dictated by banking regulations) to cover those losses.
In the case of AIG, the issues are even more arcane. In February, as its balance sheet continued to sharply decline, the company issued a statement saying that it "believes that its mark-to-market unrealized losses on the super senior credit default swap portfolio . . . are not indicative of the losses it may realize over time." Unless one is steeped in these issues, that statement is completely incomprehensible. Yet the inside baseball of accounting rules, regulation and markets adds up to the very comprehensible $85 billion of taxpayer money.
What AIG was saying then, and what others from Lehman to Bear Stearns to the world at large have been saying since, is that the losses showing up aren't "real." Yes, the layer upon layer of derivatives built on the foundation of mortgages is mind-boggling. One reason that AIG had floated beneath the radar screen of the business media (relative to Wall Street investment firms) is that its business model is so complex and opaque that it is impossible to describe simply. It was briefly in the news in 2005, after it was accused of improper accounting by the SEC and the New York attorney general. Then it faded from view, until now.
Among its many products, AIG offered insurance on derivatives built on other derivatives built on mortgages. It priced those according to computer models that no one person could have generated, not even the quantitative magicians who programmed them. And when default rates and home prices moved in ways that no model had predicted, the whole pricing structure was thrown out of whack.
The value of the underlying assets -- homes and mortgages -- declined, sometimes 10%, sometimes 20%, rarely more. That is a hit to the system, but on its own should never have led to the implosion of Wall Street. What has leveled Wall Street is that the value of the derivatives has declined to zero in some cases, at least according to what these companies are reporting.
There's something wrong with that picture: Down 20% doesn't equal down 100%. In a paralyzed environment, where few are buying and everyone is selling, a market price could well be near zero. But that is hardly the "real" price. If someone had to sell a home in Galveston, Texas, last week before Hurricane Ike, it might have sold for pennies on the dollar. Who would buy a home in the path of a hurricane? But only for those few days was that value "real."
The regulations were passed to prevent a repeat of Enron, but regulations are always a work of hindsight. Good regulatory regimes can mitigate future crises, and over the past hundred years, economic crises world-wide have become less disruptive. The panics of the late 1800s, the bank runs, the Great Depression in Europe and the United States, were all far more severe than what is unfolding today in terms of business failures and jobs, homes and savings lost.
But bad regulation is something to be feared, especially as industries become more complicated. Legislators and agencies would be wary of passing rules regulating how a semiconductor chip is programmed; they would recognize that while the outcomes those chips produce might be simple, the way they produce them is not. Yet financial service regulations sometimes act as if we still live in a time when deposits consisted of sacks of money in a vault.
A few years from now, there will be a magazine cover with someone we've never heard of who bought all of those mortgages and derivatives for next to nothing on the correct assumption that they were indeed worth quite a bit. In the interim, there will almost certainly be a wave of regulations designed to prevent the flood that has already occurred, some of which are likely to trigger another crisis down the line. Until we can have a more rational, measured public discussion about what government and regulations can and should do vis-à-vis financial markets, we are unlikely to break the cycle.
Mr. Karabell is president of River Twice Research. His "Chimerica: How the United States and China Became One," will be published next year by Simon & Schuster.

Video Of The Week

Blog Subjects

Our Blogger Templates Web Design

  © Blogger template Brooklyn by Ourblogtemplates.com 2008

Back to TOP