Ever since the sub-prime crisis came to the fore November- December of 2008, there has been a lot of worries about where this will eventually take the US economy. And this looks like a slow-action horror movie whose climax is coming. So, there was the shock when Bear Stearns went down, and then for some [...]
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Things have been happening in the US finance sector that have not happened before for a long time. The US Federal Government is proposing that it is the essential guarantor of most mega-finance companies; only allowing some of them such as Lehman Brothers to fail. The US Government has so far saved or intervened in [...] It has been decades now that Wall Street has been run by big investment banks. The exact names may keep changing as some of the smaller firms became bigger, and some of the bigger firms fall (and of course, names keep on changing with mergers and acquisitions), but the basic structure of large investment firms [...] This is a time that no Economic Affairs Minister (or Secretary of Commerce), and Central Bank Governor would want to see. Imagine spending public money to shore up private companies ! Balance that with a risk to sentiment if such large companies, immensely integrated in the economy, suddenly collapse. The potential that overall sentiment becomes [...] |
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