The BIS recently released an excellent paper comparing the current crisis to the Nordic crisis. This is a particularly interesting case study because the Nordic credit crisis was relatively clean for a credit crisis. Perhaps most interesting is the fact that their crisis was unfolding at the same time as the Japanese crisis. The results, however, were dramatically different. I believe the thoughts from the BIS are particularly interesting as I was a proponent of the harsher Swedish Model - a bit more of an Austrian economics approach to the crisis as opposed to the Japanese model of trying to ensure capitalism without losers. In recent months the USA is looking more and more Japanese and the BIS believes it is due to our flawed response:
“Our analysis indicates that current policies have followed those (Nordic) principles in some respects, but have fallen short in other, arguably more important, ones. If anything, the authorities have intervened even earlier than in the Nordic precedent. In the current episode, the down-leg of the financial cycle had not proceeded as far and banks were further away from the point of technical insolvency. However, the underlying weakness in balance sheets has not been recognised as fully. Efforts to write down assets and induce underlying adjustment in the sector have not been as extensive. Impaired assets have been kept on balance sheets at highly uncertain, and possibly inflated, values. The conditions attached to financial support have not been as strict with respect to asset and cost reductions; if anything, they have been designed with an eye to sustaining lending. The need to reabsorb the sector’s excess capacity has taken a back seat. All this has tended to slow down resolution.
In other words, the zombie banks live on just as they have in Japan. But perhaps most important is the fact that the losers have not been allowed to lose. Government intervention has only kicked the can down the road. The BIS detailed the successful principles involved in a swift crisis response and sustainable recovery:
Principle 1: Early recognition and intervention
P1: The nature and size of the problems should be recognised early and intervention should follow quickly.
The purpose of early recognition and intervention is to avoid a hidden deterioration in conditions that could magnify the costs of the
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Yesterday, in our post-mortem on the Jackson Hole symposium, we found one particular highlight most notable: according to Princeton University economist Christopher Sims, "policymakers were told that it may take a massive program, large enough even to shock taxpayers into a different, inflationary view of the future." And, as has been customary over the past year, the place where this "shock therapy" will be tested first, will be ...
When one looks back over the past 10-years and compares the performance of Banks to the broad markets, banks look broken. We shared with members last week that since the highs in 2007, banks have under performed the S&P 500 by nearly 77%. Is this under performance about to end?
With the release of today's report on July Personal Incomes and Outlays we can now take a closer look at "Real" Disposable Personal Income Per Capita.
At two decimal places, the nominal 0.36% month-over-month increase in disposable income was unchanged when we adjust for inflation. The year-over-year metrics are 2.78% nominal and 1.97% real.
The first chart shows both the nominal per capita disposable income and the real (inflation-adjusted) equivalent since 2000. This indicator was significantly disrupted by the bizarre but predictable oscillation caused by 2012 year-end tax strategies in expectation of tax hikes in 2013.
The BEA uses the average dollar value in 2009 for inflation adjustment. But the 2009 peg is arbitrar...
We believe the underlying value of Bob Evans Farms, Inc. (“Bob Evans” or the “Company”) (NASDAQ: BOBE) is substantially higher than its current stock price and we believe that the value of the wholly-owned Bob Evans Farms Foods (“BEF Foods”) business may exceed the enterprise value of the entire Company. We continue to believe the Company should pursue a separation of its Bob Evans Restaurants (“Restaurants”) and BEF Foods business segments
Bob Evans Restaurants operates 527 family-dining restaurants in 18 states, primarily in the...
There is an extremely important election coming up, and I am not talking about the US presidential election. The upcoming referendum in either October or November in Italy may have as much or even more macroeconomic impact on the world as the US election, but hardly anyone outside of Italy is paying much attention to it – yet.
I have been saying for some time in interviews around the country that I think the referendum in Italy has even more potential impact than the Brexit vote did in the United Kingdom. And just like the Brexit vote, it is rife with emotion and political turmoil, making the outcome too close to call.
U.K. Prime Minister Theresa May asked her cabinet ministers to come up with a blueprint for how their departments may be able to benefit from Britain’s exit from the European Union ahead of the Group of...
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Epizyme was founded in 2007, and trying to create drugs to treat patient's cancer by focusing on genetically-linked differences between normal and cancer cells. Cancer areas of focus include leukemia, Non-Hodgkin's lymphoma and breast cancer. One of the Epizme cofounders, H. Robert Horvitz, won the Nobel Prize in Medicine in 2002 for "discoveries concerning genetic regulation of organ development and programmed cell death."
Before discussing the drug targets of Epizyme, understanding epigenetics is crucial to comprehend the company's goals.
Genetic components are the DNA sequences that are 'inherited.' Some of these genes are stronger than others in their expression (e.g., eye color). Yet, some genes turn on or off due to external factors (environmental), and it is und...
This is a non-trading topic, but I wanted to post it during trading hours so as many eyes can see it as possible. Feel free to contact me directly at firstname.lastname@example.org with any questions.
Last fall there was some discussion on the PSW board regarding setting up a YouCaring donation page for a PSW member, Shadowfax. Since then, we have been looking into ways to help get him additional medical services and to pay down his medical debts. After following those leads, we are ready to move ahead with the YouCaring site. (Link is posted below.) Any help you can give will be greatly appreciated; not only to help aid in his medical bill debt, but to also show what a great community this group is.
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