We need more Lehmans' The lessons to be learnt
http://www.ft.com/cms/s/0/15030bea-9...44feabdc0.html
Viewpoint: Lessons to be learnt
Published: September 9 2009 20:48 | Last updated: September 9 2009 20:48
Jim Rogers Chairman of Rogers Holding
Jim RogersWe need some more Lehmans so we can get out of this. Over the past 20 years Messrs Greenspan and Bernanke introduced crony capitalism to the West which is leading to a lost decade[s]. Market fundamentals are that failures should collapse and be replaced by creative new forces rather than being propped up as zombies. Financial institutions have been failing for centuries and the world has survived. Had the central bank allowed the failure of Long Term Capital Management to run its course, Lehman, Bear Stearns, et al would still be here. Everyone would have lost so much capital and fired so many incompetents that the madness of serial bubbles (dotcoms, housing, consumption etc) would never have occurred. Consider the alternative had they propped up the bankrupt Lehman. There would be even more of the same insanity in our central banks and governments than we have now. The idea that a problem of too much debt and too much consumption can be solved by more gigantic debt and consumption is ludicrous.
Would that governments stop interfering with fundamental principles and let the market clean out mistakes! Marx is singing in his grave there in London as the US government now controls the auto, mortgage, insurance, banking, et al industries and he has not fired a shot. Letting Lehman fail was perhaps the only thing governments have done right during this whole drama.
Meredith Whitney Head of Meredith Whitney Advisory Group
I was most nervous a year ago about the real risk to retail deposits. People weren’t paying attention to the scariest part of the system – the collapse of Wachovia and Washington Mutual, which happened without damaging retail deposits on a systemic basis. One of the more concerning things now is that the government is supporting such a large part of asset prices. If they take their foot off the pedal with an exit and asset prices fall, that will be a real test and could hit banks again.
We are clearly not out of the woods yet. We are more stable than a year ago and, importantly, the underlying retail deposits are surely safer. But, across the US, the top five banks still have the top market share in all the major states. Their asset levels are artificially propped up. They have written up their assets correspondingly. I’m worried about the effects when the central banks stop buying.
Rodgin Cohen Chairman of law firm Sullivan & Cromwell
Rodgin Cohen[The markets] were extraordinarily chaotic, extraordinarily fragile and, certainly in my lifetime, the closest they have ever been to collapse ... There were those that were more comfortable that we would somehow get through it ...
The optimism came from ... a lack of understanding about how much you didn’t know. If there is a single factor which is the principle source of what has happened, it is the absence of knowledge of how much risk was in the system and where it was. The one statement I remember making to the government in arguing for Lehman to be saved was that you were trying to deal with a raging fire. Could you know how deep and how wide you had to make the fire break to make sure the flames could not get over it? My view was, nobody could be sure since we were in absolutely unique circumstances. We had never seen such a fire.
10-09-09, 08:58
Il panico derivante dalla consapevolezza sarebbe devastante....
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