Mr. Wolf, this is no a black plague that will just soon be over
Sir Martin Wolf in his “Going, going, gone: a rising auction of scary scenarios” March 12 seems reduced to being a chronicler of the black plague. In truth, what should the world care about a couple of trillion more or less in losses when in fact it is our whole financial system that is under siege and there is nothing right now that promises us a brighter and better day.
Much more important then that to tally the losses it is to make certain that our scarce rescue forces are send to save the real economy and not the virtual parts of it; which unfortunately seems to be what our regulators have come up with pouring monetary resources on the fire while praying this will not turn out to be gasoline for the inflation.
Also start mending what got us into this mess. Fixing those minimum capital requirements for banks solely based on risk assessments for short term defaults; give the banks time to adjust their capital ratios when this need is sprung upon them by surprising down-ratings; take away the frankenstenian powers given to the credit rating agencies; make certain that those mortgages that have been turned into viable mortgages by means of a reduction in the principal or rate adjustment are not longer valued as subprime; make sure that mark to markets means what it says without self-enforcing the panic of a mark to the markets-fear-anticipation; force the managers and directors of financial institutions to sign an affidavit stating that they have an inkling of what they are doing and freeze the bonuses paid to financial executives pending final results seems like a decent place to start.
Much more important then that to tally the losses it is to make certain that our scarce rescue forces are send to save the real economy and not the virtual parts of it; which unfortunately seems to be what our regulators have come up with pouring monetary resources on the fire while praying this will not turn out to be gasoline for the inflation.
Also start mending what got us into this mess. Fixing those minimum capital requirements for banks solely based on risk assessments for short term defaults; give the banks time to adjust their capital ratios when this need is sprung upon them by surprising down-ratings; take away the frankenstenian powers given to the credit rating agencies; make certain that those mortgages that have been turned into viable mortgages by means of a reduction in the principal or rate adjustment are not longer valued as subprime; make sure that mark to markets means what it says without self-enforcing the panic of a mark to the markets-fear-anticipation; force the managers and directors of financial institutions to sign an affidavit stating that they have an inkling of what they are doing and freeze the bonuses paid to financial executives pending final results seems like a decent place to start.
Posts
