World Markets Nosedive, Emergency Meeting Called By Thai Finance Minister

[Bruce1]

I'm sorry to say this meltdown is America isn't surprising at all, but results from decades of spending more than was earned and borrowing the rest. Clinton balanced the budget but the Republicans under Bush have bent the national credit card so ridiculously that the USA is now dependent on foreign savings to keep the country afloat. Clearly, the Bush team has failed to supervise lending and has been asleep at the wheel. Bush and Co. are simply incompetent.

Isn't it fascinating that Republican Congressmen have rejected a plan by a Republican President to have taxpayers clean up a mess created under a Republican administration. Even the Republicans reject Bush.

Sadly, even the Republicans appear to still reject reality. The $700 billion package should have been passed, because the alternative will cost a LOT more.

BTW the Aussie $ has fallen to real levels and its value is real, unlike the US$, whose value is impossible to predict in the future. I predict a mass exodus out of the US$ into the Euro and other sound currencies.

Also, I think America is stuffed. They remind me of the Romans, whose arrogance and stupidity eventually undermined their own power. Rome was sacked by the Celts and the legions had to abandon Britain and retreat to Italy.

Whoever is the next US President will have absolutely no room to manoueuvre. Promises made during the campaign are worthless. The next president will be basically powerless. The terrorists will gain power in Afghanistan and may overrun the Iraqi Government. America will have no choice but to bring the soldiers home. Her allies should get out now.

America has been hollowed out from within and will now turn inwards for at least a decade. That is Bush's legacy.

[chiang mai]

Why if all countries are affected is it that the pound keeps falling against the Baht?

The Pound/Baht exchange rate is influenced by the USD/Pound exchange rate since there is no real trade per se in GBP/THB. Over recent days GBP has dropped about 4 cents against USD hence GBP has dropped against THB.

In recent months I've seen times when the pound climbs against the dollar and the pound drops against the baht at the same time, leaving me scratching my head

Unusual unless BOT is selling GBP for some reason at that time - alternatively, perhaps look at the trend during intraday trade rather than the end of day rate.

[scyriacus]

Anybody wanna bet a drink at the Soi Cowboy bar of your choice that OPEC starts mumbling about pricing oil in Euros within the next 60 days?

i bet 2 drinks against you. the arabs dare to angry their friends, protectors, big brothers. selling oil for anything else but $ is a sacrilege and punishable by death (see saddam who did exactly that and broke his neck). if $ would not be needed by everyone for oil, the greenback would loose much more and america could not tax the rest of the world for their huge deficits anymore. the arabs don't care much about the value of the cheaply printed green papers. if $ goes down, oil prices go up, that simple! does anyone have a clue, where this gigantic surplus is dug in?

[Marvo]

It has been reported that there had been an "age of irresponsibility", allowing people to over borrow and rack up excessive debts.

At least there are no such reckless tendencies among the populous for borrowing money here in LOS.

Lend us a tenner anyone??

[scyriacus]

...America has been hollowed out from within and will now turn inwards for at least a decade. That is Bush's legacy.

if that is really true, i will praise bush as the best president ever. this world has enough of the american dream. i fear, that bush may take his time until january (still 4 month) and bomb some 'rogue states' in the 'axis of evil'. the world would forget the so-called financial crisis immediately. let's hope that someone can prevent that.

[scyriacus]

Why if all countries are affected is it that the pound keeps falling against the Baht?

The Pound/Baht exchange rate is influenced by the USD/Pound exchange rate since there is no real trade per se in GBP/THB. Over recent days GBP has dropped about 4 cents against USD hence GBP has dropped against THB.

In recent months I've seen times when the pound climbs against the dollar and the pound drops against the baht at the same time, leaving me scratching my head

Edit add: I'm always scratching my head. Like seeing the pound with the looming crisis rise to $1.84. Then with the possibility of a bailout the pound promptly drops to $1.80 and then the bill fails to be passed (i.e. - bigger crisis) and the rate doesn't move.

ever heard the name 'george soros' or the word 'speculation'? http://en.wikipedia.org/wiki/George_Soros

[toptuan]

I have been living this Bush nightmare for 9 years now,

wondering when the other 3 shoes would drop.

I no longer wonder. Just hope he gets jail time as a legacy.

Only Prime Ministers go to jail.

Presidents resign, or get impeached, and then get pardoned.

Review your history.

[larvidchr]

...America has been hollowed out from within and will now turn inwards for at least a decade. That is Bush's legacy.

if that is really true, i will praise bush as the best president ever. this world has enough of the american dream. i fear, that bush may take his time until january (still 4 month) and bomb some 'rogue states' in the 'axis of evil'. the world would forget the so-called financial crisis immediately. let's hope that someone can prevent that.

It would seem that not all economical analysts are in agreement with the Bush bashers-

How the Democrats Created the Financial Crisis: Kevin Hassett

Commentary by Kevin Hassett

Sept. 22 (Bloomberg) -- The financial crisis of the past year has provided a number of surprising twists and turns, and from Bear Stearns Cos. to American International Group Inc., ambiguity has been a big part of the story.

Why did Bear Stearns fail, and how does that relate to AIG? It all seems so complex.

But really, it isn't. Enough cards on this table have been turned over that the story is now clear. The economic history books will describe this episode in simple and understandable terms: Fannie Mae and Freddie Mac exploded, and many bystanders were injured in the blast, some fatally.

Fannie and Freddie did this by becoming a key enabler of the mortgage crisis. They fueled Wall Street's efforts to securitize subprime loans by becoming the primary customer of all AAA-rated subprime-mortgage pools. In addition, they held an enormous portfolio of mortgages themselves.

In the times that Fannie and Freddie couldn't make the market, they became the market. Over the years, it added up to an enormous obligation. As of last June, Fannie alone owned or guaranteed more than $388 billion in high-risk mortgage investments. Their large presence created an environment within which even mortgage-backed securities assembled by others could find a ready home.

The problem was that the trillions of dollars in play were only low-risk investments if real estate prices continued to rise. Once they began to fall, the entire house of cards came down with them.

Turning Point

Take away Fannie and Freddie, or regulate them more wisely, and it's hard to imagine how these highly liquid markets would ever have emerged. This whole mess would never have happened.

It is easy to identify the historical turning point that marked the beginning of the end.

Back in 2005, Fannie and Freddie were, after years of dominating Washington, on the ropes. They were enmeshed in accounting scandals that led to turnover at the top. At one telling moment in late 2004, captured in an article by my American Enterprise Institute colleague Peter Wallison, the Securities and Exchange Comiission's chief accountant told disgraced Fannie Mae chief Franklin Raines that Fannie's position on the relevant accounting issue was not even ``on the page'' of allowable interpretations.

Then legislative momentum emerged for an attempt to create a ``world-class regulator'' that would oversee the pair more like banks, imposing strict requirements on their ability to take excessive risks. Politicians who previously had associated themselves proudly with the two accounting miscreants were less eager to be associated with them. The time was ripe.

Greenspan's Warning

The clear gravity of the situation pushed the legislation forward. Some might say the current mess couldn't be foreseen, yet in 2005 Alan Greenspan told Congress how urgent it was for it to act in the clearest possible terms: If Fannie and Freddie ``continue to grow, continue to have the low capital that they have, continue to engage in the dynamic hedging of their portfolios, which they need to do for interest rate risk aversion, they potentially create ever-growing potential systemic risk down the road,'' he said. ``We are placing the total financial system of the future at a substantial risk.''

What happened next was extraordinary. For the first time in history, a serious Fannie and Freddie reform bill was passed by the Senate Banking Committee. The bill gave a regulator power to crack down, and would have required the companies to eliminate their investments in risky assets.

Different World

If that bill had become law, then the world today would be different. In 2005, 2006 and 2007, a blizzard of terrible mortgage paper fluttered out of the Fannie and Freddie clouds, burying many of our oldest and most venerable institutions. Without their checkbooks keeping the market liquid and buying up excess supply, the market would likely have not existed.

But the bill didn't become law, for a simple reason: Democrats opposed it on a party-line vote in the committee, signaling that this would be a partisan issue. Republicans, tied in knots by the tight Democratic opposition, couldn't even get the Senate to vote on the matter.

That such a reckless political stand could have been taken by the Democrats was obscene even then. Wallison wrote at the time: ``It is a classic case of socializing the risk while privatizing the profit. The Democrats and the few Republicans who oppose portfolio limitations could not possibly do so if their constituents understood what they were doing.''

Mounds of Materials

Now that the collapse has occurred, the roadblock built by Senate Democrats in 2005 is unforgivable. Many who opposed the bill doubtlessly did so for honorable reasons. Fannie and Freddie provided mounds of materials defending their practices. Perhaps some found their propaganda convincing.

But we now know that many of the senators who protected Fannie and Freddie, including Barack Obama, Hillary Clinton and Christopher Dodd, have received mind-boggling levels of financial support from them over the years.

Throughout his political career, Obama has gotten more than $125,000 in campaign contributions from employees and political action committees of Fannie Mae and Freddie Mac, second only to Dodd, the Senate Banking Committee chairman, who received more than $165,000.

Clinton, the 12th-ranked recipient of Fannie and Freddie PAC and employee contributions, has received more than $75,000 from the two enterprises and their employees. The private profit found its way back to the senators who killed the fix.

There has been a lot of talk about who is to blame for this crisis. A look back at the story of 2005 makes the answer pretty clear.

Oh, and there is one little footnote to the story that's worth keeping in mind while Democrats point fingers between now and Nov. 4: Senator John McCain was one of the three cosponsors of S.190, the bill that would have averted this mess.

(Kevin Hassett, director of economic-policy studies at the American Enterprise Institute, is a Bloomberg News columnist. He is an adviser to Republican Senator John McCain of Arizona in the 2008 presidential election. The opinions expressed are his own.)

To contact the writer of this column: Kevin Hassett at [email protected]

Last Updated: September 22, 2008 00:04 EDT

[toptuan]

...America has been hollowed out from within and will now turn inwards for at least a decade. That is Bush's legacy.

if that is really true, i will praise bush as the best president ever. this world has enough of the american dream. i fear, that bush may take his time until january (still 4 month) and bomb some 'rogue states' in the 'axis of evil'. the world would forget the so-called financial crisis immediately. let's hope that someone can prevent that.

Sure, I give him the go-ahead to dust Iran and North Korea, for starters!

[skipper]

THat is a way too simplistic view on the situation, even if there is some truth on what you write.

THere are many reasons for the strength of the US economy, and consumption is only one aspect. US workers are the most productive in the world, for example, and their agriculture is among the world's most productive.

What a bullshit

If there would be a total collapse of the dollar, you would see more than a "short term" struggling in Asia, where entire economies are propped up by sales to the US market. And if the dollar collapsed, you would see a huge rise in US exports, which would, in turn, bring up the value of the dollar. THe one fly in this ointment would be the price of oil. If, and this is a big if, most of the energy costs can be shifted to other sources, any drastic drop in the value of the dollar will result in an eventual resurgence of the US market.

Moore bullshit

How this will affect THailand depends on how the baht moves against all other currencies. THere is nothing to indicate that the euro will be getting stronger--the signs point to a weaker euro. So if the dollar and the euro get weaker, that will have huge impacts on Thai exports. However, there is a silver lining. The baht does not look particularly strong, and if it can weaken against the yuan, then Thailand can still remain competitive even if the baht strengthens against the dollar and euro.

Open your eyes and look around, to the rest of the world.

[johnandtai]

"And, no, the DJ didn't have its largest drop in points EVER."

CORRECTION :

It was the LARGEST POINT DROP in history.......it was not the largest PERCENTAGE DROP.

[elektrified]

Who cares. I moved here to avoid all that nonsense.

You should care. It will affect you too!

[Gonsalviz]

Who cares. I moved here to avoid all that nonsense.

Well Said.

[viotrax]

No need to worry anymore about anything once these guys have met up an sorted things out. I,m supprised the Thai finnance minister wasn't invited to the recent talks over in the US.

[george]

Thailand update:

Thai Cabinet acts to boost stock market investment incentives

BANGKOK: -- In an attempt to calm jittery investors after the US House of Representatives rejected a US$700 billion Wall Street bailout, the Thai cabinet on Tuesday approved several measures to encourage investment in the Stock Exchange of Thailand (SET).

Deputy Prime Minister Olarn Chaipravat told the weekly cabinet meeting that short-term measures would be issued to address the impact on the Thai financial system from the US financial crisis.

On the capital market, the SET, which plunged 33.11 points to 568.18 on opening Tuesday following a huge loss on Wall Street after US lawmakers rejected the US administration's emergency bailout plan, will urge investors not to panic because the Thai bourse still has strong fundamentals.

Thai share prices rebounded steeply before closing 0.79 percent lower on Tuesday as investors cautiously awaited further news of the US plan to curb its financial crisis, dealers said.

The SET composite index lost 4.75 points to close at 569.54 points, while the blue-chip SET-50 index slid 3.34 points to 417.23.

The government and SET-backed mutual funds such as energy and government pensions will lead in buying strong fundamentals and lower-priced stocks to prevent their prices from retreating too much.

The finance ministry will consider expanding as well as exempting taxes for investments in the retirement mutual fund and the long-term equity fund during the last quarter of 2008 with the objective to encourage investors to venture in them as well as in the stock market.

Regarding the possible problem of capital outflows in terms of foreign currencies after stock sales by foreign investors, there should be no problem because Thailand has more than US$100 billion in foreign reserves.

If a crisis does occur, the finance ministry still can borrow money from neighbouring countries on a government-to-government basis, while the Bank of Thailand (BoT) will monitor to see that Thai financial institutions have sufficient liquidity.

The finance ministry will ensure that government-run financial institutions to extend credits to general borrowers and small- and medium-sized enterprises.

In the long-term, Thailand will cooperate with its fellow members in the Association of Southeast Asian Nations (ASEAN) to borrow money on long-term basis.

Reiterating that Thailand has no liquidity problem, BoT governor Tarisa Watanagase said lending by financial institutions in August grew 13 per cent while non-performing loans stood at only 3 per cent.

Local commercial banks have borrowed only 1.3 per cent of their total borrowings from overseas which, according to Mrs. Tarisa, is not much.

Regarding financial woes being faced by Belgium's Fortis, she said the group had extended only Bt167 million in credits to Thai financial institutions, while its business commitments totaled Bt2.5 billion which is still low.

Meanwhile, Atchana Waiquamdee, deputy BoT governor, said the central bank would inject cash into its financial market to help financial institutions in case it is hit badly by the global credit crisis.

-- TNA 2008-09-30

[george]

Thai shares recover after morning plunge

BANGKOK: -- Thai shares recovered some of their value at the end of trading Tuesday, with the bourse down only 0.78 per cent, after plunging nearly 6 per cent on news that US Congress had rejected a 700-billion-dollar bail-out of Wall Street banks.

The Stock Exchange of Thailand (SET) index ended at 596.54, down 4.75 points or 0.78 per cent.

"Investor confidence was restored somewhat when we saw the European market wasn't hit as bad as expected," said Mongkol Puangphaetha, a broker at Adkinson Securities.

"But I'm still more worried about what's going to happen to the European financial system, which has only started to show distress signals," he added

Thai Prime Minister Somchai Wongsawat held an emergency meeting with Finance Ministry and central bank officials Tuesday morning to discuss strategies for coping with the global financial meltdown but no drastic measures were announced.

Deputy Prime Minister in charge of financial matters Olarn Chaipravat, who attended the meeting, said there was still no need for special funds to prop up the stock market. He said the government would soon announce short-term measures to shore up liquidity in the domestic financial system.

Like most Asian countries, Thailand's banking system is considered to be quite strong, and the economy is likely to grow 5 per cent this year.

The financial crisis in the US, however, is expected to have an adverse impact on Thai exports, which are still the engine of growth for the economy.

-- dpa 2009-09-30

[Gravelrash]

As expected

but made worse because of Bush's incompetence leading up to it.

He values people LOYAL to him in ALL jobs around him,

more than he values COMPETENT people in positions around him.

He's really screwed the pooch this time. World wide cluster <deleted>.

And this from a registered republican,

unsuccessfully voting for common sense in the GOP during primaries.

I have been living this Bush nightmare for 9 years now,

wondering when the other 3 shoes would drop.

I no longer wonder. Just hope he gets jail time as a legacy.

I am no Bushie ... but what about the leftie Muslim aspirant ?

How refreshing to see an insightful political analysis instead of the usual emotional unthinking twaddle, thank you, doctor is it? PhD I assume? How uncomplicated it must be to have a mind unburdened by philosophical introspection.

[ETC]

Read Pearlstein's column in today's Washington Post. This was about preventing a depression. And all the horrible things a depression means which apparently not enough people have a grasp of. Bernacke, the fed chairman, is a leading scholar of the depression and he wanted the bailout. And the fringe groups of America's left and right which because of the current leadership vacuum in the US constitute a majority of the US congress couldn't get their act together to go along. This is not good. The blame game is ridiculous at this stage: the house is on fire!

BTW, as an American, I apologize for my government. They have failed the entire world.

Jingthing...Seems like a bit of a contradiction to me..

Subscribing to this line of thought leads me , to think, that if the U.S. is to be blamed for all the world's ills, maybe the U.S. should stop every dollar of Foreign aid, repeal Nafta and Gatt, so as not to contaminate the rest of the world. Greed is not just exclusive to the U.S.

Bye the way...The original Bail out measure was not a panacea. Unfortunately there are those that think something is better then nothing, but I strongly disagree.

[Wonderboy]

What a bullshit

Moore bullshit

Open your eyes and look around, to the rest of the world.

Your debating skills are really impressive. The way you reason and express your views are worthy of a statesman... NOT

I am not American, but I do think the original poster had some valid points. I worked some months at the American branch of our company. Compared to Europe my impression is that Americans work both harder and not at least more. The pace seemed faster and the pressure from managment to deliver were higher. In Europe we've got several weeks of vacation on top of many public holidays, shorter workdays, siestas, manana, unions, strikes and what not. I might be wrong on this, but I think most people in US get only 10 days of holiday! At times the frustration of the Americans were really evitable as it made it hard for them to cooperate when we where aways that much. Productivity wise I am quite convinced the Americans have an edge over Europe. No doubt the Americans overspend like crazy, way to much, but almost all European countries have big deficits as well. People tend to forget that...

To all the gloaters out there, enjoy the misery of the US while you still can as it will not last long. We are all sitting in the same leaking boat. Right now Europe sits on the part that it is still above water, but if it goes down, we go down together.

Wonderboy

[TBWG]

Big Mac Crisis ... LOL!

When we had this kind of Crisis, we called it Tom Yum Kung Crisis. In Italy, should be Pasta Crisis.

TBWG

[elektrified]

oh dear...so as a farang in thailand...what's the best thing to do with your money in a time like this?? save? spend or invest? and if invest...in what????

cash and gold come to mind.

[ETC]

What a bullshit

Moore bullshit

Open your eyes and look around, to the rest of the world.

Your debating skills are really impressive. The way you reason and express your views are worthy of a statesman... NOT

I am not American, but I do think the original poster had some valid points. I worked some months at the American branch of our company. Compared to Europe my impression is that Americans work both harder and not at least more. The pace seemed faster and the pressure from managment to deliver were higher. In Europe we've got several weeks of vacation on top of many public holidays, shorter workdays, siestas, manana, unions, strikes and what not. I might be wrong on this, but I think most people in US get only 10 days of holiday! At times the frustration of the Americans were really evitable as it made it hard for them to cooperate when we where aways that much. Productivity wise I am quite convinced the Americans have an edge over Europe. No doubt the Americans overspend like crazy, way to much, but almost all European countries have big deficits as well. People tend to forget that...

To all the gloaters out there, enjoy the misery of the US while you still can as it will not last long. We are all sitting in the same leaking boat. Right now Europe sits on the part that it is still above water, but if it goes down, we go down together.

Wonderboy

Well stated Wonderboy!

[teatree]

bring on the Amero...

Yes. The Amero is coming, and so is the North American Union.

[wrecker]

One of my staff commented that if anything happens in the States, it'll be 10 years before it is felt in Thailand........oh dear! and this is Thai management in a company that EXPORTS to the States and relies on them for customers over here.

Maybe time for a new human resource manager?

[nouvo135]

Bring Back the "Clintons"

thats all i can say

[wrecker]

There is nothing wrong with a shake-out in the banking system. The hedge funs will be next and will be decimated. It takes 6 months for investors to withdraw their money from hedge funds. What is much more shocking is that there is not one foreign bank suing the socks off of the American so called advisor companies who repackaged the bad debts, neither have I see any European fund manager who was sacked because he or she signed off for securities which they did not understood.

For the Thai banks: Well Siam Commercial is incredible weak, they only still exist as an independent entity because the Crown Property bureau is a major shareholder the nationalized banks still have a tier 1 capital which are nowhere near international standards. It seems that the person who things that Thailand will be affected 12 year after the US must buy a ticket to Germany. Over there and in france there were also comments that their banks would not be affected. In a matter of fact, if you look at the balance sheets of for instance the Deutsche bank, which has a balance total of 4/5 of the German economy with 2000 billion dollar or the UK bank Barclays with 1640 Billion outstanding ( more than the entire Britisch economy) it means that these banks are all significantly bigger than American banks but subsequently too big to rescue. Combine this with the fact that American banks loan 20 times their own capital and European banks 35 times, it will be a real bloodbath soon. And to think that Thailand will be unaffected both in banking and export is utmost stupidity.

[drayon]

bring on the Amero...

I hope this comment does not reflect your personal wish to see this implemented.

I rather see this crisis as a sinister pretext motive into justifying the existence of the setting up the Amero. This is the Rockerfeller's plan, who's currently using his puppy dog G W Bush to get the inside work in place :-(

[bonna7]

What a bullshit

Moore bullshit

Open your eyes and look around, to the rest of the world.

Your debating skills are really impressive. The way you reason and express your views are worthy of a statesman... NOT

I am not American, but I do think the original poster had some valid points. I worked some months at the American branch of our company. Compared to Europe my impression is that Americans work both harder and not at least more. The pace seemed faster and the pressure from managment to deliver were higher. In Europe we've got several weeks of vacation on top of many public holidays, shorter workdays, siestas, manana, unions, strikes and what not. I might be wrong on this, but I think most people in US get only 10 days of holiday! At times the frustration of the Americans were really evitable as it made it hard for them to cooperate when we where aways that much. Productivity wise I am quite convinced the Americans have an edge over Europe. No doubt the Americans overspend like crazy, way to much, but almost all European countries have big deficits as well. People tend to forget that...

To all the gloaters out there, enjoy the misery of the US while you still can as it will not last long. We are all sitting in the same leaking boat. Right now Europe sits on the part that it is still above water, but if it goes down, we go down together.

Wonderboy

Wonderboy: The U.S is NOT the most productive country, that is simply not true. Just check out the latest report from the ILO to get it confirmed.

Actually, workers in France (which you mention in your post), Belgium and Norway are more productive than wirkers in the U.S.

What you are right about, is that the total number of hours worked are MUCH higher in the U.S, hence a higher output total. But, still, this does not make them more productive, actually the opposite, they spend hours and hours faffing about at work being, if that even is a word, UN-productive.

And there is a reason for having holidays, btw, to improve both quality of life and productivity, when at work.

Hopr this helps

[Jingthing]

Jingthing...Seems like a bit of a contradiction to me..

Subscribing to this line of thought leads me , to think, that if the U.S. is to be blamed for all the world's ills, maybe the U.S. should stop every dollar of Foreign aid, repeal Nafta and Gatt, so as not to contaminate the rest of the world. Greed is not just exclusive to the U.S.

Bye the way...The original Bail out measure was not a panacea. Unfortunately there are those that think something is better then nothing, but I strongly disagree.

I am no fan of Bush, but I will take the opinion of the fed chairman, the president (who was only responding to the treasury secretary and the fed chairman, he doesn't think for himself), the treasury secretary, all of the leaders of both parties in the house and the senate, and pretty much all responsible non-ideological financial experts that this measure was needed. Who said it was a panacea? It is an emergency measure. What I apologize for is how the US political system seems incapable of taking action even in an emergency and this inaction is hurting not only the US, but the entire world. The US government is simply not working, I personally don't blame any one party, there appears to be some kind of political sickness about. I think this is now leading to alot of suffering, yes, many people will die because of this, sorry for being a drama queen, guess I just take after John McCain.

Back to Thailand, when a Thai bank fails, are we going to lose the money we have in our Thai bank accounts?

Edited September 30, 2008 by Jingthing

[ETC]

Bring Back the "Clintons"

thats all i can say

I just couldn't pass up responding to your post. "dkstoney" posted this and I think it fits here, and will re-post it in part.

Viewpoints: Where now for capitalism?

Noam Chomsky

BBC News, September 19, 2008

"Markets have inherent and well-known inefficiencies. One factor is failure to calculate the costs to those who do not participate in transactions. These "externalities" can be huge. That is particularly true for financial institutions."

Their task is to take risks, calculating potential costs for themselves. But they do not take into account the consequences of their losses for the economy as a whole.

Hence the financial market "underprices risk" and is "systematically inefficient," as John Eatwell and Lance Taylor wrote a decade ago, warning of the extreme dangers of financial liberalization and reviewing the substantial costs already incurred - and also proposing solutions, which have been ignored.

The threat became more severe when the Clinton administration repealed the Glass-Steagall act of 1933, thus freeing financial institutions "to innovate in the new economy," in Clinton's words -- and also "to self-destruct, taking down with them the general economy and international confidence in the US banking system," financial analyst Nomi Prins adds."

The Clinton's hands are not clean in all this. The run away train left the station prior to GWB. However...GWD must shoulder blame for not bringing the train under control.