Banking Crises Around The World
Oct 3rd, 2008 | By John Mauldin | Category: Politics & EconomicsA Better Bailout
So, with the modified Paulson plan dead for now, what might a better bailout scheme look like in light of the Laevan/Valencia historical database?
First, it must be adopted quickly. Perhaps operating through the FDIC would be a way to accomplish that, though the FDIC will almost certainly need to have its coffers copiously refilled.
Second, forbearance would be a bad idea; it does no one any good not to face reality.
Third, purchasing bad assets and turning them over to an asset management corporation is not a promising strategy.
Fourth, recapitalizing the banks should be the heart of any policy; as the authors say, it should be selective, meaning supporting those institutions with hope of revival, and letting the terminal go down.
And fifth, targeted relief for distressed debtors, supported with public funds, has also shown success in earlier banking crises, and should be part of any rescue scheme in the U.S. as well.
Crises like this are manageable. They’re expensive and painful to resolve, but even more expensive and painful when left to fester.
Bailout Stats And Graphs
Editors Note: John Mauldin from Investors Insight presents Philippa Dunne & Doug Henwood of The Liscio Report for today’s article.
Source: Banking Crises Around The World
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As a recognized expert and leader on investment issues, Millennium Wave Investments president John Mauldin is primarily involved in private money management, financial services, and investments. John is a prolific author, writer and editor of the free popular Thoughts from the Frontline e-letter which goes to well over 1,000,000 readers weekly, and is posted on numerous independent websites. John is a Fort Worth, Texas businessman, and the father of seven children, ranging from ages 11 through 28, five of whom are adopted.