Credit crisis
Fixing finance
Apr 3rd 2008
http://www.economist.com/opinion/displaystory.cfm?story_id=10966204
From The Economist print edition
Crises are endemic to financial systems. Attempts to regulate them may
do more harm than good
AS IF collapsing prices were not enough, American mortgage firms now
have to cope with home rage. Borrowers vent their fury on the system
that is repossessing their properties by sma****ng holes in walls and
tipping paint over living-room carpets. Something similar is going on
in the house finance built. Faith in open markets has been poisoned by
a crisis that has spread from one asset to the next. First there was
disbelief and denial. Then fear. Now comes anger.
(............more)
This is totally unexpected and shocking. In retrospect it is
understandable. Can such anger be expressed in China or Asia?
Probably if the crisis is as widespread as in the US. There is more
trouble ahead (for the US and countries caught in the subprime crisis)
in which the loss of wealth is only the beginning. There will be this
social unrest that is far more insidious. You can punish a few of
those angry homeowners for property crimes. But if there are many you
cannot do so or else risk redirecting the widespread rage and fury
towards oneself (the government.) This is where the US government had
brought this upon themselves, the stripping off its own regulatory
powers in the name of free enterprise. And for some reason those who
benefitted most were a few very powerful families with Jewish names.
Associated with that is the neocon driven fiasco of America's wars of
choice in foreign lands. One can only look to the days ahead in deep
aprehension. 2008 will be a year to remember in history.
