US recession will dwarf dotcom crash
telegraph.co.uk/money/main.jhtml?view=DETAILS...Posted Jan 29, 2008, 4:54 PM UTC
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telegraph.co.uk
The reason this crunch will be so much worse, [Stephen Roach, one of the world's leading economists, now heading the Asian wing of Morgan Stanley,] said, is that the chunk of the economy which is shuddering to a halt - homebuilding and housing dependent consumption - is six times bigger than the spending on IT, which triggered the last one.
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US investment banks, meanwhile, are already having to turn to sovereign wealth funds (SWFs) from Asia and the Middle East to provide an unprecedented injection of funds to keep them afloat. Roach sees it as part of a wider question. "We are dealing with an incipient recession. Who's going to fund us? We don't have the wherewithal to fund it."
With SWFs in the spotlight, debate has raged this week over whether they ought to be more transparent, and to issue a voluntary code of conduct about their investment plans, but Roach said: "Why are we singling out sovereign wealth funds? Why shouldn't we ask the same of hedge funds, private equity or any other group of investors?
"Is it because these funds are coming from the Middle East, from China - areas that make us uncomfortable. Is this not thinly-veiled financial protectionism?"
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That is one scary article.
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...but Roach said: "Why are we singling out sovereign wealth funds? Why shouldn't we ask the same of hedge funds, private equity or any other group of investors?
I agree with Mr. Roach's series of queries here.
Yeah... why not ask for fund injections from hedge-funders, those parasitic VCs?
Btw, who allowed "REITs" to proliferate in the mid-90s? Isn't it A. Greenspan?
FYI, REITs is the predecessor of SubPrimers.
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REITs spawned the ideas of 'bundling', which gave birth to SubPrime's notorius 'securitized bundling'.
REITs started the trend of what bankers always mumbled - 'R.E special-purpose asset vehicles', which is a means to bundle properties for tax-minimization. That particular trend gave birth to the idea of securitizing mortgage-backed securities in exchange for an attractive rate financing and better fund recycling.
REITs therefore is the conceptual predecessor of 'bundled securitization' that the majority currently knew as 'subPrimes'.
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yeah, and Clinton was responsible for 9/11...
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Mr. Bubble will save us!
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It's penetrating into government-backed bonds via the FHA program. Baby-boomers have their pension programs into this sort of stuff.
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"If we had been running our economies the old-fashioned way, for example, where saving and consumption were funded by income, maybe we wouldn't be in this mess we are in now."
Truer words have yet to be spoken!
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Ironically a 'debtfreerevolution' right now would be disastrous for the economy.
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If it hits all at once, then yes you are correct. However I know for sure my mother will never let go of her credit cards, so the economy is safe for a few more decades LOL
In all seriousness, perhaps simply living within one's means would be a good start, to later transition to saving and investing, would bring about a stronger economy overall. What we currently have is a house of cards in a windstorm.
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I can imagine that yes, a recession would be worse than the dotcom slump, as the fallout of the dotcoms did not result in an actual recession. Comparisons to the recessions of '92, '82 and the ballbreaking recessions of the late-sixties and mid-seventies would be a better comparison.
Agreed, though the article hits a nerve as we just lived through the dotcom bust (primacy of recency).