Economic History Repeats

Japanese Financial Services Agency leader warns U.S. government to injest public money to fix woe in credit market. (MSN Article)

The common aspect of the issue is prevailing assumption that value of real estate asset continue to grow and banks were too lenient in mortgage granting. As a result, entire economy sank. It took Japan almost 15 years to fix this problem, as they left the problem untouched for 5 - 6 years. I still remember how weird it was to see homeless people wearing Ralph Lauren shirt in Shinjuku district of Tokyo Metropolitan corridor to subway. I earnestly hope it would not happen in US.

Among all presidential candidates, only Hillary R. Clinton is aware of this critical situation. US really needs to be prompt to spend public money to buy up bad debts. Bear Sterns going out of business is one thing. Citigroup paying 10% interest rate to Saudi Arabian Prince to maintain liquidity is another key indication of current critical situation. These guys are our friends and obviously too big to go out of business.

As a person who witnessed long term recession and studied economics, I would like to recommend American friends to look at this personally and be united to fix. This is apparently not an issue merely for banks and folks who filed bankruptcy. Much more elements for economic slow down will emerge one after another if not corrected properly.