ronpaulforprez2008
10-30-2008, 07:03 PM
Crisis myths damn the bailout (http://www.russiatoday.com/Crisis/news/32611)
Russia Today
Oct 29, 2008
Researchers at the one of the 12 Federal Reserve banks, Minneapolis, have challenged U.S. authorities to publish the data which justifies the multi-billion-dollar bank bailout.
In Facts and Myths about the Financial Crisis of 2008 (http://www.minneapolisfed.org/research/WP/WP666.pdf) (Working Paper 666) they say the commercial banking sector is not as vulnerable as U.S. authorities would have us believe.
Put simply, while investment banking has collapsed, U.S. retail banks are ready and willing to lend. They also argue that the banking sector as a whole is less important to the economy than is generally assumed. Remember, the research refers to the U.S. economy.
continued (http://www.russiatoday.com/Crisis/news/32611)
The paper examines four claims about the banking crisis:
Claim 1. Bank lending to non-financial corporations and individuals has declined sharply.
New research: U.S. bank credit has not declined during the financial crisis and even rose in September.
Claim 2. Interbank lending is essentially non-existent.
New research: Interbank lending is healthy and has not fallen sharply.
Claim 3. Bond issue by non-financial corporations has declined sharply, and rates have risen to unprecedented levels.
New research: Commercial paper issue by the non-financial sector is unchanged.
Claim 4. Banks play a large role in channeling funds from savers to borrowers.
New research: 80 per cent of non-financial company borrowing through bond issue takes place outside the banking sector. "The claim that disruptions to the banking system necessarily destroy the ability of non-financial businesses to borrow from households is highly questionable."
The researchers don't doubt the U.S. is undergoing a financial crisis and may face recession. However, they say no one has proved the strains on non-financial institutions are anything more than the effect of recession.
The conclusion is damning: Publicly available data does not justify the bank bailout. If the U.S. administration has different data "responsible policymaking requires that they share both the data and the analysis that underlies the need for bold policy with the public."
One of the researchers, Patrick Kehoe told American Banker, there should be "more of a spirit of caution and a need for better data analysis before we spend nearly a trillion dollars."
Where does this leave emerging markets like Russia? As I argued here the collapse of investment banks in turn forced many hedge funds to unwind their trades. The flow of U.S. dollars back home to America has hugely destabilized the rest of the world.
However, the banking bailout will not stop that – and it is sucking huge amounts of money from the real economy.
Banks and companies most certainly are short of dollars in the emerging economies, where hedge funds were most active.
The bank bailout could be much worse than a fraud. It could be a betrayal of the world.
Russia Today
Oct 29, 2008
Researchers at the one of the 12 Federal Reserve banks, Minneapolis, have challenged U.S. authorities to publish the data which justifies the multi-billion-dollar bank bailout.
In Facts and Myths about the Financial Crisis of 2008 (http://www.minneapolisfed.org/research/WP/WP666.pdf) (Working Paper 666) they say the commercial banking sector is not as vulnerable as U.S. authorities would have us believe.
Put simply, while investment banking has collapsed, U.S. retail banks are ready and willing to lend. They also argue that the banking sector as a whole is less important to the economy than is generally assumed. Remember, the research refers to the U.S. economy.
continued (http://www.russiatoday.com/Crisis/news/32611)
The paper examines four claims about the banking crisis:
Claim 1. Bank lending to non-financial corporations and individuals has declined sharply.
New research: U.S. bank credit has not declined during the financial crisis and even rose in September.
Claim 2. Interbank lending is essentially non-existent.
New research: Interbank lending is healthy and has not fallen sharply.
Claim 3. Bond issue by non-financial corporations has declined sharply, and rates have risen to unprecedented levels.
New research: Commercial paper issue by the non-financial sector is unchanged.
Claim 4. Banks play a large role in channeling funds from savers to borrowers.
New research: 80 per cent of non-financial company borrowing through bond issue takes place outside the banking sector. "The claim that disruptions to the banking system necessarily destroy the ability of non-financial businesses to borrow from households is highly questionable."
The researchers don't doubt the U.S. is undergoing a financial crisis and may face recession. However, they say no one has proved the strains on non-financial institutions are anything more than the effect of recession.
The conclusion is damning: Publicly available data does not justify the bank bailout. If the U.S. administration has different data "responsible policymaking requires that they share both the data and the analysis that underlies the need for bold policy with the public."
One of the researchers, Patrick Kehoe told American Banker, there should be "more of a spirit of caution and a need for better data analysis before we spend nearly a trillion dollars."
Where does this leave emerging markets like Russia? As I argued here the collapse of investment banks in turn forced many hedge funds to unwind their trades. The flow of U.S. dollars back home to America has hugely destabilized the rest of the world.
However, the banking bailout will not stop that – and it is sucking huge amounts of money from the real economy.
Banks and companies most certainly are short of dollars in the emerging economies, where hedge funds were most active.
The bank bailout could be much worse than a fraud. It could be a betrayal of the world.