Barrack Obama was inaugurated as the 44th. US President after a slip in oath taking ceremony. He will inherit from Bush administration an American economy in the most severe crisis since 1929-1932. He accepted the presidency, with a promise to remake America and claim world leadership. Obama would become the first African American president in history. To call his a black president might not be right as his mother is white. I thought that is only possible in movies. So that is an American Dream fulfilled. In Malaysia, after another crushing defeat in KT, incoming PM, Najib also promise to remake Malaysia. But this is the same filthy emperor in another piece of suit whereas in US it is a complete change in government.
The departure of Bush marks the end of a controversial and violent decade. His cohorts are long gone. Blair was forced out by his party members and Howard was defeated in the Australian general election. 2000 till 2009 is a chaotic time starting with 911, invasions of Iraq and Afghanistan, global terrorist attack, major disasters like the Tsunami and SARS and the current global financial crisis. You have a version of Armageddon.
Citigroup shares continue to plunge to a low of $2.50. This comes after the plan to break the business into 2 core business. Within a space of one year Citigroup has turn from a financial supermarket to a 7-11 store. In the same week, all UK top banks were crushed to pieces. Royal Bank Scotland share price crashed to a low of 10 pence! Barclays massive loss in value resulted in 440 million pounds wipe off for the Abu Dhabi group which happens to be the owner of Manchester City. Immediately, the UK government through BOE launched a 100 billion pounds fund to bail out these trouble banks. The UK government has already acquired 70% stake in RBS and 45% in Lloyds at this moment.
Obama’s administration is mulling on setting a government bank specializing in buying bad assets from troubled major banks. It is similar to the Danaharta and Danamodal set up in 1998. The difference is the Danaharta mechanism was actually created to bail out Dr M’s cronies and Daim’s troubled assets. I suggest the US government buys the toxic asset at face value so that these banks can start lending again and stop the economy downturn. It will get the economy growing again and hence reduce the cost of write downs of bad loans in the future. At this moment, I can’t foresee anyway out as long as these toxic assets are still in the balance sheet and as the economy continues to deteriorate, future write-offs will increase with no change of recovery. The cost of bailing out these banks is less than not bailing out due to its wide systemic risk impact. The credit and capital market faces a severe credit crunch. Immediate action is required.
The departure of Bush marks the end of a controversial and violent decade. His cohorts are long gone. Blair was forced out by his party members and Howard was defeated in the Australian general election. 2000 till 2009 is a chaotic time starting with 911, invasions of Iraq and Afghanistan, global terrorist attack, major disasters like the Tsunami and SARS and the current global financial crisis. You have a version of Armageddon.
Citigroup shares continue to plunge to a low of $2.50. This comes after the plan to break the business into 2 core business. Within a space of one year Citigroup has turn from a financial supermarket to a 7-11 store. In the same week, all UK top banks were crushed to pieces. Royal Bank Scotland share price crashed to a low of 10 pence! Barclays massive loss in value resulted in 440 million pounds wipe off for the Abu Dhabi group which happens to be the owner of Manchester City. Immediately, the UK government through BOE launched a 100 billion pounds fund to bail out these trouble banks. The UK government has already acquired 70% stake in RBS and 45% in Lloyds at this moment.
Obama’s administration is mulling on setting a government bank specializing in buying bad assets from troubled major banks. It is similar to the Danaharta and Danamodal set up in 1998. The difference is the Danaharta mechanism was actually created to bail out Dr M’s cronies and Daim’s troubled assets. I suggest the US government buys the toxic asset at face value so that these banks can start lending again and stop the economy downturn. It will get the economy growing again and hence reduce the cost of write downs of bad loans in the future. At this moment, I can’t foresee anyway out as long as these toxic assets are still in the balance sheet and as the economy continues to deteriorate, future write-offs will increase with no change of recovery. The cost of bailing out these banks is less than not bailing out due to its wide systemic risk impact. The credit and capital market faces a severe credit crunch. Immediate action is required.
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