Bankruptcy

By J. Michael McBride

One of the economists which I look to for information and advice is Dr. Marc Faber. Here is a quote from his latest market Commentary dated November 1, 2008:

“What I want to make perfectly clear is that Mr. Bemanke’s inept monetary policy actually increased volatility and led to greater losses compared to what would have occurred had rates not been prematurely cut in September 2007. Needless to say that the principal cause of the current financial crises was the ultra expansionary monetary policy the Fed pursued since the late 1990s - beginning with the bailout of LTCM, thereafter the monetary injection ahead of Y2K and finally the 2001 rates cuts, which brought down the Fed fund rate to 1% and led to a huge increase in leverage! In fact, I would argue that had LTCM not been bailed out in 1998, the market’s response would have been at the time to reduce leverage and not to embark on a huge expansion of credit in the belief that the Fed would always be there to bail out everyone who was “too big to fail” (the famous Greenspan put).”

You may want to visit his website for further information: www.gloomboomdoom.com

Michael

Full post as published by Texas Lawyer Blog on November 06, 2008 (boomark / email).