imf summary

Summary of banking crisis

This is so complete a history and includes both a summary of how bad things are, and how bad they are in perspective. Ie, the things that are being done (at least up to the 'bailout') are consistent with things that have worked in the past. The bailout/rescue is perhaps a larger scale of recapitalization than we would have anticipated, but it still contains the problem as a fraction of the total GDP (though higher than the N.Rock fraction in the UK).

The biggest key issue that was overlooked until about a week or two ago is the international ripple for foreign banks that snapped up a piece of the strange mortgage pie that was made here, and are subsequently being crushed and have to be bailed out by their central banks. The next thing was that the interest rates stayed low for far too long after the recovery period from the '01 recession. Since the problem now is the lack of liquidity and credit in the markets (because nobody is really sure what they have or what exposure they have), the money supply will naturally be expanded in a global and coordinated effort to stabilized the banking systems. But they should realize that they can't keep the rate down to juice the mortgage rates, and then create mysterious programs to sell off the unstable mortgage assets. As usual, the motto becomes, do you understand what you are buying? Generally the answer for most consumers has been no. They (the people) still don't seem to understand what is actually going on without some background of economic study. That's as big a problem in the long run, but something that can't be addressed by throwing money at it in the way the banks can be.

The bottom end has a series of charts that will no doubt appear Greek to most people, but they do at least summarize the data set to show that things being done are consistent with previously useful macroeconomic policies.