2011.10.1

Banking on Trouble

/page 40-43 TIME September 26, 2011/

Sign Spotting

• Why U.S. Banks Lending Rate Is Still Low, Though The Profit Recovered Enough ?  The Structure of America’s Banking Problem.

• The Reason Why Wall Street DO NOT Lend Money to Main Street.

• Why and How The Problem Should Be Resolved. 

Briefing

• Government’s bail out was supposed to save banking sector, and that should have save business sector after Lehman Shock. But it did not save business even though some trillion spends on the big banks. 

• The government’s fund aids was used NOT to fix the bank’s finance, BUT to  their capital ratios. The banks hold more capital rather than rend it because the profit recover was not real thing. 

• The government need radical solution to rise lending rate for business sector before European financial crisis get worse. The bank’s capital still consist of bad debt, and the part of that is tied to vulnerable European banks. 

Opinion

The U.S. financial crisis problem after Lehman Shock has much similar to Japan’s severe economic depression after the bubble economy in the 1980’s. Both governments failed to impose appropriate financial aid. The U.S. economy was apparently recovered but still in the aftereffects of Lehman Shock in terms of business sector. On the other hand, Japan failed to operate the immediate bailout on banking sector, and that caused what is called “The Lost Decade.” These history tells that the bailout should be immediate and radical.