Money or Ethics to Solve Money Problems?
(D'argent ou de déontologie pour résoudre des problèmes d'argent)
A female suicide bomber blew up killing some 40 people in a holy city in Iraq while the US Vice President was visiting Baghdad.
But, the U.S. and Europe would not use billions of dollars in peaceful manners to solve the situation in Iraq and Afghanistan while they supply billions of dollars to bail out financial institutions from the quagmire of the money market in New York, London, and Paris.
Economy is indeed sinful as so many poor people are very unduly suffering and dying outside the money market.
SECTION I: Television Tokyo
Last night Mr. Eisuke Sakakibara, a notable former executive of Japan’s Finance Ministry, said in a TV Tokyo channel it was not a disastrous situation, showing a trend chart on the yen-to-dollar exchange rate and adding that the rate could further go down to 80 yen per dollar.
It is because domestically Japan has been experiencing a kind of deflation mainly due to a huge influx of cheap Chinese commodities, so that a real exchange rate effect is softened.
But, of course, the issue is a steep rise of prices of natural resources globally observed.
The increased value of the yen against the dollar can be easily overwhelmed by the surge of prices of iron, crude oil, and other indispensable resources.
Television Tokyo Station once contributed to making Mr. Heizo Takenaka, a prominent economist and ex-minister of the Government, popular in the public; but Mr. Sakakibara in the TV channel looks like more remote from graveness of the situation on the street than some easy vendors of economic theories in market.
SECTION II: A “New York Reporting” Blog
Mr. Lawrence Henry Summers, highly appreciated by Mr. Eisuke Sakakibara, presented some prediction of the vicious circle triggered by the recent Bear Stearns crisis:
(1) Decline of stock prices and bond prices
(2) Borrowers asked for more additional cover and collateral by banks
(3) Borrowers selling their assets at a loss
(4) Another cycle of decline of stock prices and bond prices
(5) Banks getting more reluctant to lend money
( http://mori-monologue.seesaa.net/article/89902264.html)
It is reported by the media that some financial institutions are actually selling their assets at a loss as they anticipate more loss due to sub-prime loan-related transactions.
So, Mr. Mori in his “New York Report“ blog wrote that another witch-hunting or witch-searching would begin in Wall Street in the wake of JP Morgan’s purchase of Bear Stearns.
He also stressed the need to fix the amount of the subprime-loan related loss in the whole financial sector so as to increase liquidity of the financial goods at issue, wiping out concerns on additional deficits to be registered or margin calls to be extended.
SECTION III: The New York Times
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As President Bush welcomed the Federal Reserve’s sweeping intervention in the financial markets, his administration faced accusations Monday that it supported the bailout of a prestigious investment bank while doing little to address the hardships faced by Americans facing foreclosures on their homes…
The Fed’s intervention in the case of Bear Stearns intensified calls for the administration to reverse Mr. Bush’s well-known embrace of laissez-faire economic policies.
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http://www.nytimes.com/2008/03/17/business/17cnd-bush.html?_r=1&hp&oref=slogin
It looks like the same attitude as that on the Terror issue. Before Sept. 11, 2001, President Mr. Bush showed no interest in pursuing AlQaeda. But after the 9/11 Terror, he sent troops even to Iraq, in addition to Afghanistan.
The White House must now realize that the sub-prime loan problem has triggered a huge crisis not only in the housing sector but also whole Wall Street where the US President seems to have many friends whose wealth are being accumulated there, just like he has many friends in Saudi Arabia and the adjacent areas.
SECTION IV: A Japanese Magazine
Yesterday I happened to buy a magazine issued as an extra edition of “Shukan Bunsyun” featuring salvation of Japanese Economy.
In that, Mr. Jyun Mizusawa argued uniquely:
In the capitalism society, a demand can be surely matched by supply. Workers in the financial sector want immediate results and appealing performance, no matter how high related risks are. All they need is a persuasive excuse for dealing with high-risk commodities, which is offered in the form of rating.
If high-risk financial commodities, after producing short-term profits, have turned into junks, those financial sector workers can claim that they are not wrong as they honestly trusted the high ratings of the commodities.
This ugly psychology is the source of the sub-prime loan problem, since dealers and fund managers as professionals must have been aware of the accompanying risks being so high from the beginning, though some service companies handsomely offered higher ratings involving the monolines.
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Put simply, 99% of workers in the financial sector seem to have been dealing with the subprime-loan-embedded financial commodities against their conscience if they have any, since temporary and immediate profits were so large, even if they do not belong to Mafia-like housing-loan companies.
Bad minds have generated bad consequences in the money market as has been usual in history.
The subprime-loan problem is related to professional ethics more than financial systems and monetary schemes.
(The extra edition of the Japanese magazine is also introducing examples of competent bosses and incompetent bosses in office of Japanese companies.
As an example of good bosses, a reader has reported that his boss sometimes takes the blame on himself when his staff member failed.
If the number of bosses who would take pity on his failing subordinates with poor performance in Wall Street increases, the global money market will be able to avoid a possible or an expected catastrophe in the situation drifting towards the era of high oil prices and the weak dollar while US troops are everywhere in the Middle East.)
“Do Not Cast Pearls Before Swine”
(Sie müssen nicht geben Perlen zu einem Schwein)