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Us Should Heed Own Advice On Financial Crisis

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The United States should take seriously all the advice that it gave to Asia and Japan during the 1997/98 financial crisis, said Professor Takatoshi Ito of Tokyo University.

Ito, the fourth holder of the Tun Ismail Ali Chair in Monetary and Financial Economics, said the US had made the same mistakes like both Asia and Japan when it overlooked the signs of bubble.

According to him, the US had also repeated the mistakes at a pace four times faster than the economies in this region almost 11 years ago.

"Maybe it is human nature to be objective and critical to others, but to be protective and optimistic to oneself," he said in his lecture at the Tun Ismail Ali Chair Public Lecture here on Friday.

Ito said once the crisis occurred in the US, policy reactions were "too little and too late".

He said the US key failures included the government not being tough enough on the banks to force restructuring and selling of distressed assets to the Troubled Assets Relief Programme, as well as hesitation in nationalising the troubled financial institutions.

Among the advice the US should be directing at itself were avoiding moral hazard, having transparency in balance sheet, regulating hedge funds, immediate purge of failed institution management, not continuing to pump in capital to insolvent institutions, and avoiding "too big to fail" mentality, he added.

Yep. Yep. Yep.

Hindsight is 20-20 of course, but isn't financial guru Mr Bernanke supposed to know these things? What the fvck is he doing over there?

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