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spyguy

Economist - Financial Crises

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A very good article/essay from last week's Economist.

http://www.economist.com//news/essays/21600451-finance-not-merely-prone-crises-it-shaped-them-five-historical-crises-show-how-aspects-today-s-fina

Tulips, railways, countries that don't exist, housing. Crash!!! Pop!!!!!

Have a read, you might see a pattern.

Laughable about of lobbying about the FED forcing US banks to move to 5% capital.

A read of this, and you'll be wanting about 30% minimum.

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Thanks for that. It's a shame the article detail stops with the Wall Street Crash, and this seems a hell of an assumption:

But the bail-outs were not a mistake: letting banks of this size fail would have been even more costly.

BTW, as an anecdote, we had some American friends staying with us when the dotcom bubble burst - they'd just been about to retire and lost pretty much their entire retirement fund. Back to work they went and they're still working over a decade later...

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Thanks for that. It's a shame the article detail stops with the Wall Street Crash, and this seems a hell of an assumption:

BTW, as an anecdote, we had some American friends staying with us when the dotcom bubble burst - they'd just been about to retire and lost pretty much their entire retirement fund. Back to work they went and they're still working over a decade later...

It reminds me of the old tale of the tortoise and the hare.....remind me, who won ?

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Looking at the style and work, I would guess the essay is by Buttonwood/Phillip Coggan, who is probably the best financial journalist going at the mo.

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Economist 29 May 2003

'In many countries the stockmarket bubble has been replaced by a property-price bubble. Sooner or later it will burst, says Pam Woodall, our economics editor.

Yet, curiously, there has been much less economic research into the property market than into the stockmarket, the bond market or the foreign-exchange market. One reason is that until recently much of this property investment was held fairly passively. For most people a home was simply a place to live. For most firms offices were a necessary but relatively unimportant part of their infrastructure. Commercial property made up less than 5% of most institutional investors' portfolios. But now many people, having lost faith in shares, see their home as an investment that will appreciate rapidly in value. Financial institutions are also pushing up the share of commercial property in their portfolios. To both sorts of investor, property seems to offer attractively high returns—as well as a safe haven in an increasingly risky world.

Betting the house

Over the past few years, house prices have been booming almost everywhere except Germany and Japan. Since the mid-1990s, house prices in Australia, Britain, Ireland, the Netherlands, Spain and Sweden have all risen by more than 50% in real terms. American house prices are up a more modest 30%, but that is still the biggest real gain over any such period in recorded history. Commercial-property prices in some big cities have also been looking rather frothy.'

Noone saw it coming.

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house prices in Australia, Britain, Ireland, the Netherlands, Spain and Sweden have all risen by more than 50% in real terms. American house prices are up a more modest 30%, but that is still the biggest real gain over any such period in

This is not true.

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No one wants to accept facts

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