Flashback to 1999

derryb

Anybody remember this 1999 BS. Cleaning out my files I found this magazine. Rubin, Greenspan and Summers. Ironic that these men are probably the three most responsible for the global economic meltdown. Had the three of them not run Brooksly Born out of town (and the CFTC) when she completely disagreed with them and testified/warned congress of the dangers of unregulated OTC derivatives things would be a lot different today. At least she has the satisfaction of saying "told you so." If nothing else, these three "supermen" at least made my PMs a good investment.

Baley

Anyone remember "The Asian Contagion" of 1997? Remember how it was supposed to bring down the world economy? Boy, they been on a run since.

Regression to the mean is a very interesting phenomenon

jmski52

Those were the good old boys who trashed Glass Stegal, in 1999 incidently.

derryb

<< <i>Anyone remember "The Asian Contagion" of 1997? Remember how it was supposed to bring down the world economy? >>


It brought it to its knees.

World wide economies entered a free-fall, and international stock markets, from New York to Tokyo, hit record lows as investors' confidence was shaken by the volatility and unpredictability in the world's financial markets. Once could argue that it caused the begining of the end of the USSR.

Among other things:
- The plunge on the Hong Kong Stock Exchange initially wiped $29.3 billion off the value of stock shares.
- Rattled by Asia's currency crisis, the Dow Jones Industrial Average plummeted 554 points for its biggest point loss ever. Trading on US stock markets was suspended for the day.
- Asia's largest private investment bank, the Hong Kong-based Peregrine Investments, filed for liquidation.
- Russia's financial system was stretched to the breaking point as panic-striken stock and bond markets continued to plunge, forcing the central bank to triple interest rates to 150% to avert a collapse of the ruble.
- Russia's stock market crashed and Moscow's cash reserves dwindled to $14 billion.
- Japan's economy entered a recession for the first time in 23 years.
- Japan and the US spent some $6 billion to buy yen in order to strengthen it.
- The IMF had to provide $23 billion of emergency loans for Russia.
- As the crisis deepend the Dow plunged 300 points in its third-biggest loss. The Dow again plunged 512 points for it's the second-worst point loss in history.
- Created a need for a $3.5 billion bailout to Long Term Capital Management, one of the largest US hedge funds, amidst fears that a collapse could worsen the panic in the financial markets. One could argue that it triggered the eventual LTCM failure, a US crisis of its own.
- Triggered continuing US interest rate reductions that one could argue contributed heavily to the US's current crisis.

Source document

derryb

<< <i>Those were the good old boys who trashed Glass Stegal, in 1999 incidently. >>


They sold congress the belief that the markets could work better with NO government regulation. And they probably would if it were not for greed.

cohodk

derryb, those numbers all seem so small today. My, how far we've come.

roadrunner

Those 3 superman all had a hand in the early years of the gold carry and "strong dollar" trade in the early Clinton years. The knew the importance of mothballing gold long
before the financial crisis started to appear. They also played a role in helping the administration massage economic statistics (such as CPI, GDP, etc.). Let is not forget that
Mr. Rubin got his start running the Goldman desk of the London Gold pool in the 1960's. And then when Summers came along in the 1990's with his academic work on how to
to suppress gold prices, he and Rubin were a match made in heaven. Under their influences and tenure, the otc derivatives trade exploded from the $10 TRILL level to over
$1 QUAD....a 100X increase. That is their primary legacy.

I whole heartedly agree that it would be hard to find a more dynamic duo of Rubin/Summers that did more damage to our financial system than they. Problem is, they are still
doing damage.

roadrunner

CalicoJack

<< <i>

<< <i>Those were the good old boys who trashed Glass Stegal, in 1999 incidently. >>


They sold congress the belief that the markets could work better with NO government regulation. And they probably would if it were not for greed. >>



http://en.wikipedia.org/wiki/Glass–Steagall_Act

The repeal of provisions of the Glass–Steagall Act by the Gramm–Leach–Bliley Act in 1999 effectively removed the separation that previously existed between investment banking which issued securities and commercial banks which accepted deposits. The deregulation also removed conflict of interest prohibitions between investment bankers serving as officers of commercial banks.

Phil Gramm joined UBS in 2002 immediately after retiring from the Senate.

http://en.wikipedia.org/wiki/Phil_Gramm
http://www.ubs.com/1/e/media_overview/media_americas/search1/search10?newsId=58925

No conflict of interest there I am sure.

derryb

Gramm's wife Wendy did even better:
While chair of the federal Commodity Futures Trading Commission, she moved to exempt the Enron's energy-swap operation from government oversight. A few days after she got the ball rolling on the exemption, she resigned from the commission. Enron soon appointed her to its board of directors, where she served on the audit committee, which oversees the inner financial workings of the corporation. For this, the company paid her between $915,000 and $1.85 million in stocks and dividends, as much as $50,000 in annual salary, and $176,000 in attendance fees, according to a report by Public Citizen, a group that has relentlessly tracked Enron.

renman95

Those three should be the first to go to jail but it will never happen. Too many layers of teflon.