Website review: US economy risks a lost decade like...
dysviz discovered this in Economics
•2 reviews since Feb 28, 2008
economics
•telegraph.co.uk/money/main.jhtml
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dysviz discovered 6 months ago- From the page: "US economy risks a 'lost decade' like Japan By David Litterick in Munich Last Updated: 9:18am GMT 28/02/2008 The US could be facing a "lost decade" like that suffered by Japan in the 1990s as the markets fail to respond to interest rate cuts and the US Federal Reserve runs out of options, the head of one of the leading private equity firms said today. Tim Collins of Ripplewood Holdings, said the Fed was "running out of policy alternatives" as it attempted to prevent a long recession in the US. Mr Collins, whose firm has significant expertise in Japan after leading the buyout and turnaround of Japan Telecom, said he believed a "sharp repricing of assets" was the most likely outcome. But he said: "My fear is that we will prolong it and suffer a death of a thousand cuts after we have exhausted all the options." "Even without a recession and with all of the policy tools available we still have hundreds of billions of dollars of losses." Japan has only recently emerged from a period of zero interest rates. advertisement He said the future would not be clear until a recession had laid bare the true state of the financial system. "You have to wait for the tide to go out to see who is wearing a bathing suit," he said. But the chairman of Ripplewood, which last year completed the $2bn buyout of Readers Digest, rejected the argument, put forward by some at this year's SuperReturn private equity conference in Munich, that Sovereign Wealth Funds would replace struggling banks to provide debt to private equity companies. "The financial markets operate on the basis of the multiplier effect in the banking system and you cannot replicate that with what is effectively equity, not debt, from sovereign wealth funds.""
- yobaba rated 6 months ago
- The US could be facing a "lost decade" like that suffered by Japan in the 1990s as the markets fail to respond to interest rate cuts and the US Federal Reserve runs out of options, the head of one of the leading private equity firms said today. Japan's recession came on the heels of their magnificent but deadly "Bubble" of the 1980's - the same decade that saw Reaganomics and the so-called 'trickle-down' economy do a number on middle class Americans. One huge difference today, however, is the number of real estate loan portfolios and consumer credit balances that have been sold to overseas financial institutions. It remains to be seen how these entities will deal with an American recession.
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