The Bankwatch

Tracking the consumer evolution of financial services

Can governments ever fix the right thing?

Interesting perspective from Dr. Pomerleano which refers to the Auto sector in the US. I am increasingly seeing that auto sector and the banking sector as parallels.

He argues that fixing the banking sector is not enough – the ‘fix’ requires that the corporate sector is also fixed.

There is a risk that the recent recapitalization of the banking sector will fail to achieve its intended objectives, because none of the measures addresses the corporate side of the picture.

… …

For instance, Detroit seem to have forgotten that before asking Congress to allocate tax dollars, efforts should be made to convert debt to equity and deleverage the automakers.

Written by Colin Henderson

December 1, 2008 at 00:49

Posted in Uncategorized

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