Global Economy - Printable Version
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Global Economy - Guest - 02-05-2010
[url="http://online.wsj.com/article/BT-CO-20100204-718860.html?mod=WSJ_latestheadlines"]WORLD FOREX: Euro Plunges As Investors Flock To Safer Assets[/url]
Quote:NEW YORK (Dow Jones)--The euro plunged Thursday as mounting concerns over sovereign debt problems in Europe piled pressure on the common currency and helped drive a stampede out of stocks, commodities and riskier currencies.
Global Economy - Capt M Kumar - 02-06-2010
What really matters is the following : The board's effectiveness is measured by the output not by the input . The outputs are not daily, or monthly . It could be one or two in a year or even one in two years. Here you have to decide as a CEO what are the outputs you are looking for your company in next two or three years. That can help you work backwards on what is measurable . It's the CEO who must take this initiative because he will know the business more than any of the others.
Global Economy - Guest - 02-07-2010
[url="http://www.google.com/hostednews/afp/article/ALeqM5i3XoDZdlOI2jDGP3MGw7fkw_ZJ9Q"]Alarm spreads over Europe's massive deficits[/url]
Quote:BRUSSELS Ã¢â¬â The swelling public deficits in Portugal, Spain and Greece have plunged the eurozone into the biggest crisis in its 11-year life, presaging years of belt-tightening, analysts warn.
Soon we may have to start thread, "Fall of Euro" or "Fall of European union"
Global Economy - Guest - 02-09-2010
[URL="http://www.reuters.com/article/idUSTRE6183KG20100209"]China PLA officers urge economic punch against U.S.[/URL]
Quote:BEIJING (Reuters) - Senior Chinese military officers have proposed that their country boost defense spending, adjust PLA deployments, and possibly sell some U.S. bonds to punish Washington for its latest round of arms sales to Taiwan.
Global Economy - Guest - 02-10-2010
Global Economy - Guest - 02-13-2010
[url="http://www.dailytelegraph.com.au/business/breaking-news/ratings-agency-warns-on-china-bank-bubble-risk/story-e6freuyr-1225826447558"]Ratings agency warns on China bank 'bubble risk'[/url]
FITCH Ratings warned that banks in China face the greatest "bubble risk" of any Asian country, one day after it downgraded two mid-sized Chinese banks due to the rising threat of bad credit.
Global Economy - Guest - 02-16-2010
[url="http://www.dailymail.co.uk/news/worldnews/article-1250433/Greece-debt-bailout-EU-leaders-split-euro-crisis.html"]Collapse of the euro is 'inevitable': Bailing out the Greek economy futile, says FRENCH banking chief[/url]
Quote:The European single currency is facing an 'inevitable break-up' a leading French bank claimed yesterday.
Global Economy - Capt M Kumar - 02-19-2010
Also speaking in the context of outsourcing to India, Roemer said the US also believes "very, very deeply" in regard to trade issue.
"You can create jobs in America, and have fair tax policy and double your exports", he said.
Obama had said earlier this week: "If you are a business here, entirely located in the US, and investing in the US, and hiring workers in the US, you are paying a 35 per cent rate".
"However, if you are a multinational and you are investing in India, and your workforce is in India, and your plants and equipment are in India, but your headquarters are here, you are taking deductions on all the expenses in India, but you are keeping your profits outside the US; and that just doesn't seem entirely fair", he had argued.
Global Economy - Guest - 02-23-2010
[url="http://www.bloomberg.com/apps/news?pid=20601087&sid=aaeViPPUVSw4"]HarvardÃ¢â¬â¢s Rogoff Sees Sovereign Defaults, Ã¢â¬ËPainfulÃ¢â¬â¢ Austerity[/url]
Quote:Feb. 24 (Bloomberg) -- Ballooning debt is likely to force several countries to default and the U.S. to cut spending, according to Harvard University Professor Kenneth Rogoff, who in 2008 predicted the failure of big American banks.
Global Economy - Guest - 02-27-2010
[url="http://www.dailymail.co.uk/news/worldnews/article-1253791/Is-man-broke-Bank-England-George-Soros-centre-hedge-funds-betting-crisis-hit-euro.html"]Man who broke the Bank of England, George Soros, 'at centre of hedge funds plot to cash in on fall of the euro'[/url]
Quote:A secretive group of Wall Street hedge fund bosses are said to be behind a plot to cash in on the decline of the euro.
Global Economy - Guest - 03-17-2010
[url="http://www.csmonitor.com/Money/The-Daily-Reckoning/2010/0315/China-s-impressive.-But-India-may-have-more-long-term-potential"]ChinaÃ¢â¬â¢s impressive. But India may have more long-term potential.[/url]
Global Economy - acharya - 03-22-2010
7 Stressors Sapping the Middle Class
Buzz up! 562
Rick Newman, On Tuesday March 16, 2010, 5:02 pm EDT
We all know about keeping up with the Joneses. Now, the Great Recession and the jobless recovery have introduced a new socioeconomic phenomenon: slip-sliding with the Smiths.
Working harder for less is the new normal--for those lucky enough to have a job. Millions of families are giving up comforts they long took for granted, such as restaurant meals, new clothes, vacations, spacious cars, home improvements, and cable television. College funds and retirement savings have taken a hit, and some families have been forced to downsize their homes or, worse, submit to foreclosure. Little wonder that record numbers of Americans tell pollsters it's getting harder to get ahead and that they worry their kids' standard of living may fall rather than rise.
[Slide Show: How to Gauge Your Middle-Class Status.]
The obvious culprit is a terrible job market that has left 15 million Americans out of work and millions more working less than they would like. But several economic trends have been stressing the American middle class for a decade or more, and the recession intensified those pressures as well. Healthcare and college costs, for example, have been rising unabated. Seniors who are living longer require more late-in-life care, with the costs often borne by their middle-aged kids. A turbulent economy, meanwhile, has hammered away at incomes, job security, and net worth--and even led the White House to create a "middle-class task force" that gives the problem an official hue: "It is harder to attain a middle-class lifestyle now than it was in the recent past," declared a recent task-force report.
Politicians want to help, with dozens of proposals in Washington and state capitals to create jobs, subsidize living costs, and prove that elected officials care. But most governments are running out of money, and many of the political proposals are hollow, vote-seeking gestures. Americans, meanwhile, are relying more on themselves by cutting spending, saving more, changing their lifestyles, and re-evaluating their careers. As a halting economic recovery evolves, here are seven stressors that middle-class Americans need to address in order to maintain their standard of living:
Falling income. The pinch that many families feel comes from incomes that have fallen while other unavoidable costs have continued to go up. From 2000 to 2008, median household income after inflation was basically unchanged, the weakest performance since at least the end of World War II. And that was mostly before the recession. Economists estimate that once additional data are tallied, they will show that median real income fell by 5 to 7 percent during the recession. That's a huge drop that seems unlikely to reverse itself anytime soon, since a weak job market means that even those who have jobs are far less likely to get raises. And many people have absorbed pay cuts or taken new jobs that pay a lot less than they used to earn.
[See 21 things we're learning to live without.]
A sudden loss of income can be devastating for those with a lot of debt and little savings, which unfortunately includes far too many Americans. Even so, people are adjusting. There's been a stutter-step increase in the savings rate, which, if it lasts, will help pad rainy-day funds. Shoppers are buying fewer extravagances and more discount merchandise. And after a 20-year borrowing binge, Americans are paying off (or defaulting on) record amounts of debt. If those trends continue, the typical household may eventually lower costs enough to live comfortably on less income--and enjoy a few new perks if incomes begin to rise again.
Reduced savings/net worth. When incomes fall faster than expenses, the first impulse is often to make up the difference by borrowing. But banks and credit-card issuers have clamped down on lending, leaving many Americans no choice but to raid their savings to pay the bills. This has happened at the same time that home values have plunged. Many homeowners now have little or no home equity, and a topsy-turvy stock market has stabilized more than 25 percent below its peak values from 2007. The result is a net loss of about $12 trillion in Americans' net worth over the past three years, according to the Federal Reserve--about $102,000 per U.S. household.
A sharp housing rebound or a fresh stock market rally would help recover those losses, but neither seems especially likely. And stock-market gains tend to benefit the wealthy much more than the middle class anyway. So the majority of Americans will have to rebuild their net worth the old-fashioned way: by saving more, spending less, and living more frugally. The savings rate has in fact ticked up over the past year, but not by as much as some economists had expected. That's one sign that it may take a long time for consumers to adjust their behavior and get used to a new financial reality.
[See how to live happily on 75 percent less.]
High healthcare costs. The sob stories trotted out by advocates of healthcare reform ring true. Healthcare costs rose by 155 percent between 1990 and 2008, according to the White House's middle-class task force, while median household income rose by just 20 percent. That means medical costs take an increasing share of take-home pay for virtually every family. A separate study from 2009 found that 62 percent of all personal bankruptcies stemmed from medical problems that overwhelmed family finances. Even if Washington passes healthcare reform, rising medical costs seem likely to pressure the family budget for years, forcing many to simply spend less on other things.
Child-care/elder-care expenses. Many families have maintained their standard of living because both parents work. Between 1990 and 2008, for example, hours worked by both parents in a typical middle-income family increased 5 percent; in a middle-income single-parent family, hours worked spiked by 13.4 percent. That leaves less time for taking care of kids, aging parents, and anything else that needs attention--and the added costs of paying somebody else to do it. Data from the recession may show that child- and elder-care costs have eased as more people find themselves involuntarily stuck at home. And as Americans simplify their lives, some moms and dads may decide that it makes sense for one parent to spend more time at home instead of working to pay for a bunch of stuff the family doesn't really need.
[See 17 ways consumers are changing.]
College costs. A typical family with two kids should sock away about $4,200 per year to pay for college. That's a tall order. College costs have risen about 43 percent since 1990, nearly twice the rise in median income. And with state and federal education funds being axed, public universities are hiking tuition and fees. A budget crisis in California, for instance, has led to a 32 percent increase in tuition at marquee state schools like UCLA and Berkeley, with more increases likely. Private schools, meanwhile, are struggling with steep drops in their endowments thanks to the financial crisis and the housing bust, which trashed mortgage-based investments. The bottom line for many families is that they'll have to take out bigger college loans, with students working more to pay for their own education.
Housing costs. The cost of financing and maintaining a home soared by 56 percent between 1990 and 2008, thanks to the housing bubble that's now deflating. Many families that bought a home near the peak of the market--say, between 2005 and 2007--are stuck with property that's declining in value and in some cases worth less than the mortgage. That will continue to fuel foreclosures and the stress of making huge housing payments that the family income can barely cover. But the housing bust is helping bring prices back down to manageable levels for many families, one break for those who escape the recession with their household finances more or less intact.
[See 10 products that boomed during the recession.]
False expectations. For the past 40 or 50 years, Americans have lived by a series of unofficial tenets: A good education guarantees a good job, hard work will bring prosperity, and 40 years of 40-hour-a-week work earns a comfortable retirement. Then, maybe; now, not so much. Workers who believe that somebody owes them a comfortable life just because they try hard are risking bitter disappointment in a Darwinian economy, where there are likely to be more losers and fewer winners than we're used to. The winners will be those who learn how to adapt, expect nobody to give them anything, and are prepared to work harder in the future than they did in the past. That's how it was in America before anybody ever heard of the middle class, and it may be that way for a while again. The real middle class--the true bedrock of the nation--will be able to handle it.
Global Economy - acharya - 04-06-2010
ChinaÃ¢â¬â¢s currency is not worth a battle
Published: April 5 2010 19:28 | Last updated: April 5 2010 19:28
Should the US at last declare China a Ã¢â¬Åcurrency manipulatorÃ¢â¬Â? The administration was due to respond to this vexed question by April 15. Pressure to find positively has been building. Now it has wisely postponed a decision.
That China intervenes on a massive scale, to keep its currency down against the dollar, is unquestionable. At the end of 2009, its currency reserves had reached $2,400bn, or close to half of gross domestic product. The question, however, is how big a distortion such intervention has created.
Estimates of the degree of undervaluation vary massively. If, for example, the Chinese government allowed its citizens to invest abroad, the flood of capital might push the renminbi down, at least temporarily. Yet, despite the difficulties in defining and measuring degrees of undervaluation, the scale of the intervention, combined with efforts made to manage its monetary effects, makes it plausible that the renminbi is indeed undervalued, in real terms.
What is not so clear, however, is how much difference any undervaluation has made to ChinaÃ¢â¬â¢s surpluses. Given the countryÃ¢â¬â¢s flexible prices and high savings, movements in the nominal exchange rate might have only modest effects on external balances. Without alterations in consumption and saving, currency appreciation might create deflation, instead.
Yet, whatever the impact in the past, the decision to freeze the upward movement in the exchange rate in the summer of 2008 looks ill-timed. Since October 2008, ChinaÃ¢â¬â¢s trade-weighted real exchange rate has depreciated by 8 per cent, even though the rest of the world has been struggling economically and China has been enjoying robust growth
Yet defenders of China note that the trade and current account surpluses have declined sharply, while domestic demand has soared. From a peak of 11 per cent of GDP in 2007, the current account surplus declined to Ã¢â¬ÅonlyÃ¢â¬Â 6 per cent in 2009. The problem with this argument is not only that surpluses are still enormous, but that the policies adopted to expand domestic demand, during the crisis, look unsustainable: year-on-year growth in credit was 27 per cent in February 2010. In 2009, real fixed investment rose at an obviously excessive rate of 18 per cent. When the new capacity comes on stream and domestic demand starts to slow, the external surpluses might explode upwards .
All this proves that ChinaÃ¢â¬â¢s external balances and exchange rate are important issues for the entire world: China is too big to frame its policies without taking their global impact into account. But they are also big issues for China itself. While some insurance has made sense, the current level of reserves cannot do so. The investment of more than $1,800 per head in low-yielding foreign assets is a spectacular waste of resources. It should not be impossible to persuade the Chinese that higher levels of domestic consumption and less lending to irresponsible foreigners make sense.
This, then, is unquestionably an issue for frank and intense discussion. Fortunately, that is what is under way, in both multilateral and bilateral forums. So the US administration, at the highest level, should say something like the following to the Chinese government in the coming days.
Ã¢â¬ÅWe are not going to make a finding against your currency policy, not because we do not believe we have a case, but because you have made a big effort to expand demand and reduce your surpluses since the crisis began. We appreciate this highly. We are also engaged in what we believe to be a serious dialogue on global adjustment, under the auspices of the Group of 20. Moreover, we expect the appreciation of the renminbi against the dollar to restart soon.
Ã¢â¬ÅFurthermore, we also trust that you see the domestic benefits in halting your currency interventions and rebalancing your economy. We understand this will take time. We can give you such time, so long as we share an understanding of the destination that will be reached. We are not going back to the wild party of the years before 2007. You must not build your future on hopes that we might. That way would lie disaster.Ã¢â¬Â
So, indeed, it would, Former high-deficit countries, such as the US, need much lower current account deficits if their economies are to recover vigorously. If China were to seek to return to the massive surpluses of its past, a collision would be inevitable. But such a collision is not inevitable. Far from it. The journey towards rebalancing has apparently started. It is vital to ensure that it continues successfully in the years ahead.
Global Economy - acharya - 04-08-2010
Joblessness: The Kids Are Not Alright
Will the U.S. accept youth unemployment levels like Europe's?
By DANIEL HENNINGER
Unemployment today doesn't look like any unemployment in the recent American experience. We have the astonishing and dispiriting new reality that the "long-term jobless"Ã¢â¬âpeople out of work more than six months (27 weeks)Ã¢â¬âwas about 44% of all people unemployed in February. A year ago that number was 24.6%.
This is not normal joblessness. As The Wall Street Journal reported in January, even when the recovery comes, some jobs will never return.
But the aspect of this mess I find more disturbing is the numbers around what economists call "youth unemployment." The U.S. unemployment rate for workers under 25 years old is about 20%.
"Youth unemployment" isn't just a descriptor used by the Bureau of Labor Statistics. It's virtually an entire field of study in the economics profession. That's because in Europe, "youth unemployment" has become part of the permanent landscape, something that somehow never goes away.
Is the U.S. there yet?
No public figure has ever taken more flak for a comment than former Defense Secretary Donald Rumsfeld for "old Europe." These are the Western European nations that spent the postwar period free of Soviet domination. With that freedom they designed what came to be called the "social-market economy," a kind of Utopia where a job exists to be protected and the private sector exists mainly to pay for the state's welfare plans.
Daniel Henninger asks whether the U.S. will accept youth unemployment levels like Europe's.
Podcast: Listen to the audio of Wonder Land here.
Alas for Utopia it came to pass that the marginal cost of adding employees increased so much around Europe that private-sector hiring of new workers slowed and "youth unemployment" rose. And stayed.
Eight years ago, a bittersweet movie about this tragedy of fallen expectations for Europe's young, "L'Auberge Espagnole," ends with a bright young Frenchman getting a "job" at a public ministry, where on the first day his co-workers explain the path to retirement. He runs from the building.
In the final month of 2009, these were European unemployment rates for people under 25: Belgium, 22.6; Spain, 44.5; France, 25.2; Italy, 26.2; the U.K., 19; Sweden, 26.9; Finland, 23.5. Germany, at 10% uses an "apprentice" system to bring young people into the work force, though that system has come under stress for a most relevant reason: a shortage in Germany of private-sector jobs.
In the U.S., we've always assumed that we're not them, that America has this terrific, unstoppable job-creation machine. And that during a "cyclical downturn," all the U.S. Congress or the states have to do is keep unemployment benefits flowing and retraining programs running until the American jobs machine kicks in and sops up the unemployed.
But what if this time the new-jobs machine doesn't start?
In the U.S., we've thought of youth unemployment as mainly about minority status linked to poor education. Not in Europe. German TV recently broadcast a sad piece on Finland, which has the continent's most admired school system. It showed an alert, vivacious young womanÃ¢â¬âshe looked like someone out of an upper-middle-class U.S. high schoolÃ¢â¬âroaming Helsinki's streets begging waitress jobs, without success.
It was during the Reagan presidency's years of strong new-job growth, with an expansion that lasted 92 months between 1983 and 1990, that Europeans began to envy the employment prospects for American graduates. The envy continued through the dot.com boom of the Clinton years. Some of Europe's most ambitious young workers emigrated to the U.S.
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France's best and brightest on one of their periodic jobs marches.
Which brings us to the current American presidency. Last March, its admirers proclaimed that the Obama budget drove "a nail in the coffin of Reaganomics." And replaced it with what?
Mr. Obama spent his first year saving the public economy (the stimulus's money mainly protected public-sector jobs) and designing a U.S. health-care system led, if not run, by the public sector. The year's most significant U.S. fiscal policies created an array of new taxes to finance the congressionally designed health system, and raised federal spending to 25% of GDP. Another broad tax increase begins Jan. 1.
The only new-jobs idea the philosopher kings around Mr. Obama have had is the "green economy." No doubt it will create some jobs. But an idea so dependent on subsidy economics is not going to deliver strong-form employment for the best, brightest or willing and able in the next American generation. The path we're on is toward a flatter, gentler U.S. economy.
This is not the way forward to the next version of an American economy that once created Microsoft, Intel, MCI, Oracle, Google or even Twitter. The United States needs tremendous economic forces to lift its huge work force. Since 1990, roughly 80 million Americans have been born. They can't all be organic farmers or write scripts for "30 Rock."
Many upscale American parents somehow think jobs like their own are part of the nation's natural order. They are not. In Europe, they have already discovered that, and many there have accepted the new small-growth, small-jobs reality. Will we?
Global Economy - Guest - 04-27-2010
[url="http://news.bbc.co.uk/2/hi/business/8647441.stm"]Greek bonds rated 'junk' by Standard & Poor[/url]
Quote:Greece's debt has been downgraded to junk status by Standard & Poor's amid concern it was not able to take steps needed to tackle its economic crisis.
Beginning of end of European union and Euro.
Another success story of Socialism, more will follow.
India is also in queue. MMS is working towards India's slow painful death.
Global Economy - Guest - 04-29-2010
[url="http://finance.yahoo.com/news/Spain-debt-downgraded-by-apf-1816859080.html?x=0&.v=27"]Spain downgraded, Europe debt crisis widens[/url]
Germany says aid for Greece could be passed by May 7
Quote:The clock is ticking -- Greece has to pay off some euro8.5 billion worth of debts by May 19, but cannot raise the money in the markets given current sky-high borrowing costs -- at one stage earlier, the yield on the two-year Greek bond spiked up to a massive 23 percent.
Global Economy - Capt M Kumar - 05-01-2010
"Under such working conditions, there is no hope or bright future," Daikoku said. "Let's make a change to create a society where full time employment is the norm."
Japan's unemployment rose to 5 percent in March, with 3.5 million people jobless.
In Hong Kong, about 1,000 protesters Ã¢â¬â including janitors, construction workers and bus drivers Ã¢â¬â demanded the government increase the minimum wage to 33 Hong Kong dollars ($4.3). http://newshopper.sulekha.com/thousands-of-asians-rally-for-jobs_news_1170864.htm
Global Economy - Guest - 05-03-2010
[url="http://www.bloomberg.com/apps/news?pid=20601087&sid=aFaODIq8xczc&pos=6"]China May Ã¢â¬ËCrashÃ¢â¬â¢ in Next 9 to 12 Months, Faber Says [/url]
Quote:May 3 (Bloomberg) -- ChinaÃ¢â¬â¢s economy will slow and possibly Ã¢â¬ÅcrashÃ¢â¬Â in the next nine to 12 months, Marc Faber, the publisher of the Gloom, Boom & Doom report, said.
Global Economy - Capt M Kumar - 05-03-2010
Few Indians are interested in GreeceÃ¢â¬â¢s fiscal crisis, or the proposed IMF loan of 15-25 billion euros as part of a European rescue package. But Indians should worry. IMF resources raised for low and middle income countries are being diverted to bestow a special favour on a rich European country.
GreeceÃ¢â¬â¢s problem is European, and should be tackled by its rich European brethren. It should not dip into limited IMF funds raised for poorer countries. http://swaminomics.org/?p=1816
Global Economy - acharya - 05-06-2010
Bear Stearns chiefs blame market rumours for collapse
By Tom Braithwaite in Washington
Published: May 5 2010 18:59 | Last updated: May 5 2010 18:59
Bear StearnsÃ¢â¬â¢ former executives on Wednesday blamed market rumours for the demise of the investment bank in 2008, an event that marked a dramatic new phase in the financial crisis.
Appearing in public for the first time since then, Jimmy Cayne, the former chief executive of Bear, told the financial crisis inquiry commission that Ã¢â¬Åthe marketÃ¢â¬â¢s loss of confidence, even though it was unjustified and irrational, became a self-fulfilling prophecyÃ¢â¬Â.
Ã¢â¬ÅI have tried to avoid Ã¢â¬â°.Ã¢â¬â°.Ã¢â¬â°.Ã¢â¬â°conspiracies, rumours,Ã¢â¬Â he said, although he added that he had heard stories about Ã¢â¬Åhedge funds [that] gathered together and they ganged upÃ¢â¬Â. But Ã¢â¬Åregardless of conspiraciesÃ¢â¬â°.Ã¢â¬â°.Ã¢â¬â°.Ã¢â¬â°the bottom line was that the firm came under attackÃ¢â¬Â.
Alan Schwartz, who succeeded Mr Cayne as chief executive in January 2008, testified that the speed of the Ã¢â¬Åmodern financial media environmentÃ¢â¬Â had helped ensure that Ã¢â¬Åthe rumours became a self-fulfilling prophecyÃ¢â¬Â and produced a bank run.
Their fellow former Bear executives used the same formula to explain the liquidity run that led to an emergency sale of the bank to JPMorgan Chase, causing irritation among the FCICÃ¢â¬â¢s commissioners.
Warren Spector, a former co-president, said he had believed Bear had employed an Ã¢â¬Åeffective and robust risk-managementÃ¢â¬Â strategy.
Bill Thomas, vice-chairman of the congressionally appointed panel, asked: Ã¢â¬ÅHow could you folks, as sophisticated as you were, with the models that everyone felt comfortable with, believe you were the victim Ã¢â¬â°.Ã¢â¬â°.Ã¢â¬â°.Ã¢â¬â°of unsubstantiated rumours, fears and innuendo Ã¢â¬â that your colleagues did you in?Ã¢â¬â¢Ã¢â¬â¢
Analysts have pointed to a failure to diversify from mortgages, too big an appetite for leverage and Mr CayneÃ¢â¬â¢s frequent absences from the bank in favour of bridge tournaments and the golf course.
Asked about its level of equity capital, Mr Cayne said: Ã¢â¬ÅHistorically, equity will save you, but it would have been an inordinate amount of capital.Ã¢â¬Â
The bank had been reeling from mortgage-related losses but it was the unwillingness of counterparties and creditors to deal with Bear that caused a liquidity crisis from which it could not emerge.
Mr Cayne, 76, said there had been a deliberate shift to short-term funding: Ã¢â¬ÅWe felt it was more safe and more secure for our investors,Ã¢â¬Â he said. He stepped down as chief executive of Bear in January 2008 but remained as chairman until the government-backed sale to JPMorgan in March.
He joined the firm in 1969 and built it from a bond trader to the fifth biggest investment bank in the US. He was a significant shareholder and lost a large part of a personal fortune in the forced sale to JPMorgan.
The path to blaming an unforeseeable market shock has been trodden in recent weeks by Dick Fuld of Lehman Brothers, whose bank failed, and Chuck Prince of Citigroup, whose bank survived thanks to a huge capital injection from the government.
Mr Schwartz did acknowledge that the company had underestimated the potential collapse of the US mortgage market.
The FCIC, chaired by Phil Angelides, the former treasurer of California, is charged with the task of writing a detailed report on the origins of the 2008 crisis by the end of the year.
James Bullard, president of the St Louis Federal Reserve, told the Financial Times last week that he had seen nothing in the Senate financial regulation bill to prevent a repeat of the Bear crisis.
In his prepared testimony, Chris Cox, the for mer chairman of the Securities and Exchange Commission, blamed blurred lines of regulatory responsibility but did not accept any culpability for failures in supervision. But David Kotz, inspector-general of the SEC, noted that he had found Ã¢â¬Ånumerous specific concernsÃ¢â¬Â with the commissionÃ¢â¬â¢s consolidated supervised entities programme, under which Bear was regulated.