[This article by Alex Pollock, Resident Fellow at the American Enterprise Institute, is absolutely must reading for those trying to make sense of what went wrong during the 2008-2009 financial crisis. As you read it, recall that government leaders proclaimed publicly during the crisis of 2008 that the financial system was facing “financial Armageddon” and also recall that mark to market accounting imposed senseless and massive paper losses on U.S. financial institutions during 2008.]
‘The American Banking System Might Not Last Until Monday’
By Alex J. Pollock Monday, August 18, 2014
Filed under: Economic Policy, Numbers
Learning from the crises you’ve forgotten.
How good is the human group mind at financial memory? Pretty bad.
For example, consider this really striking bit of history: “The then Federal Reserve Chairman made a phone call to the Bank of Japan Governor on that critical Friday night (Saturday in Japan) in August of that year.” The chairman’s “first words were that the American banking system might not last until Monday. The crisis was that serious.”Posted: Aug 19, 2014