Comments on: Charts of the day: US macro disequilibria http://www.creditwritedowns.com/2008/10/charts-of-day-us-macro-disequilibria.html Finance, Economics and Markets Fri, 10 Feb 2012 00:37:00 +0000 hourly 1 By: John Creighton http://www.creditwritedowns.com/2008/10/charts-of-day-us-macro-disequilibria.html#comment-1404 John Creighton Sat, 20 Dec 2008 00:20:54 +0000 http://www.creditwritedowns.com/2008/10/charts-of-the-day-us-macro-disequilibria.html#comment-1404 Don’t reduce leverage. Ease the Capital requirements, but index it by inflation. Thus as inflation starts to kick in the capital requirements become more stringent so that the real value of the capital held by the banks remains constant. Set some floor in the capital requirements so that in a highly inflated economy you cannot lend out more then five times your equity but in a deflated economy you can leverage to the extreme (say 50 times equity) or more. Then when the next downturn hits only help out the banks that were able to stay within the capital requirement rules. Don’t reduce leverage. Ease the Capital requirements, but index it by inflation. Thus as inflation starts to kick in the capital requirements become more stringent so that the real value of the capital held by the banks remains constant. Set some floor in the capital requirements so that in a highly inflated economy you cannot lend out more then five times your equity but in a deflated economy you can leverage to the extreme (say 50 times equity) or more. Then when the next downturn hits only help out the banks that were able to stay within the capital requirement rules.

]]> By: Edward Harrison http://www.creditwritedowns.com/2008/10/charts-of-day-us-macro-disequilibria.html#comment-489 Edward Harrison Mon, 20 Oct 2008 17:36:00 +0000 http://www.creditwritedowns.com/2008/10/charts-of-the-day-us-macro-disequilibria.html#comment-489 Thanks, stevie b. As you know, I am back. And I do think the financial services chart is where the rubber hits the road. Leverage is the key to this problem in the U.S. and elsewhere.<br/><br/>How we reduce leverage globally without creating some major short-term economic dislocations is the $64,000 question. Thanks, stevie b. As you know, I am back. And I do think the financial services chart is where the rubber hits the road. Leverage is the key to this problem in the U.S. and elsewhere.

How we reduce leverage globally without creating some major short-term economic dislocations is the $64,000 question.

]]> By: Stevie b. http://www.creditwritedowns.com/2008/10/charts-of-day-us-macro-disequilibria.html#comment-486 Stevie b. Fri, 17 Oct 2008 13:07:00 +0000 http://www.creditwritedowns.com/2008/10/charts-of-the-day-us-macro-disequilibria.html#comment-486 Edward - for me the second chart really rams it all home. I thought (much too early and an awful lot of years ago)that it was all too much - but who ever knew how much was too much? Well we know now! Enjoy your break! Edward – for me the second chart really rams it all home. I thought (much too early and an awful lot of years ago)that it was all too much – but who ever knew how much was too much? Well we know now! Enjoy your break!

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