History Repeating
Wednesday, 1. October 2008, 03:08:13
Stop me if this sounds familiar....
Lax banking regulations and poor supervision by those who are supposed to be regulating the bank system, allow the country's banks to go on a mad, low interest, lending spree. they lend money to just about everybody. But the government hasn't been managing the economy very well, and with gross overspending and a plummeting currency value, interest rates rise. No one can afford to repay their loans, and the banks, teetering on the edge of bankruptcy are all nationalised. The US and other govts are forced to bail out the financial markets with billions of taxpayers money, businesses go bust, and the economy enters a very, very dark period.
What am I talking about....the current credit crisis? Nope. The Great Depression of nearly a hundred years ago? Nope. This is Mexico in 1994, in a crisis now known as the December Mistake.Just 14 years ago. You'd have thought the perils of that kind of economic management would have been learned by Mexico's northern neighbour. But nope. Good news? Mexico did privatise the banks again a few years later and repaid the loans much early than was originally planned. And now has a strongish economy and stable and properly run (as far as things can be properly run in Mexico) banking system.
Lax banking regulations and poor supervision by those who are supposed to be regulating the bank system, allow the country's banks to go on a mad, low interest, lending spree. they lend money to just about everybody. But the government hasn't been managing the economy very well, and with gross overspending and a plummeting currency value, interest rates rise. No one can afford to repay their loans, and the banks, teetering on the edge of bankruptcy are all nationalised. The US and other govts are forced to bail out the financial markets with billions of taxpayers money, businesses go bust, and the economy enters a very, very dark period.
What am I talking about....the current credit crisis? Nope. The Great Depression of nearly a hundred years ago? Nope. This is Mexico in 1994, in a crisis now known as the December Mistake.Just 14 years ago. You'd have thought the perils of that kind of economic management would have been learned by Mexico's northern neighbour. But nope. Good news? Mexico did privatise the banks again a few years later and repaid the loans much early than was originally planned. And now has a strongish economy and stable and properly run (as far as things can be properly run in Mexico) banking system.
