I just read an analysis from bond rating agency Standard & Poor's about how Japan dealt with its banking crisis in the early 1990s. From 1994 to 2003, 180 Japanese banks failed. Total cost of the credit losses: $950 billion.
There the government took small incremental steps. There was strong opposition to bank bailouts and a series of administrations that failed to act.
The Japanese real estate bubble burst in 1992. It wasn't until 1998 that the government began investing in the banks through subordinated debt. The government kept weak banks alive longer than they should have through depostion protection. Eventually the government began purchasing non-perfomring loans. The shortages of capital lasted until the early 2000s though.
Japanese industrial companies also had problems with excess capacity and a shortage of funding. In 2003 the government established an Industrial Revitalizaiton Corp. of Japan to provide capital. One of the lessons learned from Japan, according to S&P, is that it's also vital for a country to protect big industrial corporations, such as the automakers.
Okay we fell for this. The real estate information site
Cyberhomes shot us a comparison of the two earliest U.S. settlements, Jamestown, Virginia and Plymouth, Mass. Cyberhomes looked at which place would make the best settlement in 2008. The Jamestown Settlement is in James City County and the Plymouth Colony is in Plymouth County.
James City County
Median Estimated Home value - $319,766, which is down -6.44 percent in the past 12 months.
Population - 62,649
Pop Change since 2000 - 3.71%
Median Household Income - $95,567
Unemployment Rate - 2.60%
Recent Job Growth - 2.31%
Plymouth County
Median Estimated Home value - $310,752, which is down -13.87 percent in the past 12 months.
Population - 505,547
Pop Change since 2000 - 0.93%
Median Household Income - $92,471
Unemployment Rate - 4.80%
Recent Job Growth - 0.27%
Based on the above, Cyberhomes concludes that settlers looking to drop anchor today would be best to settle in Jamestown. Compared to Plymouth, James City County boasts a higher median household income, a faster growing population, lower unemployment rate and higher recent job growth. In addition, the county’s home values have not taken nearly as big a hit as in Plymouth.
No comment on who's got friendlier Indians.
A new Gallup study suggests that cities with loyal, passionate citizens are more likely to be economically vibrant. The three-year study, funded by the John S. and James L. Knight Foundation, surveyed 26 communities and looked at how emotionally connected residents were to their city compared to the GDP growth during the past five years.
"The findings show a significant correlation," a press release for the study said. "Over three years, the researchers will analyze the trends to prove whether emotional connection drives economic growth, or the other way around."
Hovnanian, the big New Jersey-based homebuilder, got a big no thanks from its bond holders this week. The company had tried to reduce its massive $1.6 billion debt load by offering bondholders new securties paying 18% interest. The catch was they had to accept just 60 cents on the dollar for their outstanding notes. Just $71 million worth of bonds were tendered.
The move was an attempt to preserve some assets for stockholders, including the 18% of the shares owned by management and the Hovanian family, says the debt watchers at the research firm Gimmie Credit.
"It's going to be long and dangerous housing recession," Gimmie Credit concluded. "If Hovnanian fails, at least the normal pecking order of claims to its assets will remain in tact for now."
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