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October 28, 2007



With losses like these there is no reason that corporations are not required to have reserve ratios sufficient to meet substantial losses as does the Federal Reserve to prevent wholesale meltdown effects of large, and heavily capitalized firms doing business multinationally.

The slim margins upon which they operate that reward bankruptcy, throw off employees, and leave in their wake, enormous financing disasters might be viewed within the same levels of security as the Fed is measured. Having occurred many times now, there is little cure except to address failure by extraordinary measures that will reduce the incentive for predatory financing that ignores the common good. Leaving losses to employees and to the public might be considered a tolerance of privateering with no end in sight.

The function of reserves, retained earnings, and capital credit radios is to prevent corporate meltdowns. To operate without these protections defies the principle of the corporation as a secure entity upon which the American people can have faith, and into which they can safely invest. Investment with immunity is inconsistent with the American way of capitalism, and should be corrected for the safety of all.

Come on people, it's just numbers!


This reminds me of the mess Michael Milken created when he correctly recognized, built and exploited the junk bond market. He was so greedy he left nothing on the table to encourage others to create middle markets. It took a while to work through the pain, but the benefit junk bonds offered to borrowers & issuers was so strong it survived and flourished.

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  • Chronicles of international finance and geopolitics, with hints from thither and yon to help us find a way from "growth and development" to "sustainability."

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