REVISITING THE GLOBAL TURMOIL AND INEPT US RESCUE EFFORTS

       Marking the first anniversary of the Hamburger crisis, Jean Jacques Bouflet, ministercounsellor of the European Commission's delegation in Bangkok, said yesterday that it was too early to call the economic meltdown over. Some countries in the European Union, such as France and Germany, have jumped on the up escalator.
       However, not all countries are celebrating a return to growth. After the first year of the crisis has passed into history, the economy should be on the sustainable expansion path next year, he said.
       Pornsilp Patcharintanakul, deputy secretarygeneral of the Board of Trade of Thailand, believes that the global economic downturn is levelling out after one year of suffering worldwide.
       "Economic growth is expected to recover like a 'correction mark' []. Exports will gradually grow from dramatically shrinking, while foreign direct investment is expected to enter the Kingdom soon on positive factors, including political stability, and the government's measures to booster economic growth," he said.
       The world economy should expand slightly from now, if there are no more serious negative factors to hammer down the green sprouts.
       The oil price should not be a concern, as it is gradually increasing due to higher demand in the market, not to speculation, she added.

       BLINDED
       Looking back, the warning was ominous: "Massive global wealth destruction".
       That's what Lehman Brothers Holding executives predicted before they filed the biggest bankruptcy in US history.
       "Impacts all financial institutions" read one bullet point ina confidential memo prepared for government officials obtained by Bloomberg News.
       "Retail investors/retirees assets are devastated."
       The message didn't get through. Two dozen of the world's most powerful bankers, brought together by US Treasury Secretary Henry Paulson and Federal Reserve Bank of New York president Timothy Geithner on the weekend of September 13, 2008 to devise a rescue plan for Lehman, were to busy saving themselves to see the larger therat.
       "The discussion among the CEOs was 'How do we prevent the next firm from going under?'" former Merrill Lynch CEO John Thain, who cut a deal to sell his company that weekend, said in an interview. "There should have been much more discussion about the impact directly on the markets if Lehman went bankrupt."
       While everyone assembled at the New York Fed was aware that unbridled sub-primemortgage lending and the packaging of such inferior loans into investment vehicles such as collateralised-debt obligations has pushed the financial system to the breaking point, what the bankers missed almost destroyed them - and the rest of the global eocnomy.

       BLANKFEIN, DIMON
       Lehman's downfall on Monday, September 15, sparked a run on the US$3.6 trillion (Bt124 trillion) money market industry, which provides short-term loans called commercial paper used by businesses worldwide to cover everyday expenses, including payroll and utilities.
       The panic left companies such as Goodyear Tire & Bubber stranded with insufficient cash and ravaged the accounts of millions of people.
       For Goldman Sachs Group CEO Lloyd Blankfein, JPMorgan Chase's Jamie Dimon and the rest of the financial chieftains who spent a weekend trying to unwind derivatives trades and keep bank-to-bank loans flowng, ignoring the comercialpaper market, the lifeblood of the economy, proved a catastrophic oversight.
       Within a week, the US stepped in to halt withdrawals from money market funds, leading to a $13.2 trillion it has committed to beating back the worst financial crisis since the Great Depression.

       'SYSTEM AT RISK'
       Of all the quakes of 2008 - the fall of Bear Stearns in March, the takeover of mortgage buyers Fannie Mae and Freddie Mac and the salvaging of American International Group in September - the failure to account for the effects of Lehman's demise was the most critical because its aftershocks came closest to wrecking the world economy.
       "They put the entire financial system at risk, and they didn't have to," said Harvey Miller, a partner at Weil Gotshal & Manges in New York who represented Lehman in the bankruptcy, referring to government officials. "They were warned.
       "I told them, 'Armageddon is coming. You don't know what the consequences will be'. Their response was, 'We have it covered'."
       Paulson and Geithner, who succeeded him as Treasury secretary, both declined to comment.

       INVITING 'CATASTROPHE'
       One year later, policymakers haven't learned the lesson of the bankruptcy, said Richard Bernstein, CEO of Richard Bernstein Capital Management in New York and former chief investment strategist for Merrill Lynch.
       Rather that break up institutions such as Bank of America and Citigroup, or limit their expansion, the US has given them billions of dollars in tax incentives and loan guarantees that enabled them to grow even bigger.
       To protect against a bank collapse touching off another free fall, President Barack Obama has proposed regulatory changes that rely on the wisdom of bankers and government overseers - the same people who created the conditions that led to Lehman's bankruptcy and were unable to foresee its consequences.
       "Dsignating certain institutions as too big to fail, and not having a thorough regulatory process to match, practically invites another catastrophe," Bernstein said.
       Rescue efforts exposed a financial system with so many moving parts that US regulators and the world's top bankers couldn't keep track of them all.
       A reconstruction of the meeting sat the New York Fed that preceded Lehman's bankruptcy, drawn from more than a dozen interviews with participants, reveals a failure to understand the importance of commerical paper and how that market would be affected by the collapse of the New York investment bank.
       Rather than break up institutions such as Bank of America and Citigroup, or limit their expansion, the US has given them billions of dollars in tax incentives and loan guarantees that enabled them to grow even bigger.