Lessons from the Credit-Anstalt Collapse


BOOK REVIEW -
The Credit-Anstalt Crisis of 1931, Author: Aurel Schubert
The End of Globalization: Lessons from the Great Depression, Author: Harold James

By Peter Coy – The fall of Credit-Anstalt—and the dominoes it helped topple across Continental Europe and the confidence it shredded as far away as the U.S.—wasn’t just the failure of a bank: It was a failure of civilization.

With weak banking systems still resisting aggressive treatment, it’s worth revisiting Credit-Anstalt to plumb for any applicable lessons. Long before 1931, Credit-Anstalt had begun to develop cracks that were invisible to the public. When the Austro-Hungarian Empire broke up after World War I, the bank continued to do business throughout the old empire without recognizing that the world had changed. Suddenly, more knowledgeable local lenders were getting the best deals, leaving Credit-Anstalt with the loans no one else would touch, says Aurel Schubert, an Austrian economist who wrote a 1991 book on the episode called The Credit-Anstalt Crisis of 1931. (There’s a modern analogy in Greek banks’ unwise loans in Bulgaria, Romania, and Serbia.) more> http://tinyurl.com/633oabh

About these ads

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s