Friday, January 9, 2009

Words of Wisdom - Part II

More words of wisdom from Henry Clews to get us through the harrowing market that we find ourselves stuck in. Henry Clews lived from 1836-1923 and wrote several books on his views and experiences on Wall Street, including "The Wall Street Point Of View" and "Fifty Years in Wall Street."

"I cannot refrain from expressing the opinion that there are permitted to exist in this country conditions which needlessly aggravate the perils of financial upheavals, when they occur. In every panic much depends upon the prudence and self-control of the money-lenders. If they lose their heads, and indiscriminately refuse to lend, or lend only to the few unquestionably strong borrowers, the worst forms of panic ensue."

Just like back then, banks hold the keys to the recovery.

"If, on the contrary, they accommodate to the fullest extent of their ability the larger class of reasonably safe borrowers, then the latter may be relied upon to protect those whom the banks reject, and thus the mischief may be kept within some bounds. Everything depends upon anxiety being held in check by an assurance that deserving debtors will be protected. This is tantamount to saying that all depends on the calmness and wisdom of the banks. They may easily mitigate or aggravate the severity of the crisis according as they are prudently liberal or blindly selfish."

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