Bahrain’s crown prince highlights prudent values to beat the credit crunch
Regulation, prudence and conservatism are the values that steered Bahrain away from the worst impact of the global credit crunch, His Highness Shaikh Salman bin Hamad bin Isa Al-Khalifa, The Crown Prince of Bahrain and Chairman of the Economic Development Board has told a major UK television business programme.
Speaking on Sky TV’s Jeff Randall Live show, The Crown Prince said Bahrain was not facing the severe difficulties hitting other economies because of the careful policies of the past.
He said: “I think our prudence and our conservatism has been tested and while one can never see 100% into the future and predict everything and claim things that they shouldn’t be claiming, I think I can say I am very proud of what we have been able to achieve. “
He said that what Bahrain had done differently was “regulation, prudence and conservatism” and went on to explain where other banking systems had made mistakes.
He told the high profile business journalist Jeff Randall: “The competitive, ferocious competitive nature of the markets in the west drove a lot of these banks and even some of the state owned mortgage associations, Fanny Mae and Freddie Mac as examples to make some very questionable decisions. I hear that banks were giving money, over 125% of value on homes on mortgages. That’s making a paper assumption without a full understanding of what the supply and demand was in the markets.”
The Crown Prince also said that a modest rise in the price of oil now would help avoid damaging surges in the future caused by lack of capacity. He explained: “We think that a reasonable price is somewhere in the region of $70-$80. At that price producers, small and medium sized producers can continue producing and fields that are needed in a growing economy to be online can actually supply the world. A $40 I think we’ve got a lot of people hedging at the moment to stop the price getting any lower because quite frankly they would just have to shut down. And the more difficult fields that are around the globe today would also have to be mothballed. Now what that means is that if we do enter an expansionary period in two, two years, a year and a half or three years, however long it takes, those fields would have to be unlocked. So unfortunately, with this low price of oil, what we are actually encouraging is a higher spike in the future if the global economy rebounds. “
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