My comment: Many months ago I talked with some friends about a process like this this for the Western financial system. To be honest, I expected that this would happen at early 2009 and to take to few months. I guess there are too much nationalist pride that cannot realise the obvious fact: financial institutions are nothing without income of funds, disregarding how big they are. If governments are into deficit and citizens cannot save then financial institutions are headed to failure.
Maybe, they needed that the largest European bank, HSBC, moves its headquarters from London to Hong Kong to realise that nowadays financial institutions go where funds are. Or maybe they needed three G20 meetings to open their eyes. Who knows. The good news is that finally, they are openning their eyes. The root cause is what mainstreet knows: an economy cannot survive forever if householders cannot save and governmnts are into deficit year after year. Scapegoats and politic propaganda can be used to hook many for short, but not all forever. Worse, scapegoats and propaganda do not produce actual wealth. Now the dilemma is how to go out from this hell? Option one: more bailouts. How to get funds from impoverish citizens? More virtual (printed) money? No way. Option two: let us split grain from chaff and let us seduce funds to come where grain is, then let chaff faces its fate. If not we will lose both funds and banks. Teherefore, we have to fix some severe mistakes done some years ago. Retail banking is a very conservative business. With one hand a bank takes some money from householders and grants them a humble interest. With the other hand the bank lends that money to A-rated clients demanding much higher interests. Easy. Low risk, low profit for investors. How is is related to collateralized debt obligations? securitized mortgage loans that depend on ups and downs of the "fair" market price of houses, structured investment vehicles, etc. High risk, high potential profit (or loss). They are different business. Humble householders should not share the high risk of financial engineers. Humble householders just want a safe place to put their coins for their just-in-case or for their retirement or whatever. That money should be holy. Financial engineers who intend to become millionaires through smart operations in stock markets or derivative instruments should face their risk by themselves, alone, not under the umbrella of modest householders. Let us split the traditional banking system from the "advanced" traders. Also, let us split the mortgage loan risk from the CDO risk, etc. etc. etc. each risk should have its reward accordingly. Then, capital, the huge capital, the capital that really counts, will support healthy investments and will decline insane financial fantasies. If not, banks will go where funds are and Western economies will lose both banks and funds. King Opens Rift With Brown on Whether to Split Banks http://www.bloomberg.com/apps/news?pid=20601068&sid=aV0G8sl_4YBE Peace and best wishes. Xi --~--~---------~--~----~------------~-------~--~----~ You received this message because you are subscribed to the Google Groups "World-thread" group. To post to this group, send email to [email protected] To unsubscribe from this group, send email to [email protected] For more options, visit this group at http://groups.google.com/group/world-thread?hl=en -~----------~----~----~----~------~----~------~--~---
