Prof. Ferguson, Harvard University. On this topic. http://www.bloomberg.com/avp/avp.htm?N=av&T=Ferguson%20Urges%20Shift%20Away%20From%20%60Too%20Big%20to%20Fail'%20Mindset&clipSRC=mms://media2.bloomberg.com/cache/vJdPEPMwR5mU.asf
On 21 oct, 16:20, xi <[email protected]> wrote: > 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 > Bankshttp://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 -~----------~----~----~----~------~----~------~--~---
