Yes, it's meet and greet time once again in old Washington dc featuring the imf and World Bank and a supporting cast of 10,000, give or take the odd freeloader, but this time your boy gets tapped by the Group of 30, which represents the better element among the attendees, so the other 9,970 get left out, and I have to make its keynote speech, on global Banking in the New Millennium.
Mom, this is the kinda chore that is a signal honor, or the other way around, but there is no ducking out of it, I sit down with my crystal ball to conjure up a millenary world where banking is a great new business, but my crystal tells me one or two other things are apt to happen first.
IMF goes bust: obvious, really, they make the same mistake as Barings, they ship all their capital abroad and pour it into a bottomless hole and figure they are doing the right thing and no alarm bells sound, until Mexico goes down for the third time, or maybe it is Russia, but this time it takes the imf down with it.
Later an inquiry shows how the guys at 19th and i Street break every rule in the book, starting with the rule on large exposures, but also on liquidity and mismatches, when a dollar exposure goes whoopsy it is no use calling up capital from members who subscribe in birrs and bahts and pengos and whatever they use for money in Burkina Faso, besides goats.
The report censures the principal stockholder for exerting undue influence, and making the imf provide non-recourse finance in support of its own operations, it has the last Mexican deal waved thru and pretends there is no time for consultation, but since this stockholder is represented by the us Treasury you can figure the report goes down like a bad oyster.
World Bank goes boutique: this is one I see coming, Jim and I rough it out a year ago, but since then I fear he suffers from institutional capture, we all know the day that crowns the World Bank's efforts is the day it works itself out of a job, but zillions of jobs in downtown Washington depend on this day not coming for a while, and the holders of these jobs are apt to twist Jim's arm.
What he has now is an expanding real estate portfolio, fully tenanted, and thinly disguised as a development bank, so this year I come back with a new plan to relaunch it as the World Boutique, just a few clever guys who know how to make creative use of other people's money and can fit in a small town house, just like Jim's old shop, this must be too good a chance for him to miss, and for me, too.
All go for gold: too late, we see what a mistake the imf makes to sell off the gold in its vaults and fill them up with birrs and bahts and Special Drawing Rights instead, this all comes of a producer dominated approach to money, the guys with the printing works see gold as a competitor and want to drive it off, but what they want is not what the customer wants.
These guys are just a cartel of public monopolists, with licences to print money in their own countries, and plans for a merger in Europe, and debts to manage and a standing temptation to cover them by printing money, and anyone who believes they operate in the customer's interest believes in anything, including the promise to pay on their bills.
My crystal says the banks find a way to break into this monopoly, not long ago it is any self respecting bank's core business, the market is there, the margins are there, the incentive is there, all it needs now is a financial engineer, plus of course a high class printer, I plan for the Last National to issue good-as-gold certificates, our slogan in There's gold in that thar Hill.
Dealers go for broke: Joe Jett, Nick Leeson, Colin Armstrong, dealers always figure to make money for themselves but lose it for their banks, the guys who put up the capital get paid whatever is left over from the bonus pool, until it all goes wrong, when the dealers skip off with their loot and the owners go down with the bank.
Maybe they still do this in the next millennium, or maybe we find something better, like a franchise plan, when I warn Holey Buckett he and his dealers may have to buy themselves out and pay rent, he says this makes him feel like the office junior who asks for a rise and is threatened with a partnership.
Banks buy up the store: Wells Fargo show the way in this, to them banking is just another retail service suitable for drugstores, next to the toothpaste counter and behind the bubble baths, and I figure they set a trend, from now on banks quit bidding up for each another, and start bidding up for five and dime store chains instead.
If the g30 wish to know what new way the banks can find to blow their money this time, well, here is one, tho' the Brits have a deal with the brewers which says the banks do not sell beer and the pubs do not cash checks, so this may save them from the worst of it.
Surfers get virtual: this one shows up in everybody else's crystal, how we all learn to lie in bed and surf the net until we find a deal we like, and then we reach out for the button and zap it, so the systems providers take over the business and leave the banks in the air, well, I always figure banking for a form of virtual reality, but this goes too far.
Maybe there is a fault in my reception, but I see a different picture, early in the next millennium someone hits on the idea of putting up a solid looking building, granite on the outside, marble in the inside, staff to match, and marketing this as a safe place to put your money, it is called a bank and my crystal ball says it goes over big..
Page 1 of 2
Next
|
Single Page