The next boom starts in ... 2014? -- by Chris Skinner
The USA has pledged almost $2 trillion, the UK over $1 trillion, Germany around $700 billion with more to come, and the ECB over a trillion. Iceland’s bankrupt, and many say that Ireland is one character change and six months from being another Iceland. Spain’s property market has crashed as have their jobs, and Greece is seeing riots over the euro. Germany’s unemployment rates are breaking records, whilst the rest of Europe wonders what is happening. These are all the things we are wondering about today, and we are all trying to find some security and confidence.These are, as Warren Buffet calls them, “weapons of financial distribution”. These weapons saw bankers creating financial instruments that were fatally flawed, regulators with zero comprehension as to what they were regulating, and management driven by profits and greed.
The urgent three priorities right now, for example, are to get rid of bank’s bad debts, help banks to lend again, and to resurrect banks’ wallowing share prices and Tier 1 Capital ratios.This is being addressed and will be resolved through new regulations and new business structures. Five years to get back into a growth cycle. In 2014, we will be in another growth cycle. A more sombre one, with very different financial instruments and services, and with banks that are far more checked and regulated than ever before, but it will be another growth cycle. Those firms who harness the power of the network will be the ones that achieve the fastest growth in that next cycle.
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