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China is not a democracy!

March 16, 2009

Analysis of:China worried about safety of U.S. debt | money.cnn.com

Although China has inserted itself successfully in the global commerce during the last 30 years, thanks in part for their willingness to produce energy without any concern about pollution, it still far from being an open and democratic country. The tools available to a democracy are far less effective than the ones in hands of a non-democratic country as far as the economy is concerned. Both the US and Europe have suddenly "found" billions of dollars to aid struggling sectors of its economy, but this comes with a price. Either they will face increase currency devaluation in the future or they will have to offset it with taxes in the years to come - which means slowing down expenditure (investments included) in the years to come.

Nationalization and Centralization - A huge stepback!

March 9, 2009

Analysis of:HBOS, RBS U.K. Deposits Fell; Government Banks Gained | www.bloomberg.com

Governments around the globe simply do not know what to do, have no idea of the impacts of the banking crisis and are pressing each other to take bold steps. Given this Scenario, is Nationalization or even Centralization the answer? It is not, and depositers do realize it. Firstly because one cannot handle well an operation if unaware of its entire chain. And Government officers, are not in any way more qualified than Bank Executives in terms of undertanding the business. Secondly, Governments still miss the picture. Banks no longer simply lend money - they own every business that have implications on monetary transactions, including insurance and funds operations. Separate agencies are in charge of supervising the several business that nowadays are know as "banking", without getting the full picture. Everything combines into a holding operation and if Governments do not understand that, they will "miss the train" with serious consequences to taxpayers and depositers.

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