Beware of bank consolidation

Beware of bank consolidation

Every day there are fewer banks in the world. For those of us who have heard horror stories about those who, in order to solve problems with fraudulent withdrawals from their cards, must talk on the phone with anonymous voices and try to sound innocent, thinking about the possibility that one day we will only have one bank left, reminds us of Kafka .

But, apart from experiences worthy of a Stephen King, banking consolidation, an evolution that has been sold to us as a marvel, may contain other risks not sufficiently commented on – or happily ignored. Among these the following:

Less risk diversification. Whatever the authorities do to guarantee the diversification of banks, there is no doubt that fewer banks mean fewer baskets in which to put the eggs. When I read that during the first four years of the 1930s in the United States a total of 9,000 banks failed – I wonder what would have happened to that country if there had been just one bank.

Regulatory risk. Before, there were many countries and many ways of regulating banking. Today, when rules of global application are arrogantly dictated in Basel, the effects of any mistake can be explosive.

Excessive similarity. Encouraging banks to adopt common rules and regulations is ignoring the differences between economies, which is why some countries will end up with banking systems that are poorly adapted to their needs. Certainly, regulations whose main objective appears to be to safeguard capital come into conflict with other functions of banking, such as promoting economic growth and democratizing access to capital.

Less diversity of criteria. The smaller the number of participants, the lower the diversity of opinions and, with this, the greater the risk of misconceptions prevailing. Anyone who doubts this should read the one-dimensional analyzes published by the risk rating agencies.

Violent reaction. The development of decision-making processes has benefits but also risks. Thus we see that the speed of information itself, which promotes a rapid and immediate response, can aggravate the problems. Before, between those who took the problem home to study it and those who found out about it late, the market was provided with a buffer, which often saved it from untimely and poorly thought-out decisions.

Unclear benefits. To date we have not seen a foreign bank grant, for example, mortgage loans with globalized term terms and interests. In this sense, the benefits of a global bank are not clear, when it operates replacing local banking.

Cost of global aid. When banking in Venezuela had its last crisis, among other reasons due to buying banks at excessive prices, it was sad but logical that the cost was paid by our country. Today, with globalized banks, which are not immune to committing scams, as well as buying other banks at whatever price, who will pay the bill?

Nowadays, when the world calls for bank mergers or consolidations, I wonder if, on the contrary, the creation of special reserves based on size should not be imposed on banks. The larger the bank, the worse the fall and the greater the need to avoid it.

http://subprimeregulations.blogspot.com/2001/03/beware-of-bank-consolidation-early.html

 

Here is the energy family

Here is [my] the energy family

Dad Oil, a tough and hard-working guy, who brings the bread to the house. He is quite lonely since the family, even though they like him to earn well, ignores him, considering that marketing the devil's excrement does not have enough social status. In his work, when facing difficulties such as consumption taxes, he seeks the company of the OPEC guys, even when they also seem somewhat lacking in desire.

The Hydro breast, always present with its clean and pure energy. As long as there is good communication, he does not need praise and fulfills his duties by sowing renewable warmth in the family.

The eldest son, Carbon, [coal] a solid and conservative boy, even if somewhat boring. He doesn't complain much but, by searching for his language, we can hear him commenting on how unfair it is that he is ignored at home, while in countries like Germany and Spain, his peers enjoy such extraordinary subsidies that they even go by the same name as his father Petroleum.

The second, Heavy Oil, a man who, although he looks like his father, does not even remotely have his father's personality. He is a slow and heavy guy, but if someone only gave him some technical clinics, who knows if in the future he couldn't become a real cleanup hitter. Recently he tried to do something, putting on the Orimulsion flannel but, even in Florida, supposedly a friendly state, they wouldn't let him play.

The little boy Gas – who everyone knows as the genius of the family – but nothing he can start. Although he is a good associate of Dad Oil, helping him fill the empty spaces he leaves, he fails to assert himself when he is alone and free. However, one day he will be a star

The Aeolian female and her alternative cousins ​​are still too young to know how they will behave, but they look good.

Finally, there is a nuclear guy who, because he lives outside the country, almost no one knows him.

What's the point? It occurred to me that describing our energy family in this way could help me explain what a few of us consider to be possible errors in our energy policy as a country. Let's see.

The little Gas boy, instead of preparing him to exploit all his talents in the future and assist him in forming his own OPEG, we want to launch him onto the streets alone, because we have read that he is fashionable in other countries. We don't even realize that one of the reasons for its popularity is that since it is not organized, it is a perfect strikebreaker to be used against its father Oil. Furthermore, and even if it is not bad to generate electricity, when considering its true potential, burning it in this task is like being satisfied with it washing dishes, as long as it is in New York.

Regarding Heavy Oil, if in the Orinoco Belt we sold cheaply, for about 30 years, to various national and foreign groups the bitumen they need and in return developed on-site technologies for generating plants, we could make the boy a champion. How much better than to make him pass off today's global punishment as fat, dirty and flabby!

Finally, Carbon [coal] is not without reason. If they can use it in other parts of the world and if its value is not really seen to rise explosively in the future, why don't we allow it to be useful, generating electricity?

Obviously, all of these are only matters that a united family understands and considers.

PS. Translated by Google from  an Op-Ed in Venezuela, March 1, 2001