Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
Display:
And a note to Chris - banks need not create money to be so leveraged: they just borrow it on the markets. Being at the intersection of investors and borrowers, they have access to huge pools of existing capital and have no need to create any more

Hmmm....well, bringing investors with existing wealth together with investment opportunities is what I call investment banking, and I see it as a desirable and "value added" profession and skill.

It's then a question of the characteristics of the "investment" and here I believe that the conventional "Equity" and secured "Debt" combine to form a conflicted cocktail of two sub-optimal and ethically questionable legal mechanisms.

Simply dividing revenue/production  streams into proprtional "nth's" gives one continuous asset class instead of two conflicted ones.

That's one point: but of course, if all we do is move around existing wealth we won't get very far, do we?

Credit is necessary for development, but I do not believe that credit intermediaries are necessary to create it.

Banks should instead act as service providers in managing the bilateral creation of the necessary "trade" credit.

This is the "Clearing Union" approach advocated by Keynes at Bretton Woods, and I advocate mutual "Guarantee Societies" to underpin such a Union, backed by provisions into mutually owned (not bank owned) default pools.


"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Wed Nov 28th, 2007 at 07:22:25 AM EST
[ Parent ]

Others have rated this comment as follows:

Display:

Occasional Series