Some of our Continental cousins are pretty caustic on the subject of the "Anglo Saxon" market model. (In some quarters this slips easily into an attack on "New York financiers", and we all know what that's code for.)So it comes as something of a surprise (hem hem) to learn that several staid, socially-responsible German regional banks are heavily exposed to US sub-prime mortgage risk!
Surely some mistake, I hear you cry: are not these institutions the epitome of rectitude, the conservative pillars of the German economy ? Which perhaps explains why the German government has been so swift to bail 'em out. Perhaps the provincial Dummköpfe hope we all realise they have been bewitched by these instruments of the sophisticated Anglo Saxon devil.
Meanwhile, the Bank of England continues deaf to Barclays' pleading. So which is the more disciplined market ? I know what I think.
ND
(with German grammatical advice from Mark W)
8 comments:
"dummkopfen"
Sorry, the plural is "Dummköpfe"
Neither a borrower nor a Länder be, as they say in Frankfurt.
Mark - thanks ! we dö appreciate help in our mission to maintain cultural Ständards around here
Idle - ditto ! (now, about that Ransome poetry competition of yours ...)
Amusing that Bob Diamond says at one point in that interview that Barclays are "awash with liquidity" and at another point that the situation is desparate and the BoE needs to free up market liquidity. Looks like Barclays are totally in the sh*t.
True, Nick. High time I ran the winning entries as a new post. Newmania will be so thrilled.
Anon - yes, there is good cause to conduct a serious review of how Capital Adequacy is working in practice.
I am convinced the theory is sound but individual risk committees must enforce it internally, and financial regulators from the outside - wielding stiff penalties for delinquency.
The streets of our major financial centres should be filled with heads a-rolling.
ND - They are, almost all the equity derivatives teams at the banks are gone now.
Perhaps a better way of phrasing that is that they have bolted now that the stables are on fire.
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