Fri, Sep 19, 2008 at 11:39 AM
THE COMMON TAKE OUT IS - FLUCTUATION IN INTEREST RATES THAT TOO
-- TOO FAST CANNOT BE A TOOL TO FUEL GROWTH OR CHECK ON GROWTH. THIS INFACT GIVES RISE TO THE OPPORTUNITIES TO MAKE MONEY AND SPECULATE AND THERE IS FLIGHT OF CAPITAL WITH ERRATIC BEHAVIOUR. FOR THE WORLD ECONOMICS TO BE SUSTAINABLE AND RANGE BOUND AN ORDER OR INSTITUTION LIKE WORLD BANK SHOULD BE THERE WHOSE MEMBERS SHOULD BE ALL THE CENTRAL BANKS AND THERE SHOULD BE A HIGH END RESEARCH AND CODE LIKE BASEL WHICH SHOULD BE FOLLOWED AS A MATTER OF GUIDING PRINCIPLES RATHER THAN CONTROL AND PRESSURES.
RISK MANAGEMENT , DISCOLSURES AND ANALYSIS ARE ALL TALKED ABOUT AND THEY ALL GO FOR A TOSS WHEN THE GOING GETS TOUGH.
SINCE LATE 80’S THE ECONOMIC TURMOIL ON VARIOUS OCCASSIONS IN DIFFERENT MARKETS HAVE NOT LET THE REGULATORS WORLD OVER TO PUT IN PLACE A HIGH END AND OPEN GUIDING PRINCIPLE FOR A CONSISTENT GROWTH. RATHER THE PRESENT SYSTEM HAS ALWAYS ALLOWED FOR SKEWED CAPITALISM AT THE COST OF SOCIALISM (ACTUALLY AT TEH COST OF SUSTAINED EQUITY & WELTH CULT)
EXTRACT FROM 20 OCT 07 E MAILLet us be more realistic and also factor the aggression in the fringe market of derivatives which is the outcome of interest rate fluctuations in last 7 years (courtesy FED), that every tom ...hary has started taking positions leading to spiraling of positions without much increase in Demand for almost all the commodities and supply side dynamics have also not changed much over these years except for consolidation and so do on the capitalisation front except for meltdown and sellout/bail out and re capitalisation.
2 comments:
very wellwritten and thoughtful
The original idea or the theme of this article is good. But I have some points to make:
1. The article is not complete both in terms of continuation of the history of the problem and also in terms of the conclusion.
2. When a statement like "Risk Management, Disclosures and Analaysis are go for a toss when the going gets tough" is being made, one is overlooking the aspects of these areas of finance by generalising the inability of processes developed by financial institutions. In other words, Risk management need not to be faulted for the fiasco, it is the human thought process that evades the risks for the quench of greed that creates fiasco like the one we have.
3. I agree that FED and other central banks in order to play around the cyclical changes in the business environment with monetary policy, might have caused the actual problem, we need to understand that getting all the central banks to one platform is not realistic. we need to remember the Heisenberg uncertainity principle, where we are talking about global financial stability versus local political will.
Given the above points I would like to conclude that the current global financial turmoil is not just because of one country, but increased globalisation of every countries financial network, with the holistic picture has caused this problem. This is bound to happen everytime all the countries in the world try to network their financial system.
Thanks,
Sai Krishna V
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