Wednesday, May 13, 2009
London and NY are finished as global financial centres
The FT: Amid economic rubble, Shangkong will rise
Once the global recovery begins, however, New York and London might be vying less with one another than with a new competitor in the form of a partnership between Hong Kong and Shanghai – call it “Shangkong” – a highly consequential shift of financial gravity to the east.
Posted by sold 2 rent 1 @ 10:39 AM (555 views) Add Comment
8 Comments
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1. sold 2 rent 1 said...
As with 1991 when the West watched at the collapsing Soviet Union in amazment, China will watch as the Western nations collapse in a similar manner in late 2010.
2. icarus said...
1. Don't underestimate China's own problems. It depends on markets that are shrinking and it has its own bubbles that stem from printing renminbi to buy dollar-denominated assets. This has led to equipment/investment overcapacity and to asset-price bubbles, which have led to the kind of borrowing and spending that has caused problems in the west.
2. So there's a question of whether China really wants to concentrate on building new financial institutional arangements for the world economy. East Asia's markets are (I think) mainly oil/commodity markets and are somewhat fragmented - Japan, Shanghai and HK. Most of China's energies are going into old-fashioned economic growth. Then there's the question of the extent to which China wants to challenge US hegemony generally, e.g. China's economy operates in a world where the US is the global cop (a police force which in effect is funded in part by China) who keeps markets open and quells rogue states and social movements. Don't forget that "China" means China's elites, who are not doing badly from current arrangements.
3. The writer seems to assume more-of-the-same kind of banking with a simple shift of location of its epicentre. The globalised, Anglo-American style of investment banking has been based on debt-fuelled growth, asset-price bubbles and predatory loans to the rest of the world. It's based on Latin America's, Africa's etc. not having control over their own financial systems and being dependent on these loans, with the IMF playing the role of strong-arm collector and bailiff. This is based on the subordination of the credit system as a public utility to the self-expansion of finance capital. There may instead be worldwide move towards a public-utility banking model, where the emphasis is on investment in the real economy and strengthening the means of value generation. If this happen then banking may be less global and more national - the Chinese system itself is centred on a small number of large, publicly-owned banks, with the government driving their credit strategies - with governments of nation states underwriting their own banking systems thanks to their taxing and money-printing powers.
3. icarus said...
With regard to the writer's terms 'sophisticated' and the need to attract 'talent' -- you don't need as much of this commodity if you're not trying to deceive and disinform.
4. general congreve said...
Black Ops: "Mr Obama, this is it, not more options left on the table, we are sunk, ShangKong will be king and we will be crushed within a year, it's bad".
Mr Obama: "I understand. Execute executive Order 1023 immediately".
6 hours later in the South China Sea a Taiwanese Naval Vessel on exercise with US Navy submarines is scuttled, it sinks hitting the US Navy submarine on its way down, sinking that too and killing all on board. According to all news channels it was a Chinese attack and not only have they attacked an ally the US are duty bound to protect, but they've killed US service personnel into the bargain.
Black Ops: "Executive Order 1023 100% successful Mr President".
Mr Obama: "YEE HAW!!! KFCing right on!!! Let's sink those b@stards once and for all, no one steals our crown and gets away with it".
WW3 ensues...
5. happy mondays said...
@ general congreve
Emmm, it sounds insane, something of a Bourne supremacy type movie! But sadly you are probably right, as i blogged the other day we are led / controlled / manipulated by a few psychopathic egomaniacs that will stop at nothing or for humanity to keep power!
In the words / lyrics of Peter Garret (midnight oil) Put down that weapon or we'll all be gone, i must know something to know it's so wrong....
6. happy mondays said...
“Beware the sleeping dragon. For when she awakes the Earth will shake! Winston Churchill on china.
7. 51ck-6-51x said...
China is massive and their middle class is growing. China has the four biggest banks in the world by assets (I believe, maybe it's for of the top 5 or 6), of course they will eventually have greater financial centres than the square mile or Wall St, but size ain't everything (as the bishop said to the actress), and the world will always change.
8. drewster said...
I'm not sure about Shangkong becoming a centre for business headquarters. China has yet to produce any world-class companies like Sony or Philips or Google. Even South Korea has better-known brands than China. It might well happen, but the signs aren't there yet. Shangkong may just remain a national or regional hub rather than a global one.