Thursday, September 17, 2009
The tortoise and the hare
Unadventurous, leaden-footed - too slow to climb aboard the ship of fools - Asian banks, boringly recycling deposits into corporate loans, have strengthened after their speed-fuelled western counterparts stumbled and fell. The former are strong in market cap and deposits, less so in (highly leveraged) assets. The head of Hong Kong's monetary authority said "The financial system does not and should not have a life of its own" and argued that banks' primary purpose was to support the economy, not to create jobs for bankers or headaches for regulators. The Chinese apparently decided a long time ago that derivatives were like morrors reflecting other mirrors, giving an unwanted view of infinity.