Every Sunday (Asian Monday morning), I write a column detailing the outlook for the week ahead in Asia. Since this week's column was broader and more in depth than most, and contains what I believe to be key points re: the banking system, I'm making it available to readers of this blog (albeit four days later than originally published). It was also very prophetic regarding Morgan/Mitsubishi.
From Asia View: The New Global Banking System:
What few analysts have noted is that it was really just a matter of time before the changes in the banking system we have experienced in the past few weeks were brought about. Call it creative destruction, or disruptive growth – when inevitable change comes, it’s rarely a smooth process.
Nowhere is this more true than in the banking industry. The reality is, the traditional U.S. investment bank model that many lament the passing of was built to function in the framework of a very different, bilateral era.
The de-politicization of world commodity markets, the rapid global application of technology, and the astonishing growth of emerging markets has ushered in with it a distinctly unilateral model. That’s easy to see in a social context (oil is as much a free-market product as a can of Coke; eight year-olds call friends from New York to Hong Kong on their cell phones; to a kid in Xi’an, China, the word “wireless” means a service connection to download music videos while for her parents it was the radio they never had) but it’s less obvious in a financial one (think mortgage-backed security).
Simply, disruption has been banging on the door of the banking industry for decades: we just haven’t paid any attention.
Nowhere is this more true than in the banking industry. The reality is, the traditional U.S. investment bank model that many lament the passing of was built to function in the framework of a very different, bilateral era.
The de-politicization of world commodity markets, the rapid global application of technology, and the astonishing growth of emerging markets has ushered in with it a distinctly unilateral model. That’s easy to see in a social context (oil is as much a free-market product as a can of Coke; eight year-olds call friends from New York to Hong Kong on their cell phones; to a kid in Xi’an, China, the word “wireless” means a service connection to download music videos while for her parents it was the radio they never had) but it’s less obvious in a financial one (think mortgage-backed security).
Simply, disruption has been banging on the door of the banking industry for decades: we just haven’t paid any attention.
Download asia_viewthe_new_global_banking_system.pdf
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