The Global Banking Crisis

It is interesting to note that Gordon Brown and his merry band of spinners, including John McFall (chairman of the treasury select committee) keep saying that the banking crisis is global.

Well, it is, in the sense that if American and British banks go to the wall, the globe is truly screwed. It does not mean that every bank in the USA or UK were or are on the brink of going to the wall, but enough are.

What it isn´t though is a global banking crisis if you mean everyone´s banks were all at it. They were not. As an example, Spain´s central bank, when asked by its banks if they could get into buying securitised debt said yes, but you will need more share holder capital. Needless to say they did not bother. Lebanon´s central bank just said no. Not only that it told its banks to get out of a number of American banks with so much advance notice that the net loss to them has been $20 million, which is peanuts.

That is a crucial difference. Those central banks were not regulating their banks but supervising them, much as the Bank of England did prior to Gordon Brown taking over and hoarding power to the Treasury, whilst giving away the fig leaf of independence to set interest rates with a government appointed committee to government set targets on what inflation is.

So the banking problem is global in its fallout, but make no mistake, it is not global in its causes. They were for the most part authored in London and Washington.