Tuesday, 2 December 2008

Everyone fails equally

At the start of the year, my gauge as to whether someone was a headbanger socialist was to ask the following question: do you believe in public or private allocation of capital? Now, at the end of the year, it looks as though this was the right question though everything else has changed.

Those that still believe in private allocation of capital are the headbangers while the moderates are those that believe in state allocation of capital. How times change.

Now that we’re fully versed in the annals of market failure, when it is time to lift the equally large tome marked ‘government failure’?

Pimco’s Bill Gross has been looking into these issues too.

“More regulation, lower leverage, higher taxes, and a lack of entrepreneurial testosterone are what we must get used to — that and a government checkbook that allows for healing, but crowds the private sector into an awkward and less productive corner.”

“We are now morphing towards a world where the government fist is being substituted for the invisible hand, where regulation trumps Wild West capitalism, and where corporate profits are no longer a function of leverage, cheap financing and the rather mindless ability to make a deal with other people’s money.”

Elsewhere ...

Lots around today. Am interested in Islamic finance. Here’s a primer on some recent issues.

Am also fascinated by the retail market. Lots of them are worried about going bust, so they are getting in their sales early. Debenhams is having another. Back by popular demand it cries ... what a joke!

Also this FT story on the Magal Group is worth a read. The bank in the dock is RBS, the state-owned bank.

And yet more on super senior CDOs.

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