The Flinchum File

Thoughtful Economic Analysis and Existential Opinions
Subscribe to the Flinchum File
View Archives

Credit crisis leadership shifts to London

10/09/2008

Yesterday’s headlines obscured the news. The headline was the global coordinated interest rate cut of half a percent, which calmed the markets nicely . . . for about five minutes. But, lower interest rates will not end the current credit crisis, nor will more liquidity. We need to reduce bank leverage. There are two ways to do this: reduce debt, which they cannot do, or increase capital, which has been very tough (just ask Bank of America).

The news is that England will begin injecting capital into its banks. While there will be much consternation about “creeping Socialism,” history shows that governments usually make money when they later privatize the banks. This also shifted leadership in the fight against the global credit crisis from Washington to London. It is time to learn at the knee of the Mother Country once again.

We are a fee-only advisor providing best interest fiduciary services to clients
in Chesapeake, Newport News, Norfolk, Suffolk, Virginia Beach, Williamsburg, and the surrounding areas of Hampton Roads.

CONTACT BAY CAPITAL ADVISORSWe Will Respond Promptly

Contact Us Bottom