Barclays affair shows time to shear banks –

This is an excellent article from the FT arguing that it’s time to consider breaking up the big banks. Check it out!

via Barclays affair shows time to shear banks –

For me the concluding comments were very powerful:

If we translate that back into the practical world of banking, it would be very helpful if Mr Diamond’s successor were to bring in a strategy for shrinkage. From the shareholders’ point of view it seems questionable whether Barclays’ ambitious targets for return on equity could be achieved by cost cutting alone. There must be a temptation to take on excessive risk.

Historically, the returns earned by investment banks have often proved illusory, leaving the boring but stable retail bank to come to the rescue with a handy cross-subsidy when boom turns to bust. Why not retreat from this overrated business?

Personally, my vote would be for an old-fashioned, pre-Big Bang World, with protective legislation like the Glass Steagall Act that was repealed by President Clinton – this for me, this  was the start of the financial crisis of 2008 which is still smouldering.

What do you think?

Barclays acquired the investment banking busin...

Barclays acquired the investment banking business of Lehman Brothers in September 2008 (Photo credit: Wikipedia)

French politics: Ooops, the coffers are empty | The Economist

Schémas de l'affaire soumise au Conseil d'État

Schémas de l’affaire soumise au Conseil d’État (Photo credit: Wikipedia)

This is a good read from the Economist newspaper. Check it out!

French politics: Ooops, the coffers are empty | The Economist.

In my view, France‘s Public Sector has enormous challenges to reduce its costs but few politicians have had the stamina and stomach to take on the French unions – let’s see what happens.

Personally, I have enormous respect for the French medical system which puts the UK’s to shame.

Another bloated bureaucracy for austerity ravaged European economies to consider is, of course,  the mighty EU bureaucracy itself with gold-plated pensions, generous expenses and perks etc.

What do you think?