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Thursday, 25 September 2008

Goldrush, greed and fear

What if there was no bail out?

Assume bail outs stop, as they should in a capitalist market, Paulson plan will be followed by Brown plan, Sarkozy plan, Eire plan, Spain plan, UBS (Switzerland) plan....etc if they don't

Half the at-risk banks go, so we will end up with even bigger super banks, is that good for the "market"? Probably not.

So opportunity presents itself to any concert party of rich VC's, investors (corporate or private) local high net worth people, respected business people and others to provide sensible products at good margins to desperate business borrowers.

Mark my words you will see small "banks" bursting out in 2009-2012. They will take assignment of debtors (factoring), offer small loans (perhaps SFLGS?) Possibly taking small stakes in their clients as well. And why not.

Good banking and careful lending is hardly rocket science. Current technology will provide scaleable platforms for growth and by-pass big clearing bank legacy platforms; ever tried to use on-line banking with some of the big 4 machines?

I said months ago money is too cheap now, in future there will be no such things as free business banking, personal banking etc.

This observation is the economist in me, somehow I doubt the politicians are brave enough to let the cycle renew.

If we are to avoid "socialist capitalism" i.e little choice for customers, they must.

Keith

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