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Monday, May 19, 2008

Banks: they don't get it


One of the magazines I subscribe to is the British based "Economist." I like it because of its coverage of world affairs and its unique take on American life. Well, with the sunny days on us, I am going to the beach each day for my ocean swim and then I sun myself to dry off. This week's Economist has an 18 page special on "the future of banking." So being a non-economist, I thought their summary article would she some light on what's happening in the US economy and global economy. I was wrong. I read (at least half-way through) each article and got stopped, no, hijacked, by language and words that made absolutely no sense at all. Let me share a few quotes:
"many banks and other financial institutions loaded up on debt in order to increase their returns on equity when asset prices were rising"
"...they overindulged in liquidity leverage, using structure investment vehicles (SIV's) or relying too much on wholesale markets to exploit the difference between borrowing cheap short-termed money and investing in higher-yielding long term assets. The combined effect was that falls in asset values cut deep into equity and triggered margin calls from lenders."
These are portions of sentences that drag on for five, six and seven lines. There is no subject, object and sometimes they are even missing verbs. The nouns? I think they are made-up neologisms. It reminds me of seminary days when we would sit around over coffee and try to impress each other with the big words we just learned in class: proleptic, amphyctyonic league, heuristic, and other winners.
When you get into the church, you need to know your Bible, know Jesus and love people. The bank up above held money and lent money and cared for the customer. Those guys in the Economist don't get it and they lost it.

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