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October 8, 2008

The End of the Investment Banking Era

The global financial meltdown has forced six central banks to coordinate their efforts to ease the detrimental economic effects of the worst ever global financial collapse by lowering interest rates.

We are definitely living history in the making and as everyone is contemplating the next move after the absolute collapse of the investment banking model, the Federal Reserve, European Central bank, Bank of England, Bank of Canada and Sweden’s Riksbank, all cut their benchmark rates by 50 basis points, or half a percentage point. The Bank of Japan, although it didn’t participate in this joint effort said the move had its full support. China’s central bank also lowered its one-year lending rate by 27 basis points, in an independent move.

Liquidity is also pumped into the financial system by ventral banks around the world, and governments do not hesitate to nationalise any troubled financial institution to avoid any further seismic events with irreversible effects for the global economy.

The growing number of banks and other financial institutions that are not able to survive the ever deepening credit crunch is still sending shock waves throughout the world, and I am not only talking about the financial markets.

The current market conditions will certainly be referred to by generations to come as a key milestone, as companies and organisations are struggling to weather the storm that hammered their earnings down.

3 Responses to “The End of the Investment Banking Era”

  1. Bill Says:

    I was looking at the pre-foreclosures on http://www.buymyhousebeforethebanktakesit.com and tried to tie our current events into historic events. I came across these famous old quotes;

    This (Federal Reserve) Act establishes the most gigantic trust on earth. When the president signs this bill, the invisible government by the monetary power will be legalized. The people may not know it immediately but the day of reckoning is only a few years removed, the worst legislative crime of the ages perpetrated by this banking bill.” – Charles A. Lindbergh, R-MN

    “We have in this country one of the most corrupt institutions the world has ever known. I refer to the Federal Reserve Board and the Federal Reserve Banks. Some people think the Federal Reserve Banks are U.S. government institutions. They are private credit monopolies; domestic swindlers, rich and predatory money lenders which prey upon the people of the United States for the benefit of themselves and their foreign customers. The Federal Reserve banks are the agents of the foreign central banks. The truth is the Federal Reserve Board has usurped the Government of the United States by the arrogant credit monopoly which operates the Federal Reserve Board.” – Congressman Louis T. McFadden, Chairman of the House Banking and Currency Committee, addressed the House on June 10, 1932. 75 Congressional Record 12595-12603

    “Capital must protect itself in every possible way, both by combination and legislation. Debts must be collected, mortgages foreclosed as rapidly as possible. When through the process of law the common people lose their homes, they will become more docile and more easily governed through the strong arm of government applied by a central power of wealth under leading financiers. These truths are well known among our principal men who are now engaged in forming an imperialism to govern the world. By dividing the voter through the political party system we can get them to expend their energies in fighting for questions of no importance. It is thus by discreet action we can secure for ourselves that which has been so well planned and so successfully accomplished.” – 1924 US Banker’s Association Magazine

  2. MoneyMatters Says:

    Some jokes:

    What’s the difference between an investment banker and a pigeon?
    A pigeon can leave a deposit on a Ferrari.

    Japan is mired in financial uncertainty. The Origami Bank has folded, Sumo Bank has gone belly up and shares in Kamikaze Bank have nose-dived.

  3. MoneyMatters Says:

    Money talks. Trouble is mine only knows one word – goodbye.

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