GLOBAL RISK DIALOGUE

Some time ago, I needed to buy a house for my firm but I did not have enough money and couldn’t purchase something. Thank God my friend adviced to try to take the home loans from banks. So, I acted that and used to be happy with my credit loan.

This historical fact “2008/9 crisis” demonstrate the power of globalisation and how fragil the model was.

The Nations were sustainning the flag of global thinking, global advantages, global prices, global international politics, global etc… and now we have a drastic changing back with individual protectionist thinking.

What will happen to the Arabians that only produces petrol i.e.. They need to exchange their product with the rest of the world in order to survive. Another country needs petrol to move and so on.

When the exchange stops, the needs will generate conflicts and maybe the WW3.

Globalisaton is gone and also is gone the chances of poor contries to get technology and confort. In other hand technology means nothing if no one can buy. The world is playing loose-loose. By the way: even in the global model, technology had been overpriced > that justifies why developed countries are so bad right now. Some Africans groups will not feel this crisis: they dont have TVs, no News, no houses, no stocks, they eat a minimum of the food they can find > they were segregated in the global times and nothing will change for them.

Now we have Nations thinking ahead of how to get an advantage in the future IF the crisis end up. This is silly.

My personal bet is: best chance to get out of the problem is within the countries in development with a social/industrialised model focused in less speculation and more parts produced and mainly being a country with big natural resources, existing agricultural model and minerals diversity. Exemple: Brazil.

I would bet also in a re-construction era maybe initiating another human cilcle since the nation’s currency will be re-alligned in value with the new reallity.

Unfortunately, the Goverments play chess and the lessons learned will be set up 10 actions ahead. I don’t believe in a quick solution.

I think we all know what happened and we have learned that it is corrupt somehow.
My suggestion would be to implement regulation that dictates mandatory reserves in line with risk. For example if a financial institution or government provides credit for somebody with a high risk or for institutions with high risk, the finance house should be forced to build a reserve in case of collapse. This could be limited to the time frame the risk exists and the reserve could be released once the credit is paid of (like collateral). Senior Managers should be measured and made responsible for their actions. It’s the old story, new senior arrives with the target to increase margin year on year. He takes the easy route and reduces cost everywhere takes his bonus and runs as fast as he can. Two years later the company is in trouble.
I think up to now we have only looked at ‘what’ a senior achieved not ‘how’ it was “achieved” There should be an audit in place that measures how much risk is involved in a senior’s action and force that manager to built reserves against his actions. When calculating his achievements companies should consider the reserve figures and reflect the actual result. If something goes wrong..release the reserves. Would be great to have those reserves now wouldn’t it?
Bad seniors will argue that they would have to increase pricing, good seniors would find a way …..

With rare exceptions, the current crisis has taught us little. Decades ago some of us warned of certain doom in the long run based on policies of fiat currency and rampant growth of debt. “Leaders” not only ignored our warnings, they ridiculed them.

Politicians throughout time have always made their careers by convincing people that reality is of no consequence, that if the politician says something, things will be that way.

Here in the US we had out-in-the-open fraud and criminality, explicitly supported by government complicity.

To this day, the underlying fraud has not been addressed. The deliberate lack of oversight and regulation has been danced around and ignored.

Our problem is not a lack of money or anything else requiring a “stimulus”. Our problem is a lack of confidence and trust by investors of all types.

The rest of the world happily grew their economies based on known falsehoods or debt-based GDP calculations, allowing insane leverage rates and never, ever questioning things as long as returns looked good…on paper.

We are living in a small world, and we are all responsible for its growth or its demise. If we all strive for World Peace and Prosperity, the others would listen; they would want to join forces with us, too.