With apologies to George Dangerfield, who published The Strange Death of Liberal England in 1935 chronicling the collapse of the British Liberal Party prior to World War I, I’m borrowing his title for this commentary. Okay, bear with me. Regrettably, we may be witnessing something happening to our banking system which is somewhat reminiscent of the death throes of one of England’s great political parties. The Liberal Party expired in the years leading up to the Great War not because of some single momentous and metamorphic event, but because of a series of modest crises, each in its own right small bore which, at the time, was not viewed as terribly consequential. It failed because of the stultifying, dismal and confused responses of the Liberals to these events. In the end, the party became untenable as a party of government. Let’s hope no one writes that book about our banking system in the years to come.
Our enormously complex, interdependent, vibrant, entrepreneurial, adaptive, world girding and dynamic U.S. banking system has played a seminal and still critical role in making this economy succeed. It is now under assault by large segments of our political elites and their attendant and enabling (self-identified) intelligencia. This fraternity inspired by the twin idee fixe that the Great Recession was caused by the failures and failing, economic, structural and ethical of our banking system and a fabulist conviction that banking can be “fixed.” This is a chimerical crusade to overturn the business cycle. Fruitless and dangerous.Continue Reading The Strange Death of the Modern Financial System
As we do each year at Crunched Credit, we take the end of a calendar year as an opportunity to stop and reflect on where we are, and what the next year might hold. Recognizing the certainty that a successful prediction is more a random event – a blind cat finding a dead mouse, than a product of wisdom and analytic prowess, it remains an important exercise. It bears repeating that refusing to take a view is actually to make a choice, and a pretty silly one at that. So as we at Dechert churn through our budgeting and planning process for 2016, we will make some assumptions about the economic environment and adjust our planning accordingly. Let’s agree, we are going to be wrong about a lot of stuff – maybe everything – but that fact doesn’t excuse the critical need for having a macro view.
Earlier this year