The Great Debate UK
from James Saft:
More leverage and less transparency, apparently.
Schwarzman told a panel at Davos that you can't mandate higher levels of bank capital at the same time losses are mounting and that mark-to-market accounting needed to be changed.
"You need lower capital. Do something with fair value accounting which is exacerbating things . . . We have to add more leverage to the system." He further took issue with what he described as a "fixation on transparency" and said "We have to use regulators to schedule out losses." By that I presume he means keep the bank on life support until they can make enough to absorb their losses. It did work in the 1990s with some prominent U.S. banks, but...
Laura Tyson, an economic advisor to the Obama administration, didn't seem to be buying in to the more leverage less disclosure meme.
from The Great Debate:
-- Preston Keat is director of research at Eurasia Group, a global political risk consultancy, and author of the forthcoming book “The Fat Tail: The Power of Political Knowledge for Strategic Investors” (with Ian Bremmer). Any views expressed are his own. For the related story, click here.
There are a number of macro risks that will continue to grab headlines in 2009, including the conflicts in Afghanistan and Iraq, cross-border tensions and state instability in Pakistan, and Iran's ongoing quest to develop advanced nuclear technologies.