Roubini, a reformer, not a revolutionary

An apocalyptic scenario was presented on Bloomberg TV, by American professor Nouriel Roubini, at the end of last week:

"We may have a collapse of the Eurozone, a re-entry into recession of the United States, a hard landing of China, a hard landing of emerging markets and a war in the Middle East. Next year could be a perfect global storm".

Roubini, who is considered a hard sided prophet of the crisis, recommends the separation of banking departments through "Chinese walls", thus eliminating the conflict of interest between the loan departments of banks, and their investment banking and portfolio management activities, as well as their brokerage services, insurance and derivatives divisions.

What the American professor is suggesting is nothing original, but rather a return to the rules which governed the banking system fifteen years ago, which were eliminated about ten years ago and which have accelerated the toxic disproportion between the value of the financial and banking transactions, compared to manufacturing, leaving the latter to play a secondary part.

In spite of the hard stance he is credited with, he does not promote the idea of a dismantlement of the banking system (like our media construed his phrase "The only way to avoid this situation is to destroy these financial supermarkets"), but he is only asking for a restructuring of the regulations and recommends harsh sentences for the illegalities and immorality of bankers: "Bankers are greedy. They have been greedy over the last hundreds of years - it's not that they are more immoral now than they were a thousand years ago. We just need to make sure that they behave in such a manner that we minimize the risks".

In reality, Roubini is not a revolutionary, but a reformer, at a time which, if it precedes the "perfect storm" (the term denotes the storm that no one and nothing escapes from), will then require unprecedented measures.

But the measure of "Chinese walls" is basically hogwash, when one has already seen the cases like Enron/Arthur Andersen happen, the official lies of the Greek government, (but preceded by the manipulated statistics of France), the recent manipulation of the Libor interest rates and god knows how many others "white collar" frauds.

"Chinese walls" were a lie which we believed before Arthur Andersen went bankrupt.

Today, such a claim is ridiculous.

The measures which Roubini recommends can't solve the crisis, but they would have merely reduced the force of the blast when the financial bubble was inflating, but without allowing for it to be avoided.

In fact, banks aren't the problem, nor are governments (the latter are even less so, seeing as how they are held captive by banks), but the nature of credit itself.

Roubini speaks about the greed of banks over the last thousand years, and approximates the period of the creation of banks.

But in history, credit precedes lenders by another thousand years.

Maybe, if he doesn't get scared of being labelled "an extremist", Roubini will go back in time, not one thousand years, but two, and will find there the root of the current crisis.

I think we can be proud of the fact that our generation brings full a circle of the civilization of credit, which will end with us.

Is there life after business?

Naturally.

The world will look different.

We could try to predict how.

Perhaps it could shorten our torment in this life...