The shrinking of US financial banks

Lehman death telenovela no.2

This w\e marked a milestone and turning point in the restructuring of the US finance capital, although far yet from a recovery of the world economy from the credit crunch.

Starting with Bear Stearns 6 months ago, now US financial independent banks have been CUT FROM 5 TO 2, as we knew and we had easily predicted already last March. But it is important to note that each one of the disappeared banks has followed a different path:

a) protected and public bail-out  for Bear Stearns (absorbed and disappeared within JP Morgan, a very big, top operator  in finance – but not a purely financial bank);

b) open market acquisition by a commercial bank: this w\e, the Californian, agrifood based colossus BoA has acquired for $ 50 bn Merrill Lynch, the less unprofitable of the two financial banks in irreversible crisis, due to exposition to subcrime polluted products;

c) after a refusal by Bernanke-Paulsson to save it, Lehman Brothers was sinking today  and leading to bankruptcy and default, unless a last minute cheap buyer appears (unlikely: everyone abandoned dealings, when realising the Fed Government was not putting money and\or a last resort guarantee, this time).

Such a concentration, and the disappearance of the US anomaly (an autonomous financial segment  of the credit industry), comes together with another IRREVERSIBLE CHANGE: indefinite, almost infinite derivatives, unlimited securitisation will never be back again. Financial innovation will explore other grounds: not these ones, that  weakened the financial system, leading it very close to a collapse and meltdown.

Now we are left with the credit crunch and the world recession 2008-09. But finance capital has been reorganised,  in order to take advantage from the recession, and prepare the next Minsky cycle of  financial speculation.

Published in: on September 15, 2008 at 6:01 pm  Leave a Comment  
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