Dienstag, 22. Oktober 2013

Central banker Paul Tucker, cold-peace-geopolitics and the solution of the TBTF problem

"It is absolutely essential that the TBTF problem is cracked."

Said Mr. Paul Tucker, Deputy Governor for Financial Stability at the Bank of England, Member of BoE's Monetary Policy Committee, Financial Policy Committee and Member of the Prudential Regulation Authority Board.  (At the Institute of International Finance 2013 Annual Membership meeting, Washington DC, 12 October 2013.)

Tucker: "Nothing is more important to the success of the international reform agenda. Without it, global finance would remain fragile; and to protect against that, the international financial system would balkanise as individual countries sought to protect themselves. The stakes are high. My final point, therefore, is that the authorities will have no excuse if they don’t solve the TBTF problem through resolution regimes and reforms. The necessary technology is clear. The necessary restructuring of firms is clear. The necessary degrees and forms of cross-border co-operation are clear. It is a matter of: just do it."

Hey, presto, just do it. One can only agree with Tucker's approach - But alas only in technical terms.

What does the deputy governor mean with "authorities"? Being a central banker probably the central banks. But today's central banks, like many other institutions, are evermore committed to the economic interests of their countries. Just check what they do over at the Peoples Bank of China, the Bank of Russia, the Fed, the Bank of England, the Bundesbank, the Swiss National Bank, etc. etc.

ECB's Mario Draghi of Goldman Sachs fame became something like the last mohican of denationalized private property on US-dominated globalized financal markets in the world of central banking.

Five years after Lehman Bros. there are no surviving international authorites fit to solve the TBTF-Problem. Even though "the necessary degrees and forms of cross-border cooperation are clear, Tuckers Obama-like can-do-approach will not work, because his much lamented balkanization of global finance is a fact. We are living in a cold-peace-world now, nobody want's to lift up another country's tab, when zero interest an QE no longer work.

The TBTF-Problem cannot be cracked technically on a international level, but only politically within the different nation states.

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