Focus on Global Economy

Currently, the global economy is undergoing drastic changes unlike anything in all prior history. There is over one (1) quadrillion dollars of “worthless paper”, via asset backed securities, in the form of Over-The-Counter (OTC) derivatives, Collateralized Debt Obligations (CDO) and Credit Default Swaps (CDS). World over, true wealth is being eroded continually which in turn directly impacts wholesale and retail consumer demand. In addition, credit and economic contraction is evident in all sectors of the global economy; there is not one country which is being spared. As any prudent stakeholder and/or policymaker well know, all forms prevailing debt (securitized / subordinated / mezzanine), including but not limited to, all forms of sovereign and private debt must be effectively deleveraged in a timely manner. Those unviable financial and commercial institutions which need to be orderly liquidated must undergo the process and those which need to be closed down must be followed through definitively.

The global banking system, set-up on an antiquated mercantile system with focus on merchant banking serving commercial and individual depositors, needs to undergo a major overhaul with focus on stringent balance sheet collateralized securitization and do away with non-recourse financing as evidenced by the “Enron” types of financial and commercial entities. In addition, the concept of investment banking must undergo a total overhaul and be based on prudent commercial market fundamentals, sound business fundamentals and viable business-revenue models. In addition, all forms of investment banking must be wholly and fully separated from all forms of merchant banking. Finally, global currencies must be indexed to a basket of precious metals such as “physical” gold and silver bullion actually on deposit with respective central banks, and failure to do so will deem them “fiat” currencies sooner or later, as the case may be.

There is a perfect storm brewing for the global economy and time is ticking very quickly. Constructive, positive and tangible action by all stakeholders and policymakers, across all spectra, can truly preserve the genuine “common good” of everyday citizens.