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November 24, 2011

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Robin Brownsell

I have just read this book and could not agree with you more :

"Masters of Nothing: The Crash and how it will happen again unless we understand human nature" by Nadhim Zahawi and Matthew Hancock

Standing by for FSA report on 12th December!

Manish

Good post,thank you share it,i like it very much

Iang (What Banking is.)

Good post!

Start with your definition of banking:

> The nature of banking is to borrow your money, in the form of deposits that they pay you interest against to look after, and then lend that money at a profit to others in the expectation that others will pay it back at some point.

For this activity, banks are issued a charter. That is banking, for that you need a charter.

The reason you need a charter is because of the extraordinary risk taken between demand deposits and term loans. The economy can screw you -- no other business faces this exposure. Banking _is_ risk, and any technophiliac approach to risk is doomed to failure.

However, if the bank then uses its capital (its franchise!) to invest in *markets* for some quick profits ... it has broken its charter.

Understand the nature of the banking charter. From this, all else follows, and the GFC marks I and II are explainable.

mark piper

Any risk practice that is based on historical data is fundamentally floored. Discuss....

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