Cain and Able?

The current economic crisis has prompted US Presidential candidate John McCain to make some very powerful statements. My favourite is the following:

"I warned two years ago that this situation was deteriorating and unacceptable," McCain said. "And the old-boy network and the corruption in Washington is directly involved and one of the causes of this financial crisis that we're in today. And I know how to fix it and I know how to get things done."

My question is, Sir if you do know how to fix it, what is stopping you from sharing the wisdom with the senior echelons of the global financial industry. Mr. Bernanke and Paulson notwithstanding, I am sure that the average American worker who you so vociferously proclaim to be the best in the world will be eternally grateful!

Now if you, the Americans were thinking if you could indeed vote for him, read the following:

"We need to set up a 9/11 Commission in order to get to the bottom of this and get it fixed, and act to clean up this corruption… They've violated the social contract that capitalism and the citizen have, and we can't ever let this happen again. I'll make sure it never happens again."

I am beginning to think that this guy might be a bigger entertainer than George Bush. Does capitalism have a social contract? And as far as his promise to ensure that this catastrophe is not repeated goes, well Sir, with all due respect I am sure you are not the only one with that vow. Global regulators have already started working towards that. Oops! You came with that wish a day too late!

Anything other trick that you can pull out of your hat today?

Beginning of the End

The City was not the same today. There was somber silence all around. Market forces had prevailed, the Fed had retreated and Lehman Brothers was laid to rest. Merrill Lynch, the largest US broker, agreed to forsake its independence in order to survive; albeit never again to be the same bull it used to be. AIG is on life support systems and Washington Mutual is fighting to live.

Two days and the world has changed. All the global financial innovation, the seemingly cavernous balance sheets and an opportunity of a life time to gain assets at deep discounts could not prevent this disaster. A look within and everyone saw their own domestic mess. It was too daunting a task to then take on an entity whose transactions cannot be understood or valued. Smug bankers who love to gloat about their deals and paychecks were left speechless and pay less. Some ironic justice on a rare bright, beautiful and sunny September morning in London.

While the US financial industry is licking its wounds, Europe should be ready for the coming onslaught and be prepared. It is not going to be fun ride from here on and there are a lot of hard lessons to be learnt. I only hope that unlike LTCM, Russian crisis and the dot com bust this tragedy is not short lived in the memory of the world. I hope it teaches bankers, corporates and the wider financial industry to control greed and the unnecessary aggression.

Canary Wharf is not the same tonight. There are no waiting cars outside the buildings that house the bulge bracket survivors. More floors are in darkness than usual and there is no one walking home late at night. The tube station is eerily quiet. It seems as if everyone and everything is pensive, except for the Reuters screen showcasing the tanking share market – a mocking reminder of what we have brought upon ourselves. Will we ever learn?