Dear Reader,
The current economic situation is quite strange : a lot of people, mainly from the financial services, continue to believe that the current crisis we go through is just one among another...
Apparently they don't believe in a quite long list of well informed persons like Barack Obama or famous economists like Nicolas Millions or just "popular good sense" that we were not only close to an "economic disaster" buth that we must seriously study new options ...
Our global XXIst century economy is divided according to me into three large segments :
- the individuals, persons and families who need to secure their day to day money and be sure that the money will keep basicaly the value of their deposits. In other words, the financial system must invent a way to protect them either from inflation and bankrupcy until a certain limit to define ; This segment might also include a set of organizations like cooperatives, like NGOs, like individual oriented companies ... who must secure long term development ;
- the individuals, persons and organizations that have "enough" money and accept in advance "speculation". I indeed believe that it is quite impossible for people and organization to avoid being attracted by "speculation" with a set of their assets.
- the individuals and organizations who develop their business mainly on speculation.
As a consequence I would recommend to have three categories of "banks" or "financial institutions" :
- banks which know that they have the money of people and organizations that don't want speculation. These banks would make their margins and develop themselves with strict governance rules : secure the deposits, provide an interest rate to cover inflation, anticipate potential deflation, generate an internal margin to continue to be "ahead" and cover operational costs. These banks would be not be entitled to "risk" money from a speculation stand point.
- banks which would be dedicated to work with individuals and organizations expecting speculation only. These financial organizations would not be entitled to get "long term development assets". Of course "speculation" should be defined in order to avoid misunderstandings. As a sample what investment is purely long term development and what other investment is "short term". The advantage of this type of system is that in case of a "collapse" it would not hurt dangerously the vast majority of the individuals and organizations willing to protect and develop themselves on a long run.
This would allow individual and organizations to have a clear gap between their short and long term investments. People would not suspect or discover that one bank was linked to another with risks that should not have been taken. Hence less suspicions implies higher trust and hence more long term economic exchanges.
To conclude, I would encourage economists, financial involved persons to "think large" as we can't avoid anticipating a "systemic crash" if we don't change our ways to manage long term raw materials, energy, development ... :
- take the best that works from the existing capitalist system where "markets are always right on the long run", where people are encourages to take risks and innovate ...
- take the time to study in depth what works in "niches financial systems" like the one put in place by Mr Mohammad Yunus . By the way, I read this referenced book thanks to David Martin's lent. Thanks to him. You can also have a look to Nicolas Blondeau document on the French Diplomatic Government web site
- take the time to study what works, and is compatible with our global village cultures, from the Islamic Banking System ;
- take the time to read the Papal Encyclical Caritas in Veritate "Love in the Truth" [Caritas In Veritate] Among other points :
-> Chapter 27 : "the food industry must reinvent itself"
-> Chapter 51 : "there is no need to separate their waste if we do not take care of its neighbor"
-> Chapter 67 : "globalization must be managed" [principle of subsidiarity]
Good reading
Jean-Michel
