Banking on the Past


I am writing a short series on the Banks of the past, present and future. Prediction what future of banking was the easiest piece. Identifying the current transition phase was a little tougher so I borrowed from another blogger’s post. Describing banking of the past was most difficult. Here is an example of what I’m talking about:

“The bifurcation of the credit loss piece is a key component of the revised rule,” says Larsen, “but the part that often gets missed when pundits talk [about the rule] on TV is that the trigger that starts the whole [measurement and recording exercise] is the realization that a loan is not going to be repaid. The rule addresses an impaired security, you still have to identify the fair value of that security, and all of the losses are disclosed on the balance sheet.”

Holy shit, did you understand any of that? Guess what – nobody else did either and bankers are wondering why nobody wants their “currency”. Currency is a conversation, a social agreement, a community organizer – if nobody know what it is, people are going to start trading something else.

Has anyone noticed that far and away the greatest innovation in any industry, anywhere on earth, and growing faster than anything else in history of human civilization (with the possible exception of ‘controlled fire’) is Social Media? I know it’s a little tough learning new words like “spam bot” and “avatar”, but the concept of each should be quite familiar to the bankers of the past. A spam bot is an unwelcome mechanism that squanders human productivity and an avatar is something that represents the object of trade, but which is not actually the object of trade. The parallels are quite remarkable.

That said, there does not seem much point in discussing the past. On to the future.

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