A Leaky Roof
November 8, 2011 § Leave a comment
Paul complaining about leak in his conservatory. Got me thinking– an appropriate metaphor for the state of the banking sector today. For every house needs four walls, a foundation and a roof. (True that my own sprawl has a few more than four walls, but let’s just stick to the theme here.)
At X bank, my current employer, we had a solid house. Built on ancient foundations (from the time of the Weimar Rep), a strong base, well capitalised, low risk, little return, but good profits on the margin and solid, if unspectacular, boni (pl. bonus). This was five years ago. And then the proprietor let in some new lodgers (yep the Yanks, please see previous note somewhere in these notes). These new lodgers, for some reason, decided to build themselves an extension. They didn’t get planning permission but went ahead and bulldozed a section of the house. They went foolish, they went crazy! The extension merely served to weaken the front wall, which is now teetering inwards. The back wall has already collapsed and the roof…..well the roof flew up into the sky following a strong gust (2008 Lehman Bros), and landed upside down! I think you know where this metaphor is leading– yes an upside down roof collects water. Soon the water will be so dense that the sky will fall in.
Anyone looking at Italian borrowing costs will already know the severity of the situation. One more bonus season and it’s back to the countryside!
PS I’ve had it with MarketWatch, no one reads it anyway….