Even bankers want nationalised banks

My friend Duncan Weldon has just circulated a fascinating piece from FT Alphaville which includes an e-mail exchange between bankers at UBS on the need for state-run infrastructure banks.

See:

http://ftalphaville.ft.com/blog/2010/10/18/373051/magnus-vs-donovan-the-emails/

One banker writes:

“If government wants to get involved in the business of banking, we would normally be suspicious or hostile…. Under current circumstances though, I can see a compelling reason and, if adopted, I will be cheering from the rafters. The reason, at the risk of repetition, is that this is a very serious crisis with very serious economic and social implications, as are becoming clearer all the time. I won’t say ‘I told you so’, but too many of our profession simply don’t get it….still.

For ages, developed economy infrastructure has been in decay and decline. Even a decade ago, I recall discussions with equity analysts about this. The OECD thinks its members have a $50 trillion infrastructure deficit to make up between now and 2030. So I think there’s a perfect match. And a national focused, government owned investing bank is a good way of facilitating it at a time when private sector borrowing and spending has gone into hibernation, perhaps for a long period of time.

… Think French, Japanese and now Chinese high speed rail. It is worth going a long way and taking risks in the interests of new directions and above all jobs.”

At least a few ‘masters of the universe’ recognise the need for active state intervention.

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