Maturity Mismatch - obvious starting point for reform

Regulators are running around like head-less chicken, applying completely arbitrary principles when deciding on an ad-hoc basis what to do in each individual problem case and therefore just fanning the flames of the credit bushfire.
A key feature of the ongoing banking crisis is the fact that institutions that may well have balance sheets that in the long run would turn out to be more than viable are facing the equivalent of a 'run on the bank'. Is Hypo Real Estate, to pick just one example, really ready for the knackers yard or is the fact that it cannot roll over short-term financing nothing but a short-term liquidity problem?
Whichever way this sorry saga ends one simple lesson must be learned: it is just not enough to force banks to finance themselves if possible with more genuine retail deposits but they must be made to finance their assets with liabilities that are matching by maturity. Only small deviations from this principle should be allowed. Monitoring this should be a relatively simple task for regulators and therefore eminently practicable. It just is lunacy to finance long-term mortgage lending with funds raised in the Inter-Bank market on an overnight basis.

Inept Regulators allow bank run

Every Age has his prophet, but 'Houdini' misses the key point: the Credit Crunch is a bush-fire where inept regulators allowed a bank-run to develop.

London and New York after the Credit Crunch

Both Cities may well remain the dominant financial centres after the credit crunch has been consigned to history. The common language will continue to be the language of commerce for decades, the financial, legal and accounting brains will not decamp en masse, but the shine will be less intense than before. Just looking at a financial portal in India - a country that we know very little about - the other day brought home the fact that in that country alone forces are at work that will create a marketplace that will dwarf most other domestic markets in the near future. Who will be a big beneficiary? While London may well be one of them we would also give good chances to Singapore and Dubai as they are much nearer to the action and possess more cultural affinity. In a similar vein China and Russia will develop internal markets that will pull business away from the old centres and in Europe we can envisage a multi-polar network of regional centres that can stand their own against the gravitational pull of London and New York. Property Developers take note: with communication costs at rock bottom you should not bank of continued expansion in these two cities.