The Web of Debt - Ellen Hodgson Brown, J.D

Title - The Web of Debt

Author - Ellen Hodgson Brown, J.D

Year – 2010, pagination 544

Publisher – Third Millennium Press

Review - Sampson Iroabuchi Onwuka

The Basel Committee on Banking Supervision published set of minimal capital adequacy requirements called Basel I. Ellen Hodgson Brown J.D place the essence of her book on how Basel I dealing with the consequences of New Deal gave grounds to Basel II with enough emphasis on Commodities future Trading and the CFTC that was a response to the dynamics of the 70’s. 

The author discusses the impact of Basel I Committee on Banking and supervision where the committee resolves to classify some of the problems of state and inner city municipal budget “…according to risk, and that the banks had to maintain “capital” (money of their own, not just their depositors’)  roughly equal to 8% of these “risk-weighted” assets.” 

The premier argument of the risk-weighting of 1 be at least 8% tend to suggest that $8.00 of every $100, whereas loans. It is standard business attitude to argue for the higher role of banks in business environment of the world, especially the impact of the money reserved for day to day transaction as it relates to the confidence of investors. 

It is a late argument given what specifically transpired has taken place of the last few decades, to a point that it could be safe to assert that the economic environment for Basel I is perhaps a meeting experiment for Basel II, and perhaps a meeting standard for Basil III. 

The basis on Basel I is the bank’s responsibility to challenges facing most cities and states in the world, especially the web of obligation and debt repay rate is better explained through the market problems of 2008, when a small fraction of to meet their debt requirements and to stress the test for risk in budget planning and analysis and important clearing details in banks operation and supervision. 

Several transformations of most European Banks beginning with the end of World War I or at least the beginning of the War in 1904 tender to the history of the Banking in Europe for over a century, especially how State Banks took the uniform of investment banks and to a large extent commercial ordinals which could force the markets. 

According to the author, “The office of the comptroller of the currency reported that in mid-2006, there were close to 9, 000 commercial and savings banks in the United States, yet 97 percent of U.S bank-held derivatives were concentrated in the hands of just five banks.” 

Yet in Basel II agreement and control of quantity of money expose an underlying need for transparency in national currency in market place and for other issues that require details of attention. 

Professor Henry C.K Liu – once quoted that China escaped the 1998 ‘Asian Crisis’ “China was saved from such a dilemma because the yuan was not free convertible. In a fundamental way, the Chinese Miracle of the past half a decade has been made possible by its fixed exchange rate and currency control…” and “…makes the yuan fully convertible at floating rates.”

The connection between quantity of money theory exercised in the 70’s and its adopted by the Federal Reserve in handling emergent properties creates the space for additional CDO repository. It shifted the attention of money supply from one means to another – from investment banks with money backed grants from commercial and central banks. 

This did not only solution the problems of saving rate and the rate of inflation and flight of cash; it produces the realities of banks too big to fail, or banks with domineering impact on the world markets.

Short View

The Consequence of a Basel II is the reality that few banks will move to retain control of very small of portions of world markets. The direct relationship between market behavior and impact is the awareness of bank’s rate of saving to loan’s rate both of which has little impact of national GDP. 

But this structure drove the long term view in the market – it makes it clear that the rise of major commercial based tier 3 markets led to the issue of housing and real estate boom. It corrigible to this effect the implied expansion of housing, regenerated for the States and for the Cities the nemesis of single crop markets. 

In essence, there are fewer open markets in the world, and there are more attractive options with housing than anything else in the ordinary markets. 

For this reasons, the age of Basel II which gave impetus to big banks and financial wall trees represented the comfort of long term view which shifted to housing and real estate of control, to shrinking of competitive advantage and the poor correlation between inflation and core CPI and the provisional needs for Basel III.