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Reporting from Santiago, Chile
Apparently the Latino version of Jusin Beiber is in town.
I have no idea who this kid is, but as I was walking into the W Hotel last night for a meeting, there were hundreds and hundreds of adoring prepubescent girls lining the metal cordon that had been set up outside of the building.
Then he walked outside, flanked by hotel security. He couldnt have been more than fifteen, a bit pimply-faced and gangling at that awkward age. But the crowd couldnt have cared less. The screaming persisted for ten minutes just like those old black and white reels of teenage girls losing their minds at Beatles concerts fifty years ago.
Despite all the commotion outside, I met up with my colleague, and we dove immediately into a conversation about international banking and the state of the global financial system. As a senior executive of a large international bank, he is the ultimate insider. And I was floored by what he told me.
He openly acknowledged, for example, that banks are frauds. Most banks, particularly in the developed west, only hold a tiny fraction of their customers deposits in cash. The rest is gambled away on whatever the popular toxic security du jour happens to be.
This entire system rests upon a very thin layer of confidence, reinforced by the occasional taxpayer bailout. Yet it struck him as incredible that people still had confidence in banks, especially given that most of the investment products promoted to their customers are crap.
He told me how destructive central bankers are, creating untold amounts of inflation that only serves to make people poorer, while enabling governments to go deeper into debt.
Most of all, he told me that very few of the banking sectors underlying deficiencies have been addressed since the 2008 meltdown. Many western banks are still insolvent, with the key difference that their governments are now also insolvent.
He believes that in the coming years, this confluence of risk will finally burst, most likely induced by the effects of the currency wars and competitive devaluation.