Chart of the day: Where government control of banks is for real

From an Economist special report on banking in emerging markets.

To paraphrase Crocodile Dundee:  That's not a state-dominated banking sector, THIS is a state-dominated banking sector!

Now, I realize that the following is not a popular thing to say, but I like our chances a helluva lot better with private banks than that of these states with their state-owned banks.

Doesn't mean it doesn't make sense for the BRICs to have a large state banking sector.  When you've got all those rural poor, you want that state-directed counter-business-cyclical capacity built into your system (i.e., you can command banks to keep lending during a down cycle).  Plus, you've got more political muscle when it comes to all the infrastructure building your country needs to catch up with the West.

All that is fine and good and we don't want to do anything to discourage such development, because we sure as hell don't want to own those problems.

But remember this: catching-up ain't the same thing as vaulting ahead, so take all those fabulous linear projections with a great big grain of salt.  Once you head into the intensive growth (more innovation, less the simply adding of more resources), having a big state banking sector isn't a plus--as Japan's government-cozy banking sector has proven.  You want a little more ruthlessness built into the system.

Still, some wonderful perspective for those who imagine that our government now owns the financial sector.

Comments

[Geraldanthro]

Counter point.
Some of us think the financial sector owns the Government, ( Congress, thru legal
bribes, lobbyists )

G