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Banks are now at a most critical time and their ability to innovate in sustainable business models will be key to their survival. Nouriel Roubini noted this morning that banks’ unsustainable “originate & distribute” business model of the last few years is crumbling with the broken “prioritization food chain”.
"Market prices have been drained of their informational value and thus don’t much reflect the “wisdom of crowds,” as they would under normal circumstances. Investors are instead flocking to the safest of assets, like Treasury bills."
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Market prices have been drained of their informational value and thus don’t much reflect the “wisdom of crowds,” as they would under normal circumstances. Investors are instead flocking to the safest of assets, like Treasury bills.
Fascinating analysis suggesting a fundamental shift is occurring in banking. Umair writes in the HBR.
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Let’s begin with a quick explanation from the ever-incisive Tyler Cowen. He notes:
"What is distinctive today is the drying up of market liquidity — the inability to buy and sell financial assets — caused by a lack of good information about asset values...Market prices have been drained of their informational value."
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