Creative Bankers

I happened on this column by Thomas Friedman in the New York Times, titled "Time to Reboot America". I was struck by a number of things. First of all, Friedman's point, that the U.S. is essentially in the same shape as GM and that the country needs a fresh start and, furthermore , that the next 3 months or so present an historic opportunity, albeit an expensive one, to start anew, is spot on.

This is something that many American expats can see with a clarity that seems to get muddier the more time one spends in the U.S. these days.

Then a few other thoughts popped up. I saw an article here in China where a chinese banker was intent on defending the value of the many "innovations" the capital markets have been witness to in the last ten years. Quickly on the heels of that was a memory, long dormant but still clear, of the late great Peter Drucker telling me that the field of finance, as he put it, was not a place that encouraged creativity. What he was referring to wasn't management creativity, nor was it the creativity financial pros bring to solving organizational financial problems. He was talking about the kind of financial engineering that became the hallmark of the modern Wall Street; the kind of "creativity" that used smoke & mirrors to create financial instruments so far removed from anything of underlying real value that they had worth only in that someone thought they could be bought or sold, sort of like the mythical emperor's new clothes (which, of course, never really existed). At the time Drucker made that comment, to call a banker creative would have been an insult. People wanted their bankers conservative, even stodgy. That's an attitude that, today, seems rather refreshing.

How ironic it would be if the Chinese, in their efforts to bring innovation to the modern Chinese world, buy that myth from Wall Street: that financial creativity (of the third kind) is the kind of innovation that China needs. Its not. As the U.S. has learned, to its horror.