A rhumbline is a direct heading to a point. On a map it's a straight line. It looks like the perfect way to get where you're going. On a globe, though, it may be the long way around. For example, New York and Madrid are about the same latitude. On a map, a course due east from New York is the shortest distance to Madrid. On the round face of the earth, though, a curved path (called the great circle route) passing over Greenland and the northern Atlantic is shorter. Try it with a string and a globe if you don't believe it. That's probably what a lot of the comments on this blog will be like. Random? Disconnected? Circular? Probably. But maybe they will lead to a point eventually.



Tuesday, October 18, 2011

We need a new name for banks.

Goldman Sachs lost a billion dollars last quarter, and all the talking heads on television are yakking about what this means for the “banks.”  But Goldman Sachs doesn’t do branches with friendly tellers, ATMs on the corner, loan officers in the glass-fronted office, or anything else that most people associate with banks.  They are an investment bank.  Bank of America and Citigroup do have very large commercial banking operations, but their earnings are buffeted back and forth by their investment banking gains and losses.  BofA released earnings today that had a $9.8 billion gain on one thing and a $2.2 billion loss on something else, neither of which had anything to do with loans and deposits. 

Since retail banks claimed the name first, I think we should make investment banks call themselves something else.  If they’re going to operate like hedge funds let’s give them a name that CNBC anchors and the public can distinguish from your local bank where everybody knows your name.   "Trading Banks" is too long and, besides, it's still confusing.  How about “Tranks”?
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