Friday, 10 June 2016

A Banking Bankruptcy

Economics is like meteorology- everyone has a view on the weather, but few understand the science behind it.

What this unfairly does is that it gives a (birth)right to everyone on critiquing the policies or the subject in general often without actually understanding the various mechanisms that underlie or even an appreciation of the complexities that are embedded.

But Economics is not alone in this distinction.

A close cousin to it, is the Banking industry.

At the very least, Banking forms an important part of our activities throughout the life cycle. Spanning right from the education loan to the retirement savings, banking has a whole gamut of products and services which can significantly alter the quality of life.

But the amount of ignorance on the business of a bank is appalling - even amongst the people who work in a bank.

One may argue, that we don't really need to understand the business of a bank to use an ATM just as we don't have to understand the principles of combustion to drive a car. The analogy seems almost right but its misleading because of one vital thing: stakes. A dent on a car will at best upset you for a week. But a dent in the banking system can just erase a decade of one's productive life.

Perhaps, banking is like the monsoon: many want it badly, but few want to get wet!!

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