...There has been much hand-wringing over the state of America's capital markets and their ability to help businesses grow. The main worry is that despite being big, they are no longer competitive compared with the leading financial centres of Europe and Asia. This month Michael Bloomberg, New York's mayor, and Charles Schumer, a senator, showed their concern in an article dramatically titled: “To save New York, learn from London.” But some think it is already too late for Wall Street. “The days of financial hegemony are over,” says one senior American official gloomily.

As arrogance gives way to angst, America is exploring what to do. The Chamber of Commerce has held a series of “town hall meetings” and will publish a report next spring. New York has hired consultants from McKinsey to develop a new strategy. But the initiative attracting most attention is the Committee on Capital Markets Regulation (CCMR). This group of bankers, bosses, academics and investors, headed by Hal Scott, a Harvard Law School professor, is due to release its first set of recommendations on November 30th. These are likely to include scrapping or revising various regulations seen to be holding back American business...

http://www.economist.com/business/di...fsrc=nwlgafree

To understand why London thinks it's beating New York in a race to become the financial capital of the world, walk across the Millennium Bridge toward St. Paul's Cathedral and count the number of cranes that clutter the skyline. The City, London's financial district, is in the midst of its biggest redevelopment boom since the Blitz, one result of the $100 billion in foreign investment pouring into the British capital annually.

The money is coming from the Middle East, Russia, India, China, and the U.S., and it's padding wallets, filling restaurants, pushing real estate prices through the roof, and fueling a feeling of self-confidence that spreads from coffee shops to Mansion House.

That's the ornate official residence of the Lord Mayor of the City and the scene of an annual black-tie dinner for bankers. This year's banquet in June seemed more like an Olympics celebration (yes, London beat New York in landing the 2012 games) as Gordon Brown, just days from becoming Prime Minister, rose to declare victory.....

http://money.cnn.com/magazines/fortu...ion=2007072306

Don't you ever have any good news to report?

Tell us how nice your new house is coming along or something.

IT IS more than two decades since America led the world in tax reform, and what Ronald Reagan called “that old jalopy of our tax system” is looking in need of a lot more than a new spray of paint. Last week Hank Paulson, the treasury secretary, held a summit in Washington, DC, to address the part of the system that is most visibly lagging behind best practice in the rest of the world—the taxation of firms.

The gathering of tax experts, business leaders and other heavy-hitters, including Alan Greenspan, former chairman of the Federal Reserve, agreed with Mr Paulson that Uncle Sam was “undermining the competitiveness of American workers” with high corporate tax rates. However, nobody at the summit expected Congress to do much about it, especially given its current preoccupation with easing taxes on the middle class and increasing them on the rich, particularly those who have made their fortunes in private equity.

America's competitiveness problem has been a constant theme of Mr Paulson's time at the Treasury, which he joined a year ago after running Goldman Sachs. As well as taxes, he is worried that America's capital markets are struggling to hold their own against resurgent financial centres such as London and Hong Kong.....

http://www.economist.com/finance/dis...fsrc=nwlgafree

Jim Rogers - who co-founded the now closed Quantum Fund with George Soros - told 750 global fund managers in Tokyo today that, America is “completely out of control�, there will be a 20-year bull market in commodities and that prices will be in turmoil.

And he also warned that it “made sense� if global competition for resources ended in armed conflict.

Mr Rogers told delegates to the CLSA investment forum that the prices of all agricultural products would “explode� in coming years and that the price of gold, which hit an all-time high of $964 an ounce yesterday, will continue its surge to as much as $3,500 an ounce.

Gold would continue to rise, the analyst Christopher Wood told fund managers, “because it is the exact opposite of a structured finance product�.

In a blistering attack on US monetary policy and the “helicopter cash drop� responses of the Federal Reserve, Mr Rogers described the American dollar as a “terribly flawed currency�.

He said that the plan by Ben Bernanke, the Fed Chairman, to “crank up the money-printing machines and run them until we run out of trees� had exposed America’s weakest point to her rivals and enemies.

The dollar may have declined recently, he added, “but you ain’t seen nothing yet�.

Talking to a room almost exclusively populated with Japan-focused equity investors, Mr Rogers recommended an immediate language course in Mandarin and a switch into commodities — the second-biggest market in the world behind foreign exchange.

Mr Rogers said that historic drains on wheat, corn and other soft commodity inventories have created market dynamics that could lead to severe food shortages.

The outlook over the next two decades would see prices of everything from cotton and sugar to lead and nickel “going through the roof�.

Heavily playing down the prospects of a big recovery in Japan, Mr Rogers said that the country’s demographics — as the fastest-ageing country in the world — would cause it greater problems and an ever-diminishing quality of life for ordinary Japanese.

But he also said that other countries — including Britain, Italy, China and the US — should take note of what their own demographics would look like without the effect of immigration.

“Japan will be the perfect laboratory for the world to watch how a demographic crisis plays out,� he said.

....The shakeout in global banking has untethered more than a quarter of a million people, most of them in New York and London, who thought they were in secure, well-paying jobs. Some were investment bankers and traders who, with cheap credit and a gambler’s view of risk, raked in millions of dollars in annual bonuses over the past five years. Others, like Raj Godhania, greased the wheels at companies once seen as pillars of corporate strength, such as Citigroup Inc., UBS AG and Merrill Lynch & Co.

All are now displaced, forced to reflect on their fall and to find their way in a job market where the biggest U.S. and European banks may spill tens of thousands more workers before the carnage is over. By some measures, these folks are lucky: They’re well educated and have some money to fall back on. Still, bankers are struggling with a plunge in prestige -- and little sympathy -- after a decade-long orgy of ramping up leverage and flogging subprime debt that has left the world’s economy in tatters and taxpayers with the bill. In London in February, demonstrators hanged a mannequin dressed in a tie and bowler hat from Marble Arch.

“There’s a lot of finger-pointing going on now,” says Neil Servis, 40, the former head of Morgan Stanley’s collateralized-debt-obligation business in Europe, who lost his job in September. “Everyone is targeting bankers.....”

Andrew Wesbecher moved to London from New York in 2006 to sell software to banks and hedge funds. This month he joined the exodus of American expatriates fleeing high taxes and the city’s shrinking financial industry.

“I’m the last guy to leave that I know,” said Wesbecher, 29, who worked for Tibco Software Inc. and lived in Notting Hill, the London neighborhood that’s home to billionaire Richard Branson and model Elle Macpherson. “We are all packing up.”

The number of U.S. citizens in Britain fell 3.8 percent to 126,000 in the 12 months through September, according to the Office for National Statistics. The trend probably continued this year, with the Confederation of British Industry estimating the U.K. financial industry will lose about 45,000 jobs in the first nine months of 2009, or 4.3 percent of the total.

Americans are heading home as Britain plans a 50 percent tax rate for those who earn more than 150,000 pounds ($248,000) a year and employers cut benefits for workers living abroad, reducing the allure of London. That comes a year after the U.K. said foreigners who have lived in the country for more than seven years must pay 30,000 pounds annually or give up the special status that shields overseas income from British taxes.....

Asian cities are closing the gap on London and New York in a ranking of competitiveness among the world’s leading financial centres in which they now hold five of the top 10 spots.

The Global Financial Centres Index, compiled twice yearly by the Z/Yen Group think-tank and published by the City of London, combines a survey of financial professionals with factors such as office rents, airport satisfaction and tax rates.

London has topped every survey since it began three years ago, and continues to lead in four of five financial sub-industries, although New York is number one in banking.....

Henry Michaels spent 25 years as an investment banker with New York-based firms such as Merrill Lynch & Co., Lehman Brothers Holdings Inc. and Citigroup Inc.

When the financial crisis deepened this year, he abandoned the struggling U.S. companies for a job at Royal Bank of Canada.

“In this crisis, strength and stability matter,” said Michaels, 48, who resigned as co-head of Citigroup’s banks and diversified financials group in May to join RBC Capital Markets in New York. “RBC is in growth mode, and it’s nice to be playing offense.”

Canadian banks, bolstered by their reputation as the world’s soundest, are adding investment bankers even after rivals slashed almost 316,000 jobs worldwide since the collapse of the U.S. subprime market in 2007, according to data compiled by Bloomberg.....

London has officially dethroned New York as the world's top financial center, according to an index released this month by the Geneva-based World Economic Forum.

The WEF's 2009 Financial Development Index ranks 55 countries on the sophistication and stability of their financial systems and markets. The nations were evaluated according to more than 120 criteria, ranging from the favorableness of their institutional and business environments to the size of their equity and bond markets, and from their technology infrastructure and human capital to the ease of obtaining consumer and commercial loans.

Perhaps the biggest surprise in this year's study—the second release of an annual index launched in 2008—was that Britain rose to the No. 1 spot despite its economic troubles, up from No. 2 last year. Britain was buoyed by the relative strength of its financial markets, particularly in foreign exchange and derivatives, and by its world-beating insurance coverage.....

The bankers no doubt saw it coming. They’ve been lectured, harassed and demonized all through the past year over their role in plunging the world into the deepest recession of the last half-century.

That doesn’t make the U.K.’s planned tax on bank bonuses any less of a spectacular goal against your own team. It attacks the wrong target with the wrong weapon. All it will do is drive the global banks out of London and wind up putting the government in an even deeper fiscal hole.

There were good arguments for finding ways to curb bonus payments at Royal Bank of Scotland Group Plc, along with other institutions that have had to be bailed out by the British taxpayer at great expense.

But attacking the bonus payments at the London offices of Goldman Sachs Group Inc. or UBS AG makes about as much sense as a Las Vegas croupier throwing the highest-rolling player at his roulette table out of the casino. It’s the casino that will suffer, not the gambler.....

The United States is rapidly becoming an unpredictable place for banks to do business, and Canada stands to benefit.

Some international financial institutions are weighing the possibility of moving certain people or businesses from the U.S. to Canada, or locating new operations in Toronto rather than New York, industry sources say.

Canadian banks are still trying to absorb the Obama administration's two major hits to the financial sector; Thursday's new rules on the size of banks as well as their trading operations, and the bank tax that was unveiled last week. And as they digest the moves, a number of players suggested that the uncertain operating environment is making it difficult for banks to cement business strategies.

“The heightened uncertainty around regulatory rules, tax rules and structural rules makes it very difficult for any financial institution to plan its business,” said Royal Bank of Canada chief executive officer Gordon Nixon.....

London has lost its crown as the preeminent home of banking and finance, as it tied for the first time with New York in the latest ranking of financial centres.

Fears about a regulatory backlash and new taxes drove down London's score by 14 points to tie with New York at 775 points, in the Global Financial Centres Index compiled by Z/Yen for the City of London Corporation.

London was one of only four cities to lose points in the semi-annual ranking, which combines a survey of financial professionals with factors such as office rental rates, airport satisfaction and transport. New York's score rose by only one point.

Asian cities continue to rise in the ranking of 75 global centres. Hong Kong and Singapore posted double-digit gains in third and fourth place and the gap between London and New York and the rest of the world is at its narrowest since the survey began in 2007. "This research is a wake-up call for decision-makers," said Stuart Fraser, policy chairman for the City of London Corporation, which promotes the financial services sector and provides local services. "You can't take this route [of bashing banks and bankers] without endangering the competitiveness of London."

New York fared better than London for business environment, availability of people and infrastructure, even though those participating in the survey agreed that New York had taken the bigger hit from the financial crisis.

The most recent rankings were based on surveys taken from July to December 2009, when discussion of tougher regulation and higher taxes in the UK was at fever pitch.....