PUBLIC ADVOCACY: The Economist

Inside the banks:

The crisis has shown up flaws in the financial markets and the global economy.  Huge flows of capital into debtor Nations like America and Great Britain pumped up asset markets. These fed the instabilities of financial markets; themselves plagued by poor regulation, dangerous incentives and the reckless use of mathematical models.  Fixing this will take a lot of work over 18 months, when legislation should be ready, but already a picture of a new finance is becoming clearer:  smaller, better regulated and more conservative.

 

This vision is worth keeping an eye on, but the immediate priority is the imperiled banking system.  Just now, with finance in ruins, the nexus of markets and non-banks that make up the” shadow banking system” has failed.  Decent businesses are being starved of credit and driven into bankruptcy. 

 

Sound familiar?

 

Note: These words are not mine.  They are from the Editorial in The Economist, dated January 24th, 2009: Blank Cheques, bankruptcy, nationalization: the options are dire, but governments must choose between them.

We have choices: 


12 thoughts on “PUBLIC ADVOCACY: The Economist

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