Monday, Jun 29, 2009
Re: Bank for International Settlements' Annual Report
Telegraph: Your must-read for the day
The modern financial system is immensely complex – possibly too complex for any one person to really understand it. Interconnections create systemic risks that are extraordinarily difficult to figure out. The fact that things
apparently worked so well (up until the time that they did not) gave everyone a false sense of comfort.
Posted by devo @ 10:56 PM (492 views) Add Comment
5 Comments
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1. little professor said...
250 page pdf? How about you read it and give us a HPC-sized summary.
2. devo said...
Phew, finished.
Basically, it says we're fucqued.
3. icarus said...
Who'd want to plough through 250 pages of obfuscation? It's obvious the authors think the financial system and the real economy are complementary. They aren't. The banks are parasitical on the real economy and you cannot serve both the host and the parasite. Parasites which are good at their job make the host think the parasite is part and parcel of itself, and that's what the financial system does. Credit for the productive sectors of the economy very much takes a back seat to banks, especially the US investment banks, the dominant sector of banking, enriching themselves by inflating asset bubbles and, when that goes wrong, using their money/power to get bailouts which help nobody but themselves. "The financial system is the economy's plumbing" - yeah, it flushes it down the toilet.
4. devo said...
Weasel words - don't trust them ! ...
"How could this happen? No one thought that the financial system could
collapse. Sufficient safeguards were in place. There was a safety net: central
banks that would lend when needed, deposit insurance and investor
protections that freed individuals from worrying about the security of their
wealth, regulators and supervisors to watch over individual institutions and
keep their managers and owners from taking on too much risk. And when an
individual country faced a banking crisis, experts – feeling they knew better –
would criticise the authorities for their mistakes. Prosperity and stability were
evidence that the system worked. Inflation was low, growth was high, and
both were stable. The policy framework, built on sound economic principles
combined with a bit of learning, had delivered the Great Moderation in the
industrial world. The emerging market world was wisely following the lead.
What a difference two years make. Since August 2007, the financial
system has experienced a sequence of critical failures."
BIS, Basel, 29 June 2009
5. devo said...
"It's obvious the authors think the financial system and the real economy are complementary."
Who are the members of this "BIS", anyway? Probably a bunch of Vested Interests. lol