You too FT
Sir in “The consequence of bad economics” you accuse our leaders of intellectual failure and blame their “unwillingness to see (or their wilful ignorance of) what markets need in order to produce good outcomes for society. I accuse FT of the same.
You say “People were not unaware of risks, but... The great mistake was to rely merely on self-interest in as imperfect and as important a market as the financial sector” and I have held for years, and in hundreds of letters to you, that it was exactly the reliance on self-interest that was missing in many of our regulations.
The minimum capital requirements for the banks which in the case of private corporations sometimes allowed for a 62 to 1 leverage, plus the official appointment of some external credit rating nannies, all in a globalized world slush away with funds, induced and facilitated some few reckless market participants to sell to the world a monstrously explosive systemic risk composed exclusively by perceived low risk AAA investments, and which all blew up. FT has mostly preferred to ignore these facts.
I agree though with your conclusions, “This was not a failure of markets... but the intellectual and moral failure of those who were in charge of it”... FT included, of course.
You say “People were not unaware of risks, but... The great mistake was to rely merely on self-interest in as imperfect and as important a market as the financial sector” and I have held for years, and in hundreds of letters to you, that it was exactly the reliance on self-interest that was missing in many of our regulations.
The minimum capital requirements for the banks which in the case of private corporations sometimes allowed for a 62 to 1 leverage, plus the official appointment of some external credit rating nannies, all in a globalized world slush away with funds, induced and facilitated some few reckless market participants to sell to the world a monstrously explosive systemic risk composed exclusively by perceived low risk AAA investments, and which all blew up. FT has mostly preferred to ignore these facts.
I agree though with your conclusions, “This was not a failure of markets... but the intellectual and moral failure of those who were in charge of it”... FT included, of course.
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