The Financial Services Authority (FSA) has just issued the Turner Report which traces the causes and suggests the cure for the current financial crisis that it describes as the worst in a century. It notes that “the crisis also raises important questions about the intellectual assumptions on which previous regulatory approaches have largely been built. At the core of these assumptions has been the theory of efficient and rational markets. Five propositions with implications for regulatory approach have followed: Continue reading
Chris Caldwell (3/31/09) makes several astute observations in this morning’s Financial Times, noting that what “looked like discontent with a slow economy is strating to look like opposition to a system.” The past justifications by financiers that their stratospheric salaries were appropriate because of their genius status now rings hollow to most people, except, perhaps, the financiers themselves. It may be that the compensation model for those in finance will never return to the levels enjoyed in the recent past. He also notes, perceptively, that the public’s tolerance for opacity has greatly diminished. We no longer trust the elite and want to know what they have done with our money and who is reaping riches at our expense. “Americans are beginning to view those who wrcked the financial system like the secret police in a former comunitst country.” Where this will all lead, no-one knows at present.