[ExI] What is Grace?
pharos at gmail.com
Sat Mar 14 19:24:11 UTC 2009
On 3/14/09, painlord2k wrote:
> The two bigger structural defecs of the economy in the modern developed
> world are:
> 1) Fiat money
> 2) Fractional reserve banking.
> Fiat money let governments (via central banks) to inflate the credit and
> lower the interest rates of loans, fueling an economic expansion in the
> short time and an economic recession in the long time.
> The main problem is that the people is become, in the last decades, too
> much interested in the short term gains and uninterested in the long term
> consequences. As Keynes said, "In the long term we are all dead". We live in
> the long term of Keynes and many others. They did a mess and we are paying
> their debts and their actions.
Substitute 'markets' for 'people'.
Try: *markets* have become too much interested in short term gains.
The Chief Executive of the FSA (in the UK) has recently made a speech
admitting that they previously failed to regulate the financial
Significant quotes are:
Furthermore, the limitations of a pure principles-based regime have to
be recognised. I continue to believe the majority of market
participants are decent people; however, a principles-based approach
does not work with individuals who have no principles.
Markets have shown not to be rational; excesses have not been
corrected by market discipline.
This is a central point for us all and management, in particular, to
recognise. The managers of the future must acknowledge and fight
against the ‘herd mentality’; ‘the collective wisdom’.
The recognition that financial markets are not rational but rather
they are a behavioural system built around personal aspirations is
critical to us effectively changing this time round.
In future, markets throughout the world will be regulated with a much
heavier hand. In particular, directors of financial organisations
will no longer have the freedom to make calamitously stupid decisions.
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