Hitting Nails on the Head
I am currently reading a collection of essays written by Denis Healey - a true Labour warhorse - reckoned by many as the best Prime Minister Britain never had.
The essays were written between 1952 and 1991 - and cover Healey's long and distinguished career both in government and in party politics.
Call my reading habits a bit odd if you like - but I came across this little gem the other day - which was written in 1991.
"These markets were managed by young men who treated money simply as numbers on a computer screen - as a commodity, like rice or coffee beans. As a result interest rates and exchange rates began to fluctuate violently without reference to the flows of production and trade which they were supposed to reflect.
New financial instruments were invented to hedge against interest rate or exchange rate risks. Anything which could be gfiven a monetary price was turned into a security which was traded on the global markets by anyone who had a computer.
So there was none of the prudential supervision which was traditionally exercised by central banks over commercial banks."
Seems like Denis Healey hit the nail on the head - all those years ago.
Because that's exactly what happened when banks across the world started buying up and selling on bad debt - like it was going out of fashion.
And while this was happening - governments, politicians and central bankers - all looked on from the sidelines - until, of course, it was too late to do anything - other than pick up the pieces.
The essays were written between 1952 and 1991 - and cover Healey's long and distinguished career both in government and in party politics.
Call my reading habits a bit odd if you like - but I came across this little gem the other day - which was written in 1991.
"These markets were managed by young men who treated money simply as numbers on a computer screen - as a commodity, like rice or coffee beans. As a result interest rates and exchange rates began to fluctuate violently without reference to the flows of production and trade which they were supposed to reflect.
New financial instruments were invented to hedge against interest rate or exchange rate risks. Anything which could be gfiven a monetary price was turned into a security which was traded on the global markets by anyone who had a computer.
So there was none of the prudential supervision which was traditionally exercised by central banks over commercial banks."
Seems like Denis Healey hit the nail on the head - all those years ago.
Because that's exactly what happened when banks across the world started buying up and selling on bad debt - like it was going out of fashion.
And while this was happening - governments, politicians and central bankers - all looked on from the sidelines - until, of course, it was too late to do anything - other than pick up the pieces.
