March 9, 2008
Key Issues Facing The Global Economy: Outlook for Europe
At the Institute of International Finance 2008 Spring Membership Meeting in Rio de Janeiro, Brazil, which took place from March 5 till March 7, I participated in a panel discussion on “Key Issues Facing the Global Economy”. My task was to discuss the outlook for Europe (a small subcontinent on the western extremity of the Eurasian landmass). The Powerpoint presentation that served as the background for my discussion can be found here.
To a significant degree I attribute the North Atlantic financial crisis that erupted in August 2007, to the triumph of transactions-based financial capitalism over relationships-based financial capitalism. I expect the economic damage different parts of the world, including Europe, will suffer as a result of the crisis to be strongly positively correlated to their degree of overexposure to the transactions-based model.
The presentation also briefly discusses regulatory changes that are likely to come down the pike in Europe as a result of the crisis and the near-certainty of an imminent crackdown on tax havens led by a coalition of the willing in Europe and the USA.
While I sympathise with the main thrust of your argument and a definition of “bank” that excludes Goldman Sachs, Merrill Lynch and Bear Sterns, some of your other comments are either self-contradictory (e.g slide 28) or betray a lower understanding of English than the average Dutchman (those whom I have met speak better English than the average Englishman). For instance, the word continent was invented to distinguish Europe from Asia and the western extremity of the Eurasian landmass is somewhere near Dakar.
Posted by: John | March 10th, 2008 at 3:32 pm | Report this commentAn alternative explanation is the replacement of partnerships where those who shared the profits were liable for the malfeasance of subordinates by limited liability companies where gamblers can cash in perceived profits (that are not always real) before the results are known and walk away from losses
John, you appear to be confusing Eurasia with Afro-Eurasia - a common mistake among the geographically challenged. Also, the word ‘continent’ was invented to distinguish those that are from the incontinent, as is evident from the road signs along the M2 motorway: Dover for the continent (and Folkestone for the incontinent).
Posted by: Willem H. Buiter | March 11th, 2008 at 12:46 am | Report this comment