When we want status quo, we shall unwittingly parade greed and fear. Many people have realised that markets function in silos, particularly when these fail to address the issues of deprivation and sustainability. But there is a more pressing issue. The emergence of credit risk in a flat world (where import duties are very low and capital can move freely) has overwhelmed all large players, namely, governments and banks. Although banks will own their country's credit rating, we have not seen governments taking cognisance of conflict of interest between the activities carried out by banks and the broader multiple objectives of the government. Governments and hence taxpayers seem to be owning the one-sided responsibility of cleaning up the fallout of the systemic build-up (called economic growth) created by banks and now the "too-big-to-fail" banks.
Governments are using a behind- the- scene approach to monitor and regulate banks. As if the agents of economic growth need not be alerted by public suasion. The government has tied its own hands by not bringing in law because free markets do not expect heavy handed regulation. That way the government has officially refused to filter the good and the bad and mostly waits until a crisis engulfing the entire system is precipitated. A law would bring the bourgeois to know that some growth is unwanted, and it would ask for early alarms in the system. It would de-couple the nexus between governments, banks and businesses. That is to say that the balance sheets of the businesses do not tell the entire story. Their promoters are using the tax havens and funny named vehicles to subvert the legitimate tax share of the country they reside / do business in. Otherwise the promoters stash a lot of wealth into the trusts and societies which have fig leaf signature of social development.
We have seen the emergence of arcane risk management paradigms which are based on sparse data and just the price data. We are made to believe that risk shall reveal itself in the price series which is the only observable truth in the market. We are asked to depend on models that carry model risk. All merely to hide the practices and the products that spew risk in the first place.
Governments are using a behind- the- scene approach to monitor and regulate banks. As if the agents of economic growth need not be alerted by public suasion. The government has tied its own hands by not bringing in law because free markets do not expect heavy handed regulation. That way the government has officially refused to filter the good and the bad and mostly waits until a crisis engulfing the entire system is precipitated. A law would bring the bourgeois to know that some growth is unwanted, and it would ask for early alarms in the system. It would de-couple the nexus between governments, banks and businesses. That is to say that the balance sheets of the businesses do not tell the entire story. Their promoters are using the tax havens and funny named vehicles to subvert the legitimate tax share of the country they reside / do business in. Otherwise the promoters stash a lot of wealth into the trusts and societies which have fig leaf signature of social development.
We have seen the emergence of arcane risk management paradigms which are based on sparse data and just the price data. We are made to believe that risk shall reveal itself in the price series which is the only observable truth in the market. We are asked to depend on models that carry model risk. All merely to hide the practices and the products that spew risk in the first place.
No comments:
Post a Comment