A good read on what happened in Iceland from Fortune.
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4 comments:
I think the groundwork for rebuilding the global financial system needs to include three basic standards:
1) Personal liability for work performed by anyone involved in finance e.g. central bankers, investment bankers, accountants, etc. For example Architects, Engineers, Doctors, and others all bear liability for their work. Why should MBAs get to hide behind bankruptcy or official office? If your financial engineering was negligent you are personally liable.
2) Any fund, country, county, individual, company, trust - anything - should have maximum leverage requirements which must be met in order to participate in financial markets. I am thinking broadly of 5:1 for secured debt, and 2:1 for unsecured. And yes some "businesses" will cease to exist in this environment.
3) Changes to currency, taxes, interest and lending standard changes must be slowed down. For example countries can't shock the global financial system with sharp changes in policy. All policy changes should have to phase in over something like 3 year periods.
Matthew,
Not saying any of your ideas are "wrong", but to address #3; do you REALLY think sovereign nations would go along with that? Or are we talking about a "New World Order", here? Who's going to monitor/enforce this?...the UN?...BOLMFAO!!!
Jan
Let's see #3 could be a requirement for participating in a free trade area for example. That wouldn't require heavy-handed central control.
I am just pointing out that if trade and lending are initiated between countries then there should be a clearly communicated expectation that the relationship be smooth and predictable instead of jittery and haphazard.
Participating in the world financial markets feels like riding in the trunk of a car with 9 year old learning to drive on ice...
Capitalism pretty much means you can do almost anything to be more competitive (although in the past, the US would change the rules for its benefit).
I think the world is re-evaluating capitalism as the US has practiced. We have shown that trust was not part of the equation.
It will be interesting to see how governments interpret the current fiasco as we proceed forward.
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