Truths for a new world of them and us

FT ^ | 05/29/08 | Philip Stephens

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Truths for a new world of them and us

By Philip Stephens

Published: May 29 2008 17:47 | Last updated: May 29 2008 17:47

Globalisation belonged to us; financial crises happened to them.

The world has been turned on its head. Consumers in the wealthiest nations are struggling with the consequences of the credit crunch and with the soaring cost of energy and food. In China, retail sales have been rising at an annual 15 per cent. I cannot think of a better description of the emerging global order.

The trouble is that the politics of globalisation lags ever further behind the economics. For all its tacit recognition that power has been flowing eastwards, the west still wants to imagine things as they used to be. In this world of them and us, “they” are accused by Democratic contenders in the US presidential contest of stealing “our” jobs. Now, you hear Europeans say, “they” are driving up international commodity prices by burning “our” fuel and eating “our” food.

The other day I listened to an eminent central banker offer a lucid explanation of the collapse of confidence that last summer paralysed international credit markets. I say lucid because he kept it simple, skipping the indecipherable stuff about algorithms, bundled securities and mark-to-market accounting rules.

The crisis, this banker told a conference hosted by the Weidenfeld Institute for Strategic Dialogue, flowed from the coincidence of a global savings glut with the explosion in financial innovation made possible by ever more sophisticated information technology. This had engendered among all those highly paid investment bankers and traders an insouciant indifference to risk. It was always going to end in tears.

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So financial industry in the west went crazy and turn over the economic clout much faster than it should have. They thought they could indefinitely made money hands over fist counting on virtually unlimited savings in Asia flowing into Western market while deftly wielding their deceptive magic wand.

Now this man preaches that Western world accept the fate and move on. How about some accountability for those cheerleaders and financial whiz, who engineered this debacle? They surely misled general public in a grand-scale. Is it too much like "pitch-fork mob" to be considered? Would "everybody did it" become another favorite defense? Or would it be "it won't change anything no matter how many people you punish"?

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Ping!

[RSmithOpt]

'GG X 10 e100'

GG = Global Greed