In October 2008, soon after the Lehman collapse that threw the world into a financial and economic crisis which also saw Singaporeans hit by a structured deposits debacle, I wrote an article (link below) about the so-called City boys -- bright young analysts and traders who worked for big investment banks in the City of London.
http://www.asiaone.com/Business/News/Story/A1Story20081006-91922.html
Egged on by a bonus culture and pampered by expenses-paid high living, they -- and their counterparts on Wall Street and other financial hubs -- created and sold high-risk products that they knew would eventually be unsustainable when the gravy train stopped, as it did from 15 Sept, 2008, starting with the Wall Street and London crashes triggered by the sub-prime crisis in the US. The crisis reverberated around the world.
It was a make-believe world in which low interest rates and easy credit worldwide, with plenty of money sloshing around, played no small role.
But -- fast forward to today -- has the world learnt its lesson? Nope, says the respected British economist, journalist and broadcaster Liam Halligan. With his eye on the current US government debt crisis and the Eurozone crisis, he lays a great deal of blame on what he dubbed the irresponsible "conventional Western wisdom" and the part played by the International Monetary Fund (IMF) in ignoring the wiser counsel of experts from the "emerging markets" such as China against debt securitisation at all costs.
The West -- despite its increasingly dismal record -- knew everything there was to know about global finances and economics, so who are these upstart emerging economies -- despite their trade surpluses and prudent financial and fiscal policies -- to tell us how to run the world, so to speak.
In short, to use my own analogy, it was a classic case of The Emperor Wears No Clothes. Well, the Emperor is still stark naked, but the IMF now has a little boy to point that out... in the person of Mr Zhu Min, the Fund's new deputy managing director. High hopes are being pinned on Mr Zhu, who was the Deputy Governor of the People's Bank of China, to insist on reforms at the IMF. Such reforms are critical to set the stage to jump-start an overhaul of the sick global financial and fiscal infrastructures.
Mr Halligan's commentary, "We should have listened to him years ago," has been published in TODAY (18 July):
http://www.todayonline.com/Commentary/EDC110718-0000024/We-should-have-listened-to-him-years-ago
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