| Submitted by: | coolramguy |
| Date: | 12 / 14 / 2008 |
| Category: | Mixed Topics |
| Words | Pages: | 1245 | 5 |
| Views: | 102 |
Every time global financial markets go into turmoil, most recently thanks to the US sub-prime mortgage fiasco, voices rise to demand global regulation. But then the question emerges – can central bankers of the world tame the global financial markets? In his recent book “The Age of Turbulence: Adventures in a New World” Alan Greenspan makes a compelling case for why global regulation of the financial markets would offer no relief. The global markets, huge in size, with billions of transactions, move with too great speed for meaningful intervention by regulators. But that does not preclude international cooperation. Regarding globalization, two strands – almost contradictory – emerge in the book by the former chairman of the US Federal Reserve: first, the increasing irrelevance of central bankers in monitoring the markets, let alone controlling them, and second, the power of cooperation. For Greenspan, the stress of international competition is not much different from that of domestic competition, except for greater speed and size. Regulation is supposed to order the markets, prevent panics, present a fair playing field and prevent fraud. It cannot protect consumers or businesses from bad decisions. Global markets expand the number of competitors for any job, contract or product; consumers and producers have unprecedented access to information on prices, conditions and quality. Thus, Greenspan warns that international trade can be brutally unkind to the inefficient that waste resources. Consumers and politicians, worried about the speed of change and the potential for any crisis spreading via intricate linkages, may see chaos in global markets, but Greenspan sees balancing forces. “Even in crisis, economies seem inevitably to right themselves (though the process sometimes takes considerable time,” he writes. Crisis for one becomes an opportunity for another. “The scramble by market participants to seize those opportunities presses prices, exchange rates, and...
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