1. One obvious point in the analogy that needs careful explanation is that when the price of gold is high, life in the town is good, whilst most of the conditions that make life in financial London good are connected to "lows" (e.g. low Treasury yields, low inflation, low interest rates, etc.)

2. What is a "gold town?" Basically it's an accumulation of physical assets and human capital around the mining of a particular ore. When gold prices are high, it is a more profitable business than anything else. The town becomes composed of a central economic core (gold mining) and ancillary services (machine repair, basic human needs and entertainment/culture for the workers.)

3. What happens when the gold price goes down?

4) But the financial industry doesn't have lots of heavy machinery? True, but the skills of the workers are arguably much more specialised than those of gold miners. Gold miners can convert to construction, other ore extraction or even farming (which are all locally prominent industries.) Just what can you quickly turn a derivatives specialist into?

(And yes, the answer might be a management consultant, but it's not at all clear that there's any shortage of those, particularly if the financial sector takes a downturn.)

5. What's the paranoid nightmare of the gold miner? Well, suppose someone really worked out that "gold from seawater process." It's hard to see the gold production industry staying where it is, instead it will move to be closer to the industrial customers for gold.

6. What's my paranoid nightmare about financial services? In the long run, absent the boom conditions, the customers for financial services are other industries, notably manufacturing. (Whether service industries need as much financial wizardry is a debate for another diary.) That being so, then the long term expectation would be that eventually financial services will move to be near the manufacturing?

7. But that's long term paranoia, what about "Anglo disease"? Right now, London is a boom town, living off the mining of "financial ore." With changes in conditions this ore will stop being worth so much and the industry will have to contract. Problem is, government policy (regulation and exchange rates) has been oriented around the financial ore industry for 20 years. Other industries have largely withered. That has the potential to leave a lot of people unemployed and waiting for the next boom in the "financial ore" market.