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The focus is too narrow - the world does not stop at the western financial markets.

There is still a large amount of under regulated money floating around in Russia, the petro-states, China and parts of South America. Even though their stock markets have been hit as well, their economies are not as dependent on financial manipulation.

What will happen is that the west will tighten up regulation (a bit) and banks and other financial institutions will be less inviting to these outside investors, so they will gamble elsewhere.

As long as huge amounts of money are pouring into these states because of the sale of their, increasingly scarce, natural resources they will have an incentive to continue to take on risky ventures.

In addition the fundamental institutions that could control things remain toothless - WTO, IMF, WB, UN, etc. Without some sort of world governance there can be no real reform. The financial black holes like Switzerland, the Channel Islands and elsewhere continue to service this sector as well.

It's not just greed, this only leads to excesses, it is the fundamental defect of capitalism that causes cycles of boom and bust. This has been true since the private stock firm was first invented and there is nothing in the basic organization of such economic systems to prevent it from continuing in the future.

The forces are: market growth, monopoly power, overproduction, collusion and buying government influence.

Finally many multi-national and state-sponsored (or owned) enterprises are now bigger than the countries where they do business. Right now Shell can push Nigeria around, but it appears that a combine of international actors is now able to push the US Federal Reserve around as well. There is much talk of Fannie Mae and Freddie Mac being nationalized to protect the investments by the Chinese government. So who is the customer and who is the producer? Who pulls the strings?

Policies not Politics
---- Daily Landscape

by rdf (robert.feinman@gmail.com) on Fri Oct 10th, 2008 at 11:55:23 AM EST

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