Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
Jerome, your Anglo Disease theory (to the limited extent I actually understand it) seems to imply that, as a result of cheap money, external deficits and capital inflows, the US and UK have been disproportionately responsible for creating the conditions under which the current dislocation has taken place.

Does that plausible conclusion imply that the rest of the world will, to some unknown extent, now have to detach itself from the Anglo system, thereby dethroning the dollar as the world reserve currency and gradually moving New York and London awau from the world's key finance paths?

If such a detachment does begin to take place, should we expect, for example, failing US Treasury auctions and a bankrupt Treasury, in fact if not in name? A rising fraction of international business transacted entirely in non-dollar currencies?

by Ralph on Thu Oct 9th, 2008 at 05:53:44 PM EST
I think, is to cut down the financial sector to size, and reduce its influence on the economy and on policy making, by turning it back into a boring - and heavily regulated - service provider.

That should easy in most places; it will be hardest in the UK and the US given the size of the sector there and its political power.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Fri Oct 10th, 2008 at 08:09:11 AM EST
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