Money Talks

Howard Davies, former Deputy Governor of the Bank of England and Director of the London School of Economics as well as being Chairman of the old Financial Services Authority has put his head above the parapet.

The Banks That Ate The Economy is the title of the piece and he wonders if banking could become too big and too important in the economy and with what effects.

This article comes from Project Syndicate via the Tax Justice Network.  The TJN reminds us of the concept of The Resource Curse in economies in which a single area of economic activity becomes dominant.

It first put in mind the Shelley poem, "Ozymandias" in thinking of past major centres of human activity now gone.

Checking Wikipedia however on the subject saw the reference to the other poem of the same name by Horace Smith, the friend of Shelley.  His made specific reference to London, see below:

Smith's Ozymandias

In Egypt's sandy silence, all alone,
Stands a gigantic Leg, which far off throws
The only shadow that the Desert knows:—
"I am great OZYMANDIAS," saith the stone,
"The King of Kings; this mighty City shows
"The wonders of my hand."— The City's gone,—
Nought but the Leg remaining to disclose
The site of this forgotten Babylon.

We wonder,—and some Hunter may express
Wonder like ours, when thro' the wilderness
Where London stood, holding the Wolf in chace,
He meets some fragment huge, and stops to guess
What powerful but unrecorded race
Once dwelt in that annihilated place.

End.

In London these days we sometimes wonder.  Down the decades I have seen a number of systemic collapses of one kind or another.  Only a couple of weeks ago doing what should have been routine London bookings online there was a bad crash by the provider.

A lot of people, with not so much money at stake as one of their major personal interests lost out and the provider made a humble apology that seemed to make sense.  My in house software engineer suggested that it was a little more complicated.

As every money thing these days, if you leave out some criminal elements, is done on computers and these are enmeshed with the others the scope for a "chain reaction" or "complexity failure" is immense.

This need not involve a major event, or political crisis or one of the catastrophes favoured by doomsday merchants.  As a teenager I was asked to plug a lighting cable into a power line and chose the signals cable instead creating instant radio silence adjacent to the East German border.

It might have triggered the Third World War and I was out of favour afterwards.  The Army were even happier on my demob' day than I was.

Had a couple of weeks ago the crash on the bookings site caused problems with the payments systems in the credit card company and this in turn caused that and the figures to go badly wrong, and then and then, the City of London could have collapsed.  My own imaginative ways to get round the crash could have done something.

Who knows?  Does anybody?