Gavyn Davies is a macro economist and was formerly Head of Economic at Goldman Sachs.
Personally, on reflection, I think that it is rather sad that so much of our lives will be determined by the moment “collective fear” gives way to “collective greed”. When I studied Finance, some forty years ago, it was mainly focused on investment.
It is interesting to speculate where Finance lost its way to fear and greed? It can probably be traced back to the de-regulation of the banks in the US and the repealing of the Glass Steagall Act.
In my view, President Clinton’s deregulation of the Financial Services industry in the US has been the underlying cause of the global financial crisis since 2008. Perhaps without de-regulation in the US, hedge funds would not have been allowed to grow and short-sell European governments’ sovereign debt & the European financial crisis could have been avoided?
I wonder if Greek citizens, in their collective fear of the financial unknown, will be blaming the US hedge funds for their plight? Or will they agree with the Western media and hold Greek political classes and the bloated Greek Public Sector accountable?
Hedge funds are like street bullies – they will continue to pick off weaker prey, until another player on the block steps in and gives them a bloody nose. Isn’t it about time that the German right moved over and let the ECB “take their gloves-off”?