Jack Yan
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The Persuader

My personal blog, started in 2006.



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26.01.2014

Finance is broken, and we still haven’t learned

I posted this quotation from I Acknowledge on my Tumblr today:

The news that should have us all worried is: the derivatives market contains $700trn of these debts yet to implode.
   Global GDP stands at $69·4trn a year. This means that (primarily) Wall Street and the City of London have run up phantom paper debts of more than ten times of the annual earnings of the entire planet.

   It brings me back to one of the first things we ever wrote in the Medinge manifesto: ‘Finance is broken.’ Attempting to value companies using shares or financial statements can be a mugs’ game—and that was in 2002, before the market became so improbable.
   If only we knew how much worse things would get. And we thought, in the immediate post-9-11 period, that we would be learning the lesson about a Dow that was well overvalued. History has shown that we didn’t. And the most recent recession hasn’t corrected things: we’re still sitting on a time bomb.
   We wrote in the manifesto, ‘We believe money is a poor snapshot of human value. Brands, however, create value. The branding industry is about creating value for our customers. It makes more sense to measure the ingredients of branding and relationships.’
   It’s an ideal, and one with its own problems, too. But I know that part of the finance industry has failed us through its greed. I’m not too certain how their deeds and those of these British forgers differ, creating “wealth” backed by nothing.

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Filed under: business, globalization, UK, USA—Jack Yan @ 12.51

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