ME and Ophelia

Sunday, July 26, 2009

Queen told how economists missed financial crisis 

Cryptic note to self for future reference.  I saw it coming, which is why I wrote and published this at Sudan Watch on Tuesday, June 19, 2007:
U.N. Head Links Climate Change, Darfur
Recently on television news, I saw the great American media baron Ted Turner talking about masses of money changing hands more now than ever before. Seems he's divesting of media to concentrate and invest in nuclear and environment.

My point is, the climate change spending budget will be humongous and, coupled with the world's munitions spending, represents an historic opportunity for making poverty (and war!) history. Surely if world peace could be agreed, and amnesty's sorted, it would leave those who refuse to give up illegal weapons to be treated as criminals.

United Nations Blames Darfur on Food, Water Shortage & Newspapers 18 June 2007

U.N. Head Links Climate Change, Darfur
AP report via Guardian June 17, 2007

"It is no accident that the violence in Darfur erupted during the drought," Ban said. (Reuters)
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Quote of the Year

"The Queen asked me: 'If these things were so large, how come everyone missed them? 
-Professor Luis Garicano (Source:  see here below)
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Sunday, 26 Jul 2009:
Queen told how economists missed financial crisis
The Queen has been sent a letter by a group of eminent economists explaining how "financial wizards" failed to "foresee the timing, extent and severity" of the economic crisis, it was reported.

The three-page letter, signed by London School of Economics professor Tim Besley, an external member of the Bank of England's monetary policy committee, and political historian Peter Hennessy, was sent after the Queen asked on a visit to the LSE why nobody had predicted the credit crunch, according to the Observer newspaper.

The letter ends: "In summary, your majesty, the failure to foresee the timing, extent and severity of the crisis and to head it off, while it had many causes, was principally a failure of the collective imagination of many bright people, both in this country and internationally, to understand the risks to the system as a whole."

The letter talks of the "psychology of denial" that gripped the financial and political world and says "financial wizards" convinced themselves they had found ways to spread risk throughout the financial markets - a great example of "wishful thinking combined with hubris".

The content was discussed during a seminar at the British Academy in June, attended by Treasury permanent secretary Nick MacPherson, Goldman Sachs chief economist Jim O'Neill and Observer economics columnist William Keegan, the newspaper said.

A Buckingham Palace spokewoman would not discuss the correspondence but said: "The Queen always displays an interest in current issues and is kept abreast of current issues. Obviously the recession is very topical."

In March, Mervyn King became the first Bank of England governor to be invited for private talks with the Queen.

When she visited the LSE in November last year she asked Professor Luis Garicano, of the economics' management department, about the origins of the credit crisis, saying: "Why did nobody notice it?"

Prof Garicano told the Queen: "At every stage, someone was relying on somebody else and everyone thought they were doing the right thing."

The Queen described it as "awful".

Prof Garicano said afterwards: "The Queen asked me: 'If these things were so large, how come everyone missed them?"'

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# posted by Ingrid J. Jones @ 7/26/2009
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