As a “global risk assessor” there is nothing like keeping the free press on its toes.
Sir Nicholas Stern is absolutely right in that “The world needs an unbiased global risk assessor” March 25, and his proposal on how to set up an independent institution for such purpose sounds absolutely right, yet I have to tell him to brave himself to the fact that it would probably not work. First because it is hard to see how the world would elect the right people to such place, instead of just the correct people. Second because it is hard to see how to guarantee that institution would just not turn into a club of mutual admirers. Lord Stern himself starts going down this last route of perdition when naming some possible candidates that he himself personally admires.
Let us look at the “unbiased global risk assessor” from our current perspective. Would it have been able to alert the world to what was happening? In such a way the world would have listened and acted upon the warning in a timely fashion? I believe not.
Also why use so many resources to try to identify the exact timing of when things go wrong instead of avoiding creating the conditions for things to go wrong. I myself even though I could never be sure of the exact timing of it knew that catastrophe was on its way when our financial regulators in Basel came up with such a silly idea that a bank should be able to leverage itself 62.5 time to 1 as long as it lent to corporations perceived as AAA or AA- by human fallible credit rating agencies.
No, much more important than creating this type of new oversight institution is to make certain that the old oversight institutions work. Like that the free press, like FT, are stimulated enough to pose the right questions, in time, and which for a starter requires their journalists not joining the establishment.
When I see a journalist in the audience frowning and frantically scribbling away on a block I know we got it right. When I see a journalist moderating a discussion as another one among the learned I know we got it all wrong.
Let us look at the “unbiased global risk assessor” from our current perspective. Would it have been able to alert the world to what was happening? In such a way the world would have listened and acted upon the warning in a timely fashion? I believe not.
Also why use so many resources to try to identify the exact timing of when things go wrong instead of avoiding creating the conditions for things to go wrong. I myself even though I could never be sure of the exact timing of it knew that catastrophe was on its way when our financial regulators in Basel came up with such a silly idea that a bank should be able to leverage itself 62.5 time to 1 as long as it lent to corporations perceived as AAA or AA- by human fallible credit rating agencies.
No, much more important than creating this type of new oversight institution is to make certain that the old oversight institutions work. Like that the free press, like FT, are stimulated enough to pose the right questions, in time, and which for a starter requires their journalists not joining the establishment.
When I see a journalist in the audience frowning and frantically scribbling away on a block I know we got it right. When I see a journalist moderating a discussion as another one among the learned I know we got it all wrong.
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