Book review: Saving the Market from Capitalism, by Massimo Amato and Luca Fantacci
Despite its liquid nature the fiscal system is set in its ways - and it needs to change, say Italian economists Massimo Amato and Luca Fantacci, who address some problems buoyed by liquidity.
by Massimo Amato and Luca Fantacci
Polity
Their check-list includes the rise of fiscal instruments divorced from the real economy, banker bonuses, rating agencies' inability to gauge the creditworthiness of debtors with "due wariness", and the surge in global imbalances. Amid the uncertainty, even booming, traditionally frugal China has issues.
"China is not a country in equilibrium," the economists write, adding that the nation's epic trade surplus aggravates inflationary pressure. Worse, contrary to popular assumption, China was rocked by the global financial crisis, they say, citing evidence of a slowdown across the BRICS (Brazil, Russia, India, China, South Africa).
Despite the scope of the crisis blamed on bankers, little has been done to prevent future meltdowns, they write. Their advice is that, instead of preaching at failed states such as Greece, politicians should get practical and radical: rein in the market that has come to lord them all - the financial market.
Local currencies should be created and used to foster neighbourhood economic development, the authors say. They also advocate a "clearing house" system, where credits and debits are reciprocally offset rather than accumulated, encouraging parity.