Sunday, 7 June 2009

No system or network should have a single point of failure.

In the United States there is a centralized financial power structure which has over relied on the perceived worth of credentials per se and has (largely) not rewarded/punished on the basis of good/bad judgment.

While that culture of credentialism and entitlement persists the financial elite is becoming even more concentrated and oligarchical. The lack of culpability shown by many of those responsible for colossal errors and miscalculations and the asymmetric nature of the private profit/socialized losses model is creating such a sense of dissonance and disengagement that the cultural fabric is becoming very frayed and could burst apart at the seams.

Moreover the global financial system has a single point of failure – the integrity of the US Treasury market. A sane financial system or network would never allow itself to have such a vulnerability and a new financial architecture has to be devised with a much greater distribution of risk. The US Dollar is currently too big to rescue, and this seems to be the message that the BRIC countries are sending out and those in the advanced economies should be grateful that they are embarking on strategies to ease their dependency on the US dollar and the market in US debt instruments.

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