Pass the parcel

Congratulations to Martin Wolf of the Financial Times

An article was published in the FT on the 29th June that beautifully describes the ways in which we are all being so beautifully ‘screwed’ by the world of finance.  (Note, you may need to register to see this article, but please do.  Registration is free and the FT is full of great content.)

It starts like this:

This global game of ‘pass the parcel’ cannot end well

By Martin Wolf

Published: June 29 2010 23:31 | Last updated: June 29 2010 23:31

Paul here. Pass the parcel is a game for kids’ parties that involves passing a multi-wrapped ‘present’ around where the kid holding the parcel when the music stops gets to unwrap one sheet, then passes it on, etc., etc., until the kid holding the parcel with just one wrapper on it when the music stops gets the present.

Martin continues:

Our adult game of pass the parcel is far more sophisticated: there are several games going on at once; and there are many parcels, some containing prizes; others containing penalties.

So here are four such games. The first is played within the financial sector: the aim of each player is to ensure that bad loans end up somewhere else, while collecting a fee for each sheet unwrapped along the way. The second game is played between finance and the rest of the private sector, the aim being to sell the latter as much service as possible, while ensuring that the losses end up with the customers. The third game is played between the financial sector and the state: its aim is to ensure that, if all else fails, the state ends up with these losses. Then, when the state has bailed it out, finance can win by shorting the states it has bankrupted. The fourth game is played among states. The aim is to ensure that other countries end up with any excess supply. Surplus countries win by serially bankrupting the private and then public sectors of trading partners. It might be called: “beggaring your neighbours, while feeling moral about it”. It is the game Germany is playing so well in the eurozone.

It’s an article that really does need to be read in full. Martin concludes thus:

Yet it is quite clear that an isolated discussion of the need to reduce fiscal deficits will not work. These cannot be shrunk without resolving the overindebtedness of damaged private sectors, reducing external imbalances, or both.

The games we have been playing have been economically damaging. We will be on the road to recovery, when we start playing better ones.

Now I really don’t want Learning from Dogs to focus on ‘doom and gloom’. There’s more than enough of that to go round twice and thrice.

But when someone writes in such a great clarifying way – then it deserves the widest promulgation. The more we all know about the games being played, the better we can change the rules to benefit society.  Well done, Martin.

By Paul Handover

3 thoughts on “Pass the parcel

  1. It is a great article… but read it carefully and what you will find is that in this case we are talking about a parcel that really no one wants to keep because it could explode in their faces, and so buried in it is Martin Wolf’s insistence that we keep on playing it!… meaning that we should now pass the parcel to Germany and they should, as good sports, take it.

    And not that Wolf would be wrong about that… if only we could find a way to deactivate the bomb while passing it along.


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