National Tamers versus Global Tigers
Chapter 2: Global financial players
2. Global ﬁnancial players What an extraordinary episode in the economic progress of man that age was which came to an end in August, 1914! . . . The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, . . . and reasonably expect their early delivery upon his doorstep; he could at the same moment and by the same means adventure his wealth in the natural resources and new enterprises of any quarter of the world, and share, without exertion or even trouble, in their prospective fruits and advantages; . . . and could then proceed abroad to foreign quarters . . . bearing coined wealth upon his person, and would consider himself greatly aggrieved and much surprised at the least interference. But, most important of all, he regarded this state of aﬀairs as normal, certain and permanent, except in the direction of further improvement, and any deviation from it as aberrant, scandalous, and avoidable. John M. Keynes ( 1971, p. 6) Despite the general usefulness of the assumption of rationality, markets can on occasions – infrequent occasions, let me emphasize – act in destabilizing ways that are irrational overall, even when each participant in the market is acting rationally. Charles P. Kindleberger (1978, p. 41) 2.1 THE ORIGINS OF FINANCIAL GLOBALIZATION The globalization of ﬁnance is a recent phenomenon but its roots are ancient.1 The books that a scholar of international ﬁnancial history such as Kindleberger (1978 and 1984) has devoted to the subject provide readers with a host of...
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