by Summary:
Politics don’t matter; market forces shape our world. So ran the dominant ethos before 2008. Adam Tooze, the author of a landmark book, says it was always an illusion The City of London decided to face East as it saw the huge profits that could be made in China. But China's huge credit boom could bring the Chinese economy crashing down, says Adam Tooze, and then the City of London will be the first Western domino to fall. Alan Greenspan, Gordon Brown, and the neoliberals thought that politics was finished, except for national defence issues, and that markets ruled, but China combines politics and economics with equal strategic importance, says, Adam Tooze. KV In trade and security, the UK lacks the heft, but it has shaped our era of globalisation and may still do so via one
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Politics don’t matter; market forces shape our world. So ran the dominant ethos before 2008. Adam Tooze, the author of a landmark book, says it was always an illusion The City of London decided to face East as it saw the huge profits that could be made in China. But China's huge credit boom could bring the Chinese economy crashing down, says Adam Tooze, and then the City of London will be the first Western domino to fall. Alan Greenspan, Gordon Brown, and the neoliberals thought that politics was finished, except for national defence issues, and that markets ruled, but China combines politics and economics with equal strategic importance, says, Adam Tooze. KV In trade and security, the UK lacks the heft, but it has shaped our era of globalisation and may still do so via one
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Politics don’t matter; market forces shape our world. So ran the dominant ethos before 2008. Adam Tooze, the author of a landmark book, says it was always an illusion
The City of London decided to face East as it saw the huge profits that could be made in China. But China's huge credit boom could bring the Chinese economy crashing down, says Adam Tooze, and then the City of London will be the first Western domino to fall. Alan Greenspan, Gordon Brown, and the neoliberals thought that politics was finished, except for national defence issues, and that markets ruled, but China combines politics and economics with equal strategic importance, says, Adam Tooze. KV
In trade and security, the UK lacks the heft, but it has shaped our era of globalisation and may still do so via one hugely significant entity: the City of London. While Wall Street has America’s huge national economy as its hinterland, the City of London is outsized, preeminent in currencies, interest rate derivatives and global banking Its present role and importance was already taking shape by the late 1950s when it began to provide an offshore market for unregulated borrowing and lending.
Again, this was very much a political choice, shaped via the growth of someting called the Eurodollar – a dollar held in Europe and hence, importantly, outside the jurisdiction of the Federal Reserve; a political choice enabled by the British authorities and tolerated by the Americans. Hence it was by way of London that the offshore dollar banking industry was born, with profoundly destabilising long-term results.
In fact, the consequences were nothing less than world historic. On 15 August 1971, Richard Nixon suspended the gold convertibility of the dollar. (By the terms of the Bretton Woods Agreement of 1944, which had governed post-war global finances, currencies were pegged to the price of gold.) For the first time since the invention of money in the ancient world, no major currency was anchored to a metallic base. Money was openly acknowledged as a political creation.
The result, in the short term, was an explosion of instability, inflation and gyrating exchange rates. It was a feast for investment bankers, both on Wall Street and in the City of London. Opec’s oil earnings added to the surge. To avoid taxes, the money was funnelled through offshore havens, many of which were located in the former British empire, or exploited quasi-feudal entrepots such as Guernsey.
The eurodollar market was a “work-around”. By the 1980s, the push was on to achieve something more comprehensive: the wholesale liberalisation of capital movements. Regulators in London and New York, egged on by banking interests, were racing to the bottom.
The Guardian