Critics would levy three big charges against modern financial capitalism: it is unjust; it is inefficient; and it is unstable. This charge sheet is as old as capitalism itself.
I'll ignore his arguments on this first two here because his argument on the third is intriguing at a time when many think a downturn is inevitable. He prescribes six remedies if we are:
to take advantage of the financial brain's abilities, while limiting its capacity for irresponsible, short-sighted and destructive behaviour
Those remedies are;
First, for essentially political reasons, we must re-examine the taxation of income and wealth.
Second, we should recognise that emerging and small economies have to manage their involvement with the global financial system cautiously.
Third, we must also realise that the mixture of floating exchange rates with a number of important pegged rates is creating huge distortions.
Fourth, we must look more closely at how monetary policy interacts with the financial sector and asset prices.
Fifth, we should also look once again at how well vast rewards are aligned with risk in financial markets.
Finally, we must encourage regulatory and fiscal authorities to achieve higher levels of co-ordination.
I added the emphasis. The reason is simple. The issues that concern me are at the core of making markets work. When the FT agrees its time for action.