Martin Wolf is one of the biggest hitters in the world on economic thinking.
He said in this FT column this week that:
These are historic moments for the world economy. I felt the same during the emerging market financial crises of 1997 and 1998 and the bubble in technology stocks that burst in 2000. This "credit crunch" may, I believe, be an equally important turning point for financial markets and the world economy.
I strongly recommend reading what he has to say. He concludes:
Experience teaches that big financial shocks affect patterns of lending and spending across the world. Originating, as it does, at the core of the world economy, this one will do so, too. The question is how stable and dynamic the world economy that emerges will be.
My answer is that this will depend on the extent to which we embrace openness and accountability. If we do, we can create a better economic order. If we don't we're in trouble.
It's pretty straightforward.
It's also pretty straightforward for the supposed legitimate role of the tax havens in the new structure. Securitisation has been a major market for them. As Martin Woolf says:
[T]hese events have called into question the workability of securitised lending, at least in its current form.
Actually it's dead in the water. So are the places, like Jersey, that have secured their legitimate offshore income from pursuing these practices. And I'm not crying about that.