FT.com / Columnists / John Kay - The cause of our crises has not gone away.

John Kay in the FT this morning mixes two themes I have also explored. First, on Iceland he says:

The citizens of that most placid of countries, Iceland, now backed by their president, have found a characteristically polite and restrained way of disputing an obligation to stump up large sums of cash to pay for the arrogance and greed of other people. They are right. We should listen to them before the same message is conveyed in much more violent form, in another place and at another time. But it seems unlikely that we will.

His message is that the time has come when we have to stop underwriting financial markets making ever bigger losses as a consequence of paying a few recklessly to generate enormous asset bubbles that then burst.

Second he says:

We made a mistake in the closing decades of the 20th century. We removed restrictions that had imposed functional separation on financial institutions. This led to businesses riddled with conflicts of interest and culture, controlled by warring groups of their own senior employees. The scale of resources such businesses commanded enabled them to wield influence to create a — for them — virtuous circle of growing economic and political power. That mistake will not be easily remedied, and that is why I view the new decade with great apprehension. In the name of free markets, we created a monster that threatens to destroy the very free markets we extol.

He's right to be worried. The risk of conflict as the many have to restrain the few is real. Robust determination is needed to constrain the power of the markets.

I wish I could see where it is coming from.