Nick Mathiason noted in the Observer today that:

As Alistair Darling mingled with the press at the Treasury's summer drinks party last Tuesday, officials expressed alarm at steep falls in UK bank share prices, compounding the ever-deepening financial crisis.

When asked whether any reform of the financial system would feature a fundamental review of tax havens and offshore financial centres - the places where the world's banks parked most of their mortgage-backed securities and structured investment vehicles - officials and ministers replied that it was not a priority.

Why the heck not? Has no one heard of systemic thinking in Parliament Street? Don't they realise that what's happening is not a minor systems fault? It's the system that's at fault and tax havens play a major part in that system that's failed?

Look at this:

Compare that with the conventional thinking that the Treasury seems to be using:

1. Listing situation elements and;
2. Selecting the most likely element to focus on.

If the Treasury are using this thinking technique then of course they're asking the wrong questions. Their techniques are wrong.

As The Observer notes:

Last month, the Bank for International Settlements, the organisation that watches over the world's central banks, asked in its annual report: 'How could a huge shadow banking system emerge without provoking clear statements of official concern?'

Good question. But a better one is why is no one at the Treasury asking it?

NB: apologies for the fact that this post got seriously messed up when first posted