Refounding Finance

After the shock that the crisis created and the quick – but not cheap – measures that were passed, it seems that the debate is currently moving on the terms of a longer term solution (see posts in Javelin Strategy or The Bankwatch for example). And there, things do not look good either.

It is obvious that free market created a lot of wealth (that has not been equally distributed), but was unable to stabilize the deep imbalances it generated. Furthermore, it’s now obvious that the wrong mix of regulation and laissez-faire created serious flaws in the incentive mechanisms. Regulation prevented competition to come and erase unfair rents that some actors were extracting. Laissez-faire meant than no-one had the authority to correct these undeserved appropriation.

But going back blindly to regulation is certainly the wrong answer. It is interesting to see that people who considered Alan Greenspan as a genious, treat him now as the villain who made all this possible. The truth is simpler: Alan Greenspan is certainly a very smart man, but there’s no single human being on this planet who can master a complex evolving system like the financial system. So regulation is not the answer in itself.

I think we should think of the problem in deeper and wider terms. It’s a real refoundation of significant part of our financial system that we must address. And to do this, I don’t believe that tinkering the current system through new regulations will do. We must get back to the roots of this industry which aims at providing a service to people looking for an opportunity to save and to people looking for means to get access to current resources.

We will be discussing this subject – and many others – in London on Feb 14, 2009 at BarCampBankLondon2 and in San-Francisco on Apr 25, 2009 at BarCampBank SF2. Anyone interested in putting back innovation as a solution and not a problem to the current financial woes should certainly consider joining us.

2 Responses to “Refounding Finance”

  1. 1 chrisjcook January 30, 2009 at 8:28 pm

    The approach I’ve been taking is to use partnership-based legal protocols (ie not based on Company or Trust law, and contract law) in order to create P2P investment (Unitisation) and P2P credit (Credit Clearing).

    These presentations might give you an idea of a “Re-foundation” to evolve from a “deficit basis” to an “asset-basis” for finance. Post Credit Crash I’ve been getting interest at top level (ministerial) in a couple of countries.


    was a lecture in Ireland setting out how unitisation of property rentals could replace secured (mortgage) debt…


    …earlier this week in Teheran, set out how a “Credit Clearing Union” could enable a global market/payments system based upon an energy “Value Standard” and fungible Energy Units (eg Units redeemable in natural gas).

    I’m going to try and get down from Scotland to BarCampBank2

  2. 2 Frederic Baud January 30, 2009 at 8:44 pm

    @chrisjcook Hope you can make it to BarCampBankLondon2 so that we can discuss all this in persons.

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