`Greed- and Fear:A special report of the future of finance`

Reaction and Opinion "Greed-and fear A special report on the future of finance " The Economist , 24 January 2009

The report discusses the many flaws in organized financial markets but concludes that these markets should continue to operate on principles of initiative or creativity and with a reasonable amount of government regulation . While greed may be part of the cause of financial market instability , naivety and delusion contributed as well . Innovation in computer technology coupled with the work of Black and Scholes in options pricing gave rise to the modern derivatives markets (Greed-and

br fear A special report on the future of finance ) Natural selection happens in financial markets where companies are constantly changing to the latest product , i .e . retail banks began to focus on investment banking , and investment banks moved into the arena of hedge funds . The report calls into question the new form of financial market regulation .A major area of focus of the report is what factors lead to the boom and bust market cycles that lead to financial instability . The report describes three concepts , globalization , liberalization , and technological innovation as triggers of market booms , busts , and financial instability (Greed-and fear A special report on the future of finance ) This responds to each of these ideas as set forth in the report

Globalization

According to the report globalization embraced by emerging markets along with low inflation in developed markets made credit grow more quickly and easily (Greed-and fear A special report on the future of finance However...