Essential market analysis of the crisis

My Cobden Centre colleagues have been steadfastly producing further market analysis of the crash over the last couple of days:

• Sean Corrigan comments on the alarming US monetary contraction of the last few months and explains that we should see the economic effects by the end of the third quarter. Andy Duncan follows up with commentary from those who predicted the first crisis and who are now predicting a second, based on sound theory.

• Toby Baxendale reviews Alchemists of Loss - How Modern Finance and Government Intervention Crashed the Finance System by Kevin Dowd and Martin Hutchinson:

  This book is a page turner. It is a must for anybody who has an interest in what has gone wrong with our financial system and thus the economy, and what can be done to fix the problems created.
  ...
  The alchemists in the title are 7 Nobel Prize winners, investment bankers, the political class, other economists, and regulators. They exploit the frailty of the human condition — our impulse to believe that “this time, things are different.”
  

• Andy Duncan reports on a Civitas lecture, asking, "Our Dysfunctional Financial Services Sector: Is there a solution?"

  Dr Woolley’s main contention was that the financial services system is clearly broken, particularly by the principal-agent problem where the agents (traders, fund managers, financial advisers) are milking the investment gains of the principals (that’s you, me, and everyone else with a retail pension), mainly through technological financial innovation, moral hazard, leverage, and the general opacity of the financial system.

  Andy considers the substance of the lecture before proposing a solution which differs from Dr Woolley's: correct the flaws in the monetary regime.

At The Cobden Centre, we are determined to widen the scope of the present economic debate. We are for honest money and social progress because we believe that productive human social cooperation requires as its foundation a better system of money and bank credit. As James M. Buchanan (Nobel Laureate, economics, 1986) has said,

The market will not work effectively with monetary anarchy. Politicization is not an effective alternative. We must commence meaningful dialogue with acceptance of these elementary verities. Far too much has been said and written in elaboration of the first statement, which too often is taken to be equivalent to the assertion that “capitalism” or “the market” has failed.

The market has not failed; money has failed.