The Archbishop of York: “We find ourselves in a market system which seems to have taken its rules of trade from Alice in Wonderland."

BB NOTE: Archbishop John Sentamu spoke to a gathering of international bankers on the financial crisis. His remarks are here. Ruth Gledhill has more here.

Here are some excerpts:

“It seems to me that the current solutions being proposed by the administration in the United States are remarkable, not least for a proposed level of intervention that now seems to do away with the concept of “systemic risk” and replaces it with a new market notion of “systemic underwriting”. This is something previously unknown in the so called land of the free and the land of the free market. Adam Smith believed that when we act in our own self-interest, an ‘invisible hand’ would control our excesses and direct us – even against our will – towards the common good. Today we are more cautious, more cynical and more realistic. It seems if we morality in our markets we have to legislate for it. Indeed as we meet here tonight, the Prime Minister and the Chancellor are meeting with members of the US treasury to propose exactly how such regulation might work. The problem they, along with other Governments, will face at this time is how to regulate that which its libertarian advocates argue works best when it regulates itself.”

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“One of the lessons of the current turmoil is the recognition of our interdependence upon each other. It is a lesson that is often at odds with the mindset behind those practices such as short selling, but it is a lesson that bears repeating in times of crisis. Am I my brothers keeper ? Yes I am. The impact of what happens with a subprime mortgage in America has an impact upon my brother employed in Newcastle Upon Tyne working for Northern Rock. Am I brother’s keeper ? Yes I am when short selling leads to mergers with redundancies for thousands of my brothers and sisters. Am I my brothers keeper ? Yes I am, because “systemic risk” only makes sense when it is translated into the thousands of individual stories of hardship that flow from the collapse of a bank. This interconnectedness is more than the playing out of Globalisation upon financial systems. It is fundamentally a recognition of the law of consequence. Our actions have consequences far beyond that of their immediate parameters.”

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“To a bystander like me, those who made £190million deliberately underselling the shares of HBOS, in spite of its very strong capital base, and drove it into the bosom of Lloyds TSB Bank, are clearly bank robbers and asset strippers.

“We find ourselves in a market system which seems to have taken its rules of trade from Alice in Wonderland, where the share value of a bank is no longer dependent on the strength of its performance but rather on the willingness of the Government to bail it out, or rather on whether the Government has announced its intentions so to do.

“Our country has built its financial strength historically on the manufacturing of goods, where money was the medium of exchange. In the last week we have has seen its systems come close to ruin because now money is no longer being the medium of exchange for goods, but rather is the very item which is being traded.”

Tip of the Tinfoil to Ruth Gledhill.