On Fri, 13 Jun 1997 02:17:56 -0400 F. Leon Wilson wrote:

>
> "[T]hese transactions are carried out by a very small community -
> the world's largest 30 to 50 banks, and a handful of major
> brokerages. ... The new communications technology has created a
> small, elite community of international finance - perhaps no more
> than 200,000 traders around the world who all speak the same
> language and recognize a mutuality of interests despite their
> rivalries." (Greider, p. 245-246.)
>
>
> THE EMERGENCE OF SPECULATIVE CAPITAL
>
> Today, the use of capital for productive purposes is being
> replaced by capital invested for purely speculative purposes -
> that is, the hope that its value will somehow rise in relation to
> other speculative adventures: Tokyo real estate versus baseball
> cards; or New York stock futures versus rare paintings.
>

> Noam Chomsky cites estimates that in the early 1970s about 10
> percent of the capital in international exchanges was for
> speculation and about 90 percent of it was related to the real
> economy, for investment in productive capacity and for trade. By
> the 1990s, those figures were reversed - 90 percent was for
> speculation and never destined to be invested in raw materials, or
> factories, or transportation systems, or for trade. Chomsky also
> quotes David Felix's study for the United Nations Conference on
> Trade and Development which cites estimates that by 1994 the ratio
> was about 95 percent speculative to about five percent real
> economy-related." (Class Warfare: Interviews, Noam Chomsky with
> David Barsamian, p. 106)
>
>

This ratio of 95% speculation to 5% real economy related transactions
means that the creation of the proposed single common European
currency might be a risky business.  Last week, on the 10th & 11th
June, there was a meeting in Amsterdam of the 1997 Financial Panel of
the European Research Center, on the subject
"Will the EMU Pay Off: Anticipating the Effects on the Market."

The speakers included Nout Wellink, President Elect of the Dutch
Central Bank, Alan Walters, former economic adviser to Margaret
Thatcher, Wilhelm Nolling, Professor of Economics, Hamburg University,
Jacques Attalie, former President of the European Bank for
Reconstruction and Development and Linda Davies (my sister), a former
banker who is now a novelist.

The text of her speech is now available on the Web -

The Psychology of Risk, Speculation and Fraud
http://www.ex.ac.uk/~RDavies/arian/lindaemu.html

In it she tries to anticipate the reactions of speculators in the
period leading up to EMU and immediately afterwards, and discusses the
likely outcome.
_____________________________________________________________________
Roy Davies           | e-mail [log in to unmask]                |
University Library   | History of Money URL                          |
University of Exeter | http://www.ex.ac.uk/~RDavies/arian/llyfr.html |
Stocker Road         |                                               |
Exeter EX4 4PT       | Financial Thrillers URL                       |
UK                   | http://www.ex.ac.uk/~RDavies/arian/linda.html |
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