I feel obliged, after lurking here for some time, to point to the odd
fallacy:
Thomas Lunde offers us this:
>Andre Gouin has kindly presented us all with a new source of
>information - take a read of the following paragraph if you want to
>evaluate the quality of writing and depth of thought - I like it -
>thanks.
M. Gouin, it seems to me, does not understand the difference between
apples and oranges.
He says:
> Faced with the power of these giants of the financial world, States
> can do very little. The recent financial crisis in Mexico, which
> began in late December 1994, demonstrated this clearly. What weight
> do the cumulative currency reserves of the United States, Japan,
> Germany, France, Italy, the United Kingdom and Canada that is, the
> seven richest countries in the world - have when faced with the
> financial attacking force of private investment funds, for the most
> part British or Japanese? Not a lot. Just as an example, let us
> consider that in the greatest financial elilort made in modern
> economic history in favour of a country - in this case Mexico - the
> great States of the world (including the United States), the World
> Bank and the International Monetary Fund managed, together, to raise
> about 50 billion dollars. A considerable sum of money. Well, the big
> three American pension fund managers, Fidelity Investments, Vanguard
> Group and Capital Research and Management control 500 billion
> dollars. The managers of these funds hold in their hands a financial
> power of indescribable proportions - one that no government minister
> or central bank governor in the world possesses. In a market that
The flaw is this: if you measure the power of the mentioned
pension funds by the total of the assets they administer, and the
power of the G7 countries by how much they can raise to support
Mexico, the comparison lacks relevance. Either compare how much the
pension funds can raise to support Mexico (as opposed to their total
assets under administration) or compare their total assets to the
total assets that these countries control, in which case 500 billion
dollars is peanuts, relatively speaking.
The foreign currency reserves (which may only be a part of the
"cumulative currency reserves" M. Gouin refers to) of the G7
countries do in fact approach 500 billion dollars excluding gold
reserves. These reserves are available for exercising the sort of
influence that M. Gouin favours, amongst other things. I would bet
my poke that the owners of the investment funds are not prepared to
allow the use of the slightest portion of their funds for such
purposes.
Rhetoric such as this denigrates the conclusions it is intended
to support.
> The
>managers of these funds hold in their hands a financial power of
>indescribable proportions - one that no government minister or
>central bank governor in the world possesses. In a market that has
This plainly wrong conclusion is the result of such analysis. It
leads to such nonsense as this:
>Political leaders of the major world
>powers meeting with the 850 most important economic decision-makers
>in the world at the Davos International Forum in Switzerland last
>January, clearly stated the degree to which they feared the
>superhuman power of these fund managers whose fabulous wealth has
>freed itself from government control and who act as they wish on the
>cyberspace of world finance.
Perhaps M. Gouin would be willing to provide a copy of what was
actually said where these fears are so "clearly stated." Given his
emphatic expression of what was said I would expect to see the words
such as "fear", "superhuman power" attibuted to these leaders or
some support for the notion that these fund managers are free "from
government control".
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Ken Walker mailto:[EMAIL PROTECTED] http://www.island.net/~kwalker/
