The succession of political dramas in Europe, most recently the end of Socialist dominance in Spain, again shows the financial markets acting like a global supra-government. They oust entrenched regimes where normal political processes could not do so. They force austerity, banking bail-outs and other major policy changes. Their influence dwarfs multilateral institutions such as the International Monetary Fund. Indeed, leaving aside unusable nuclear weapons, they have become the most powerful force on earth.
The power of financial markets, however, is a double-edged sword. When that power is flexed, the immediate impact on society can be painful – wider unemployment, for example, frequently results and governments fall. Yet history suggests the longer-term effects can be often transformative and positive. For all the recent hand-wringing over the role of the markets, this could yet be the case in Europe, too.
Read the rest at The Financial Times
By Roger Altman
Meet your new (faceless) masters.
BTW, someone please remind Mr. Altman that nothing is permanent.
Also, no clue that the monetary authority of a currency sovereign has control of the yield curve if it chooses to use it, and the fiscal authority as the power to maintain sectoral fiscal balance at full employment through functional finance. See Bill Mitchell, Who is in charge?