->PConnect(script.ftech.net,mi2gl,m4d2e,mi2gl)
 

The Fear of Central Bankers

Flight from Illiquidity, Derivatives and Heightened Risk of Contagion

London, UK - 12 July 2007, 21:59 GMT - We are grateful to Dr Harald Malmgren, based in Washington, DC, for "The Fear of Central Bankers -- Flight from Illiquidity, Derivatives and Heightened Risk of Contagion" in response to, "Are the Currency Markets Warning that there is Trouble Ahead? The Precipitous Decline of the US Dollar and its Impact on the World."

intentBlog: Dr Malmgren: The Fear of Central Bankers

Dear ATCA Colleagues

[Please note that the views presented by individual contributors are not necessarily representative of the views of ATCA, which is neutral. ATCA conducts collective Socratic dialogue on global opportunities and threats.]

Dr Harald Malmgren is an internationally recognised expert on world trade and investment flows who has worked for four US Presidents. His extensive personal global network among governments, central banks, financial institutions, and corporations provides a highly informed basis for his assessments of global markets. At Yale University, he was a Scholar of the House and Research Assistant to Nobel Laureate Thomas Schelling, graduating BA summa cum laude in 1957. At Oxford University, he studied under Nobel Laureate Sir John Hicks, and wrote several widely referenced scholarly articles while earning a DPhil in Economics in 1961. His theoretical works on information theory and business organization have continued to be cited by academics over the last 45 years. After Oxford, he began his academic career in the Galen Stone Chair in Mathematical Economics at Cornell University.

Dr Malmgren commenced his career in government service under President John F Kennedy, working with the Pentagon in revamping the Defense Department's military and procurement strategies. When President Lyndon B Johnson took office, Dr Malmgren was asked to join the newly organised office of the US Trade Representative in the President's staff, where he had broad negotiating responsibility as the first Assistant US Trade Representative. He left government service in 1969, to direct research at the Overseas Development Council, and to act as trade adviser to the US Senate Finance Committee. At that time, he authored International Economic Peacekeeping, which many trade experts believe provided the blueprint for global trade liberalisation in the Tokyo Round of the 1970s and the Uruguay Round of the 1980s. In 1971-72 he also served as principal adviser to the OECD Wise Men's Group on opening world markets, under the chairmanship of Jean Rey, and he served as a senior adviser to President Richard M Nixon on foreign economic policies. President Nixon then appointed him to be the principal Deputy US Trade Representative, with the rank of Ambassador. In this role he served Presidents Nixon and Ford as the American government's chief trade negotiator in dealing with all nations. While in USTR, he became known in Congress as the father of "fast track" trade negotiating authority, which he first introduced into the historically innovative Trade Act of 1974. He was the first official of any government to call for global negotiations on liberalisation of financial services, and he was the first US official to call for the establishment of an Asian-Pacific Economic Cooperation arrangement, known in more recent years as APEC.

In 1975 Dr Malmgren left government service, and was appointed Woodrow Wilson Fellow at the Smithsonian Institution. From the late 1970s he managed an international consulting business, providing advice to many corporations, banks, investment banks, and asset management institutions, as well as to Finance Ministers and Prime Ministers of many governments on financial markets, trade, and currencies. He has also been an adviser to subsequent US Presidents, as well as to a number of prominent American politicians of both parties. Over the years, he has continued writing many publications both in economic theory and in public policy and markets. He is Chief Executive of Malmgren Global and also currently the Chairman of the Cordell Hull Institute in Washington, a private, not-for-profit "think tank" which he co-founded with Lawrence Eagleburger, former Secretary of State. He writes:

Dear DK and Colleagues

Re: The Fear of Central Bankers -- Flight from Illiquidity and Heightened Risk of Contagion


It is true when ATCA states that "We are at one of those moments in financial markets when the reality may not have changed much but perceptions have clearly shifted. The shift is about risk, the willingness to accept it and the premium to charge for it." At this moment financial traders and many market analysts are focused on the deterioration of the US subprime mortgage market because that is what fills daily business headlines.

[CONTINUES] [ATCA Membership]

A flight from "illiquid" assets to liquid assets would bring about a major swing in financial markets. What bankers in the past traditionally described as "flight to quality" would be reinterpreted in a "flight to liquidity" - to assets that are easily tradeable on short notice. This would mean assets that have a large and highly liquid market. The largest and most liquid market in the world can still be found in the US bond and equity markets. It may seem counterintuitive, but in a flight to liquidity, it is unlikely that there will be a flight from the dollar, at least in the next few years. There are no other alternatives big enough and liquid enough to provide "safety" when the values of more risky, relatively illiquid assets come into question.

Best wishes


Harald Malmgren

[ENDS]

We look forward to your further thoughts, observations and views. Thank you.

Best wishes


For and on behalf of DK Matai, Chairman, Asymmetric Threats Contingency Alliance (ATCA)


ATCA: The Asymmetric Threats Contingency Alliance is a philanthropic expert initiative founded in 2001 to resolve complex global challenges through collective Socratic dialogue and joint executive action to build a wisdom based global economy. Adhering to the doctrine of non-violence, ATCA addresses asymmetric threats and social opportunities arising from climate chaos and the environment; radical poverty and microfinance; geo-politics and energy; organised crime & extremism; advanced technologies -- bio, info, nano, robo & AI; demographic skews and resource shortages; pandemics; financial systems and systemic risk; as well as transhumanism and ethics. Present membership of ATCA is by invitation only and has over 5,000 distinguished members from over 100 countries: including several from the House of Lords, House of Commons, EU Parliament, US Congress & Senate, G10's Senior Government officials and over 1,500 CEOs from financial institutions, scientific corporates and voluntary organisations as well as over 750 Professors from academic centres of excellence worldwide.

The views presented by individual contributors are not necessarily representative of the views of ATCA, which is neutral. Please do not forward or use the material circulated without permission and full attribution.



Intelligence Unit | mi2g | tel +44 (0) 20 7712 1782 fax +44 (0) 20 7712 1501 | internet www.mi2g.net
mi2g: Winner of the Queen's Award for Enterprise in the category of Innovation

mi2g is at the leading edge of building secure on-line banking, broking and trading architectures. The principal applications of its technology are: 1. D2-Banking; 2. Digital Risk Management; and 3. Bespoke Security Architecture. For more information about mi2g, please visit: www.mi2g.net

Renowned worldwide for the ATCA Briefings. Subscribe now.
 
Home - Profile - Values - People - Careers - Partners - Contact Us
D2 Banking - Bespoke Security Architecture - Digital Risk Management - Tools

Intelligence Briefings - Brochures - Case Studies -
SIPS Methodology FAQ (pdf)
Keynote Speeches - Articles - News Feeds - Glossary (pdf)
Terms and Conditions - Privacy Policy