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The Wheel Of History Turns Again...
From The Rise and Fall of the Great Powers, Paul Kennedy:
"In 1736, just as Abraham Darby's ironworks at Coalbrookdale were beginning to burn, the blast furnaces and coke ovens of Honan and Hopei were abandoned entirely. They had been great before the Conqueror had landed at Hastings. Now they would not resume production before the 20th century."
September 2008: Britain and the US introduce temporary bans on the short selling of certain financial shares. British PM Gordon Brown warns that the ban, due to be reviewed in January, will lead to stricter regulation of the City.
26 September 2008 (Bloomberg Asia): "China's cabinet agreed to let investors buy shares on credit and sell borrowed stock to help develop Asia's second-largest market after prices and trading volumes slumped, an official familiar with the plan said.
"The State Council signed off on a China Securities Regulatory Commission plan submitted this month to allow margin lending and short selling, said the official, who declined to be identified as he isn't authorized to speak on the issue.
"China's action contrasts with regulators in the U.S., Europe and Australia that have banned short selling in the past week to shore up financial shares battered by the global credit squeeze. China's government is betting the changes will boost trading without spurring further declines after state share buybacks helped the CSI 300 Index rebound from a two-year low."
And on events like these, history turns. The west has already lost much of its manufacturing capacity to China; will financial services follow?
It is true that for now Chinese cities lack the facilities which make London an attractive place to live and work for those in the financial sector. But London's rise to the top is a recent phenomenon: Few high-flyers would have chosen the British capital as a destination based on its shopping, dining and lifestyle destination in the 1970s or much of the 1980s.
Furthermore quality of life isn't everything. If good restaurants were the main draw for a financial centre, the Masters of the Universe would have set up shop in Rome.
Lifestyle follows the money, and money goes where regulations are being struck off, rather than piled on. Add a shiny multibillion dollar infrastructure, as China has been developing in the past decade, and you've got a deal. The west's financial services industry is not going to flit to Asia tomorrow, but empires rarely die overnight. But die they do, and often through a surfeit of regulation and bureaucracy.
Fortunately others realise we face a turning point. In a speech to Conservative Party Conference today, London's Mayor Boris Johnson said,
"I say to the Labour government – you will not make this country or its capital more competitive by driving away talent. You cannot regulate your way out of a recession. You can certainly regulate your way into one.
“No matter how much you may dislike the Masters of the Universe, my friends, there are plenty of other parts of the universe that would welcome them.”
There's still time.
