Markets operate because those who take part in them can have confidence that their operations are overseen by a political authority which will ensure contracts are honoured, property is secured, and the currency in which payments are made retains its value.
Over the past 20 years, the world market in money has expanded to such an extent that no single national political authority can provide that guarantee for it. The recognition of this mismatch between economic and political structure will stabilise the world's financial system: it remains to be seen whether co-operation between central banks and the willingness of governments to shoulder unpaid and possibly unpayable debt will be strengthening enough.
If it is not, the alternative to general impoverishment is not necessarily the creation of new political authorities, a solution which in the current circumstances seems unlikely. The most important political power as far as the market is concerned is the power to tax.
A tax on international currency transactions, perhaps as high as 1 per cent, collected by national governments, could create an international stabilisation fund (possibly with borrowing powers) and administered by the IMF. This would give financial independence to such crucial elements in the present world political structure as the UN and the WTO.
If the fund had power to vary its tax rate according to the systemic risk it perceived in transactions it could perform a certain regulatory function.
Professor N Boyle
Magdalene College, Cambridge
Icelandic bank risk was easy to see
Three months ago, I was attracted by the high interest rates on offer from Icesave. But, knowing nothing of Iceland's banks, I though it wise to do a little research before handing over my hard-earned cash. Within two minutes, the internet had informed me that the cost of credit insurance against the possibility of default, a prime measure of creditworthiness, was between three and four times higher for Iceland's three major banks than for any equivalent British bank.
"These banks are now seen as the most unsafe in the developed world," stated the source. My money went elsewhere. Am I some kind of genius? No. The finance directors of the many local councils in Britain who have lost tens of millions of taxpayers' pounds in the Icelandic bank crash deserve to be sacked.
It is rather narrow for James Daley to turn his fire on council treasurers (Analysis, 10 October). How about the Government, which sought economies and thus gave an incentive for getting a high return on reserves? How about the bankers who lent to those who could not repay? And what about governments which allowed it to happen?
The Government is using legislation supposedly introduced to combat terrorism to freeze the assets of Icelandic companies in the UK. It is said that this is in retaliation for Iceland's refusal to guarantee the savings of UK account holders of Icelandic banks. I am unaware of any treaty which obliges the Icelandic government to guarantee such savings.
This case illustrates the propensity of government to misuse the powers available to it. We are told that the Government must be granted the freedom to introduce extensive powers to guarantee our security from terrorism, yet these powers are used immediately it is convenient for the Government, whether there is a connection to terrorism or not.
Under no circumstances should we allow this Government to introduce the identity card scheme; it absolutely cannot be trusted to use our information for the stated purpose.
Dr Maria Kutar
Last week, the British government was whingeing about the Irish because our sovereign government decided to look after our citizen depositors in our citizen banks. This week, they insult the least threatening country and people on the planet by invoking a so-called anti-terrorist law to hijack Icelandic banking assets in the UK. What were your county councils and police forces doing with her Britannic Majesty's subjects' very hard-earned tax revenue in the first place?
Carrick-on-Shannon, Co Leitrim
If it is true that taxation is going to rise to pay for bailing out the banks and City fatcats, then surely now is the time to raise the top level of taxation on super-earners, especially the bonus element. Even better, do it retrospectively for the past, say, five years: they would then be contributing to bailing themselves out, rather than the rest of us having to do so.
Also, is anyone ever again going to listen to financial experts telling us we must save for pensions for old age, when those savings get "invested" in the stock market? Especially when, after paying in for 20, 30 or 40 years, you then have to take out an annuity paying a pittance, and are not even be able to leave that sum to relatives should you die 10 minutes after retiring. I know I for one am sick of feeling like I'm being ripped off, left, right and centre.
The Government's rescue package has been met with a tsunami of indifference, as has the Bank of England's announcement that the base rate has been lowered to 4.5 per cent.
There is still a fear that there are other financial services outfits who are yet to declare that they are not viable, notably insurance companies, and judging by the FTSE 100 index, traders are unimpressed. How many more SIVs and SIV-lites are sitting and festering in off-balance-sheet accounts?
The FTSE 100, the Dow Jones and all the other indices will continue to oscillate up and down like a bride's nightie until we are all allowed a good look under the voluminous skirts of the entire financial services system. The money's on the table; now let's see what you've got.
Banks have been inflating their profits for years by concealing their debts, or, as they like to put it, keeping their debts "off balance sheet". They have been playing Texas hold 'em with worthless chips.
GLYNDE, EAST SUSSEX
I was horrified to hear that City banks are planning to pay out bonuses of several billion pounds this year to their finance traders. At a time when we, the taxpayers, are being asked to pay for the financial mess that these people have got us into and risking our pensions and livelihoods, I find this verging on the obscene. Will they never learn?
All week long I have read in The Independent of new acts of government largesse directed toward the banking system, a proportion of which funds will certainly maintain weather-proofed brokers in the manner to which they are accustomed. If only Alistair Darling had been at No 11 when savers in Farepak needed him most.
Godfrey H Holmes
In the past three weeks, we have seen 400 years of free-market philosophy turned on its head, culminating in the nationalisation of the banking sector. The conventional right-left politics also no longer exists, with a Labour government "rescuing" iconic free-market institutions (where three years ago it refused to bail out the Longbridge manufacturing plant) and a Conservative shadow chancellor advocating governmental presence in bank boardrooms to regulate executive pay.
Is this the death of capitalism as we knew it? If so, have we now reached the stage described in the Marxist theory as that "following capitalism in the transition of a society to communism, characterised by the imperfect implementation of collectivist principles"?
About a month ago, I thought I would try for a higher return on my money. But all the comparison tables were headed by Icelandic banks and, given the uncertain financial climate, I thought it best to leave my capital in the boring old Chelsea Building Society.
But now I realise that I can invest in any bank, however undercapitalised, and sleep easy knowing that if the worst happens I shall be bailed out by the British taxpayer. No moral hazard for me.
Spotting signs of abuse on children
In writing about Professors Southall and Meadow, Richard Ingrams (27 September) states that "professional people never like to see one of their number prevented from earning a good living". What paediatricians never like to see is children harmed by their parents or carers. The fact that most parents do not harm their children, does not remove the responsibility from paediatricians of speaking out when they see evidence that children have or might have been harmed.
When David Southall started 30 years ago, researching the breathing patterns of babies, he was investigating sudden death in infancy, not setting out to prove that parents kill their children. In the course of this work, the inescapable fact emerged that occasionally parents do harm their children.
In the light of his extensive research into sudden infant death, Professor Southall was alarmed by Mr Clark's account of bleeding from the nose of his small baby, described on the Channel 4 programme.
The GMC's own guidance justifies "raising a concern, even if it turns out to be groundless" and, in fact, "you must be able to justify a decision not to share such a concern". Incidentally, research published in the past year (Pediatrics 2007) has underlined the rarity and seriousness of bleeding from the nose in infancy, and its link to non-accidental injury.
Consultant in Emergency Medicine,
Professionals Against Child Abuse,
MOBO helps the aspiring artists
Your arts editor, David Lister, had a pop at the MOBO Awards. (4 October). MOBO has never honoured artists and performers for the colour of their skin, and it never will.
MOBO has been a pioneer in the field of music of black origin – not black people – and these various genres have grown in significance and popularity around the world. That there are many more channels in the UK such as BBC's 1Xtra as well as MTV Base broadcasting this amazing music appears to have escaped the ear of your arts editor.
MOBO is about bringing less-known but relevant artists to public attention. That often attracts criticism but MOBO should be proud of its success. Without MOBO, it would have been that much harder for artists such as Estelle to achieve the recognition they deserve.
Director, MOBO, London W1
There is certainly a black woman in the statue group (letters, 10 October) at the back of the Albert Hall where I used to queue frequently for the Proms 60 years ago.
MICHAEL GROSVENOR MYER
As you like it
While my heart bleeds for the problems of Londoners trying to get home after an evening performance at the RST in Stratford (letter, 10 October), and I completely sympathise with their plaintive requests for public transport back to London, perhaps the RSC, and the various public transport companies concerned, could also consider providing post-performance services for those theatregoers from Powys, Somerset and Lincolnshire at the same time?
B R Lee
Bees on locoweed
Congratulations to Alex James and his film crew on their speedy escape from enraged bees (Rural Notebook, 8 October). Rape flowers seem to make bees unusually aggressive. My husband, on our old horse, was also chased down a Gloucestershire lane, by one furious bee, as he passed a rape field. Perhaps fortunately, given the relative tonnage, the guard bee stung my poor husband, not the horse. The hives were then moved, under a kind of insect Asbo, to service more soothing flowers.
River of low return
Your correspondent Aftab Jeevanjee (letters, 10 October) seems to misunderstand what "waste" means in the context of water, that is, potable water needlessly discarded into foul water. It remains water, but not as we need it. For that water to be potable again, it needs to be retrieved, cleaned and replaced in the drinking water system, all of which re-quires money and, more importantly, energy, which is where the environmental damage is done.
The bare facts
I long ago resolved that when I ruled the country my first act would be to ban the wearing of matching socks, thus lessening stress nationally and saving many man (and woman) hours. Worth introducing in these difficult times?