Global capital turns nasty

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Who is surprised by the savage way markets have punished politicians, bankers, speculators and economists? The structure of financial markets needs a rethink. Our cover story tears them apart as follows:

Too many risks, too few rewards

For a system that supposedly conquered the world in 1990, free-market capitalism doesn't look so good any more. After Mexico, Thailand, Korea, Indonesia, Russia, which of capitalism's self-appointed disciples will stumble next? And who is to blame? The track record has embarrassed all but hard-liners into thinking there might be a Third Way - between free capital flows with floating exchange rates and the dirigiste controls of the 1960s. Chile, China, James Tobin - they've all been held to ridicule for their batty market ideas. But today it's not just bleeding-hearts and socialists who are looking at their attempts more closely. Michelle Celarier reports

Capitalism and serfdom

The market, like nature, is red in tooth and claw. It has no concept of ethics, morality or justice. Its agents are predatory and are concerned mainly with their own survival. They have no thought for the good of the system. That doesn't mean the market is bad or that it doesn't work. It means that present prescriptions for emerging economies do not reflect these realities. Nothing highlights more starkly the inappropriateness of the blind application of free market thinking to emerging markets more than the role of hedge funds. By Simon Brady

The madness of fixed exchange rates

Only floating exchange rates will allow the world to steer between the Scylla of capital controls and the Charybdis of recurrent financial crisis and wealth destruction, argues Bernard Connolly

Can the IMF play supercop?

Must the IMF grow in size just to stomach the next bail-out, or should it reinvent itself as a tougher, global rating agency of countries and their banking systems? Such an IMF would not whisper advice into the ear of crony capitalists and then pay off their creditors - it would be a lean, mean agent of transparency and would deal out pain where pain is due. James Smalhout reports

Make the bankers pay

Throwing good money after bad How do you wean crisis countries away from official bail-outs onto private funding? There has to be a way to reward borrowers for improved behaviour yet punish lenders for piling in indiscriminately. New lending models include contingent repos, sovereign default options and credit spread bonds. But will they catch on? James Smalhout reports

A new way to fund the IMF

Eugene Black argues the case for an alternative method of funding the IMF that would enable it to tap the private markets and reduce the need to return to member states for additional funds