Take lessons from financial follies

Since the outbreak of the US credit crisis that is threatening to send the world economy into a tailspin, many economists have been asking what lessons can be learned from this financial calamity.

Probably a lot. But none of these lessons will likely be very effective in preventing future blowouts. Past experience has shown that financial intermediaries and the customers they serve tend to have short memories.

My first job in a newspaper was to assist the senior banking reporter in covering the third-world debt crisis that involved numerous countries and territories from South America to Southeast Asia. The assignment afforded me a glimpse into the world of high finance, in which outwardly staid bankers climbed over each other to court petty dictators, garrulous army generals and their minions for loan mandates.