FIRST it's "risk-on" and then it's "risk-off", and then on again and off again with depressing regularity, depending on how the whim takes the market on any particular day. Is this any way to run a financial system, I wonder, if that system has any pretensions to being a reliable supplier of funds to the global economy?
I am not the only one, it seems, to be alarmed at the way in which Europe's financial future hangs in the balance as market sentiment flip-flops from positive to negative and then back again according even to the slightest tweet or twitter of news from that unhappy continent.
A "broad-based nationalisation of the credit system" could be in prospect if things go on as they are now, along with "capital controls and dramatic restrictions on financial markets", a former World Bank senior official suggested to me the other day.
This was no naive, anti-capitalist fantasy. My source, Ernest Kepper, is a man with long experience as an investment banker on Wall Street and in helping develop banking and financial system during his tenure at the World Bank and its sister institution, the International Finance Corporation.
Some people might argue for even more radical reforms. Why not nationalise large chunks of the portfolio investment industry while we are about it, and why not combine central banks with finance ministries as well, maybe, as banning financial derivatives?
If you think this is a bit over the top and that governments (or public corporations at least) could never hope to run anything so complex as a modern financial system, then the question you should ask yourself is whether they could make a worse job of it than the private sector seems to be doing nowadays.
This is prompted not just by the current mess in the eurozone but the crisis-prone nature of the global financial system as a whole. Are crisis and instability built into the very nature of the financial system, to a degree where it guarantees conflict rather than healthy competition?
There are too many financial agents, it seems, many of them often pulling in opposing directions. This kind of chaos is not easily tolerated in other areas of human activity, so why should it be accepted in finance? Dare I suggest that it is because most people simply haven't given the matter much thought?
There are, for example, finance ministries that act as agents on behalf of taxpayers; central banks that provide the liquidity to fuel financial activity; bankers who collect and re-lend deposits; financial institutions that collect and invest savings, and so on.
The trouble is that these various conduits of the financial system often produce an adversarial relationship among the people they are meant to serve. Also, the fact that financial agents usually interact only through anonymous marketplaces hardly helps to foster cooperative relationships between lenders and borrowers or investors and recipients.
Financial markets are supposed to be good at allocating resources but they do so in completely uncoordinated fashion, precisely because there are so many agents, all with differing objectives, involved in the process.
Governments collect taxes to finance activities deemed to be in the public interest, and also borrow in the marketplace to help finance these activities. The lenders are taxpayers who entrust their savings to investment institutions not knowing that they will end up with a double exposure to the public sector.
The problem is that the time horizons and risk appetites of governments and of private investors (often one and the same people but wearing different hats) can be poles apart, especially given the vast range of short, medium and long-term investment opportunities available to institutional investors nowadays and the ease with which they can switch investments and loyalties.
Then, of course, there are bankers who provide money both to public and private sectors of the economy, enabling those sectors to leverage their activities in a way that puts investors at elevated risk and effectively at odds with themselves as both providers and users of money.
It is all supposed to balance out in the end through the mechanism of the market but, in reality, it doesn't as we can see from the large and increasing incidence of mega financial crises that have occurred in recent years in various parts of the world.
As if anyone needed reminding, the bigger of these crises have included the post-bubble collapse in Japan in the early 1990s, the Asian financial crisis in 1997, the US dot-com bubble in 2002, and the global financial crisis in 2008 and now in Europe. (And that's not to mention previous crises in Latin America, Russia etc).
In addition to the uncoordinated flow of funds through the financial system, we have the anomaly of finance ministries and central banks that are often at odds over levels of spending, so that the former simply push for spending latitude while the latter fight a rearguard action to curtail it.
The shortcoming of financial markets when it comes to allocating funds is exacerbated by the sheer amount of funds at their disposal, reflecting not the absolute level of savings in the system but rather the ability of the systems to leverage massively.
I suspect that we are only just at the beginning of a deleveraging process that is going to take at least a decade to play out and will kill risk appetite and most global economic growth in the meantime, not just in Europe but in the United States and possibly China, too.
So, what do we do in the meantime? The idea of nationalising large chunk of the financial system is not so fanciful as it may sound. Government takeovers of banks will probably be the starting point and, thereafter, unless other institutions can pull the global financial system out of the mess it is in now, a political constituency for much wider public ownership could develop.
No doubt this is a somewhat simplistic, and perhaps flawed, analysis but there must be at least a germ of truth in it. Those, either in the public or private sector, who manage savings on our behalf surely have a duty to consider the architecture of the system and to render it less crisis prone before it is too late.