This just stated in my Econ 324 class, American Economic and Business History: These are the necessary components of a "good" financial system.

  1. Stable public finance and debt managements
  2. Stable money supply
  3. functioning banking system
  4. effective central bank
  5. Active securities market.
How, oh how, do we combat this hypocrisy. They counteract themselves!

From this AP story:

Somalia has been ravaged by violence and anarchy since warlords overthrew dictator Mohamed Siad Barre in 1991 and then turned on one another. The current, U.N.-backed government was formed in 2004, but has struggled to assert any real control.

So... the UN backed government has corruption problems... shocking!  

Just stumbled upon this article on Yahoo! News...

Somalia was named and shamed Tuesday as the worst-governed country in sub-Saharan Africa in a survey of political performance across the continent... The foundation uses those measures to rank countries on five factors: safety and security; rule of law, transparency and corruption; participation and human rights; sustainable economic opportunity; and human development.

For those of you not in the know, Somalia is the closest thing we have in the world to a stateless state. Here's an excellent article from written in 2006. In the article, Yumi Kim quotes the CIA Factbook:

Despite the seeming anarchy, Somalia's service sector has managed to survive and grow. Telecommunication firms provide wireless services in most major cities and offer the lowest international call rates on the continent. In the absence of a formal banking sector, money exchange services have sprouted throughout the country, handling between $500 million and $1 billion in remittances annually. Mogadishu's main market offers a variety of goods from food to the newest electronic gadgets. Hotels continue to operate, and militias provide security.

Now, should we be surprised that the index, drawn up by folks at the Kennedy School of Government at Harvard, considers Somalia the worst of the bunch? When you consider the fact that Zimbabwe was ranked 31st of 48, one has to wonder the objectivity of this index. There are thousands of things wrong with the Zimbabwe government and it's evil dictator, Robert Mugabe, but I'll spare you the minutiae. This is from the wikipedia entry on Mugabe:

The Mugabe administration has been criticised around the world for corruption, suppression of political opposition, mishandling of land reform, economic mismanagement, and deteriorating human rights in Zimbabwe. According to most analysts his administration's policies have led to economic collapse and massive starvation over the course of the last ten years. Zimbabwe has the highest inflation rate in the world predicted to hit 1.5 million % by the end of 2007, and is, according to the United Nations Economic Commission for Africa, Africa's worst economic performer. With a record 85% unemployment and ~8000 % inflation rates, Zimbabwe is in its worst economic crisis since Mugabe took power.

This appears to be another example of the mainstream media covering a biased, BS organization decreeing X,Y and Z to be the case, without actually caring for the criteria used. If absolute despotism is better than the a successful stateless economy, then I'll stick with the worst.