|
|
The defense being offered for Goldman Sachs, and Wall Street, is that
since they are serial cheaters and everyone knows it, the victims should only
blame themselves for thinking otherwise, and doing business with them, and
being cheated.
I have heard this one quite a bit lately. When someone from the Street offers
this defense it is a bit ironic and almost funny.
If you are a member of a fraternity of self-confessed cheaters and liars,
your public statements may not be credible and compelling as you think.
Unless you are talking to muppets of course. 'Trust
me, this time I am NOT lying. But if it goes wrong, I was and you should have
known better.'
It is as the hypocritical as the CEO defense, wherein these titans demand
outrageous salaries for their superior performance, but when the crimes are
discovered, it turns out they have progressive dementia and are barely aware
of what goes on in the businesses that they lead.
Are these people children? Or is anyone who takes them seriously merely a
gullible idiot?
What about the politicians, economists, and the media that rise to their
defense, and serve their interests, time after time? Are they merely dupes,
useful idiots?
Thomas Frank reflects on the serial failures of the country's thought leaders
in the following essay. Frank leans a bit left, and I thought the criticisms
which he levels could be spread around much more liberally, if you know what
I mean.
I can remember arguing with certain prominent 'progressive economists' about
the growing bubble some years ago, and more recently the moral hazards of
TARP, and being shut down as effectively as a financial reformer on financial
television.
It is not a right or left thing anymore. It is what Lord Action called, 'the
people versus the Banks.'
More broadly, it is about equal protection under the law, the primacy of the
democratic republic versus the tyranny of the oligarchs and their enablers,
the statists of both left and right.
Too Smart to Fail
Notes On an Age of Folly
By Thomas Frank
In the twelve hapless years of the present millennium, we have looked on as
three great bubbles of consensus vanity have inflated and burst, each with
consequences more dire than the last.
First there was the “New Economy,” a millennial fever dream
predicated on the twin ideas of a people’s stock market and an eternal silicon prosperity; it collapsed eventually
under the weight of its own fatuousness.
Second was the war in Iraq, an endeavor whose launch depended for its success
on the turpitude of virtually every class of elite in Washington,
particularly the tough-minded men of the media; an enterprise that destroyed
the country it aimed to save and that helped to bankrupt our nation as well.
And then, Wall Street blew up the global economy. Empowered by bank deregulation
and regulatory capture, Wall Street enlisted those tough-minded men of the
media again to sell the world on the idea that financial innovations were
making the global economy more stable by the minute.
Central banks puffed an asset bubble like the world had never seen before,
even if every journalist worth his byline was obliged to deny its existence
until it was too late.
These episodes were costly and even disastrous, and after each one had run
its course and duly exploded, I expected some sort of day of reckoning for
their promoters...
But what rankles now is our failure, after each of these disasters, to come
to terms with how we were played. Each separate catastrophe should have been
followed by a wave of apologies and resignations; taken together— and
given that a good percentage of the pundit corps signed on to two or even
three of these idiotic storylines mandated mass firings in the newsrooms and
op-ed pages of the nation...
The day Larry Kudlow apologizes for slagging
bubble-doubters as part of a sinister left-wing trick is the day the world
will start spinning in reverse. Standard & Poor’s first leads the
parade of folly (triple-A’s for everyone!), then decides to downgrade
U.S. government debt, and is taken seriously in both endeavors. And the
prospect of Fox News or CNBC apologizing for their role in puffing war
bubbles and financial bubbles is no better than a punch line: what they do is
the opposite, launching new movements that stamp their crumbled fables
“true” by popular demand.
The real mistake was my own. I believed that our public intelligentsia had
succumbed to an amazing series of cognitive failures; that time after time
they had gotten the facts wrong, ignored the clanging bullshit detector, made
the sort of mistakes that would disqualify them from publishing in The Baffler, let alone the Washington Post.
What I didn’t understand was that these were moral failures, mistakes
that were hardwired into the belief systems of the organizations and
professions and social classes in question...
[big snip]
“The main lesson we should take away from the Efficient Market
Hypothesis for policymaking purposes is the futility of trying to deal with
crises and recessions by finding central bankers and regulators who can
identify and puncture bubbles,” announced Chicago school economist
Robert Lucas from amid the ruins in 2009. “If these people exist, we
will not be able to afford them.”
And the main lesson we should take away from the Efficient Market Hypothesis
for our purposes is the utter futility of economics departments like the one
that employs Robert Lucas.
A second lesson: if economists— and journalists, and bankers, and bond
analysts, and accountants— don’t pay some price for egregious and
repeated misrepresentations of reality, then markets aren’t efficient
after all. Either the gentlemen of the consensus must go, or their cherished
hypothesis must be abandoned. The world isn’t gullible enough to
believe both of them any longer.
Read the rest here.
Things will change, but it is going to take some time. As Charles Mackay
observed, a people do not go mad overnight, and they only come back to their
senses slowly, one by one.
And history has shown that a minority of 10 to 20 percent may remain true
believers to an ideology after it is thoroughly discredited and even
vilified. I was astonished to find Russians who in 1997 still longed for the
days of Stalin, and of older Germans and Italians who even today have a
sentimental wistfulness for a strong leader with a firm hand, and would
welcome the return of der Führer.
I think this is because their ideas are founded not in reason, but in the
realms of schadenfreude, a burning hole in their
being that craves filling with the misery of others, or a natural obesiance to autocracy born out of a slavish dependence
on the will of dark leaders who relieve them of the burden of thinking.
 
|
|
