In the interest of full disclosure, you should know that I served three years on the board of George Soros' foundation, the Open Society Institute, dealing with such issues as a free press, the rule of law, and human rights. But I've had no involvement in his political activities and nothing to do, with his business interests unfortunately.
I ask myself, "Why is it that several dozen people saw this crisis coming for years?" I described it as being like watching a train wreck in very slow motion. It seemed so inevitable and so merciless, and yet the bosses of Merrill Lynch and Citi and even [U.S. Treasury Secretary] Hank Paulson and [Fed Chairman Ben] Bernanke -- none of them seemed to see it coming.moyers' interview with andrew bacevich is worth revisiting in this regard, and btw...
I have a theory that people who find themselves running major-league companies are real organization-management types who focus on what they are doing this quarter or this annual budget. They are somewhat impatient, and focused on the present. Seeing these things requires more people with a historical perspective who are more thoughtful and more right-brained -- but we end up with an army of left-brained immediate doers.
So it's more or less guaranteed that every time we get an outlying, obscure event that has never happened before in history, they are always going to miss it. And the three or four-dozen-odd characters screaming about it are always going to be ignored.
If you look at the people who have been screaming about impending doom, and you added all of those several dozen people together, I don't suppose that collectively they could run a single firm without dragging it into bankruptcy in two weeks. They are just a different kind of person.
So we kept putting organization people -- people who can influence and persuade and cajole -- into top jobs that once-in-a-blue-moon take great creativity and historical insight. But they don't have those skills.
Governments’ ability to spend their way to growth is crucial. This goes against purist free market theology. But look at it this way. The IMF estimates that US and European banks need to shrink their balance sheets by $2,000bn a year over the next five years.* That is a terrifying contraction in the supply of global credit. If governments do not pick up the slack, the world risks falling into what is called the “paradox of thrift”. Here, everyone cuts back spending simultaneously. Companies retrench, jobs are cut and consumption falls further. A deflationary spiral begins. This was the plight of Asean countries after their 1997 crisis. They only wriggled free thanks to growing exports – a solution that cannot work for the whole world.this is why g7/20 coordination is necessary, cuz as greenspan actually observed: "Interestingly, the change in U.S. home mortgage debt over the past half-century correlates significantly with our current account deficit." it's conceivable that the fed's b/s expansion and treasury borrowing could take it on, altho the 10-year yield rising in recent days suggest they might be beginning to run into limits; like (gov't) rates are still rather low and foreign creditors remarkably accommodating...
Somehow the genius quants — the best and brightest geeks Wall Street firms could buy — fed $1 trillion in subprime mortgage debt into their supercomputers, added some derivatives, massaged the arrangements with computer algorithms and — poof! — created $62 trillion in imaginary wealth. It's not much of a stretch to imagine that all of that imaginary wealth is locked up somewhere inside the computers, and that we humans, led by the silverback males of the financial world, Ben Bernanke and Henry Paulson, are frantically beseeching the monolith for answers.now i would say that to a large extent wealth (like community) is 'imaginary' -- to paraphrase locke (& dostoevsky), if everyone can agree, it could all happen at once -- as a store of socio-cultural 'memory', but of course it's also limited by its fungibility [cf. liquidity & 'moneyness', or maturity transformation via a discussion thereof ;] not just with current production and past (e.g. inventory & 'savings') but future estimates of production...
« Older The myth persisted over the years until it became ... | My New York... Newer »
This thread has been archived and is closed to new comments
All three of them stiffed him on the tip.
posted by spock at 5:29 PM on October 11, 2008 [6 favorites]