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30 September 2008

Not making bail

One thing was painfully clear to me last night as I watched the BBC coverage of the House vote against the “bail-out”:

It seems that most Americans see the financial crisis as a national case – an us vs them, fat-cat vs joe 6-pack type situation. They do not see themselves or the situation as part of a much larger global market.

In my gut I felt “quite right” when I heard snippets from Nancy Pelosi. It does seem that the market “rules” – until there’s a colossal oopsy.

But who will suffer really, in the end? I fear that it will not be the members of the board of Lehmans….

What we should be writing to Congress now? Make sure that there’s something in it for us peasants this time! Off the top of my head: Caps on the ginormous salaries of board members and CEOs. More stringent regulation. Something to stop this happening again. And while we’re at it, can we all just stop believing that “the free market” is actually free?

I went to bed thinking, “what timing.” In yesterday’s post I finally received my absentee ballot for the November election.

2 comments:

  1. At the risk of being labelled a pedant may I (sort of) disagree; there is already too much regulation, what we need is better regulation. However, as with most things in the real world (if bankers live in the real world that the rest of us do) regulation is very difficult due to the complexity of modern banking products, very few people - even insiders - understand them and they're not going to tell the emperor he has no clothes.

    From N N Talib (the Black Swan)
    I have nothing against economists: you should let them entertain each others with their theories and elegant mathematics, and help keep college students inside buildings. But beware: they can be plain wrong, yet frame things in a way to make you feel stupid arguing with them. So make sure you do not give any of them risk-management responsibilities

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  2. Well put, yes, better regulation is of course what I meant!

    But bankers must live in the real world like the rest of us. Complexity is a lame excuse.

    Fabulous quote re economists. They are indeed the merlins of our times.

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