Another Yves Smith special!
Many will know that Naked Capitalism is a wonderful Blog and what Yves does is truly amazing. (And a big ‘thank you’
to Richard Smith who so ably stood in for Yves on her recent European trip.)
On the 29th July this year, Yves reran an article that she posted on May 11th, 2007. It’s spot on, in my opinion.
Here’s how Yves starts the Post:
I am beginning to suspect that many are reacting to the over-stimulation of the modern world – the accelerating pace of change, data overload, time pressure, work and relationship instability – by turning off their brains. The rise of fundamentalism and the “family values” push, both efforts to turn back the clock, is one set of responses.
Another is the rise of sound-biting, of using pithy communications to cut through the clutter of the daily information assault. But sound biting is inherently reductionist. It doesn’t permit nuanced argument, or pointing out fuzziness in data, or shades of grey. Sound bites are great for simple, emotional appeals, lousy for policy development (which is one reason why this country seems incapable of having an intelligent discussion on important topics like health care. The public has been trained out of having a long enough attention span to listen to alternatives).
That is so true. Just re-read the sentences, “But sound biting is inherently reductionist. It doesn’t permit nuanced argument, or pointing out fuzziness in data, or shades of grey.” (My italics.)
We live in such a complex world that reducing any important idea or concept to a headline or to an executive summary is, in its own way, significantly short on integrity.
That article from Yves concludes thus:
Most businesses operated in competitive environments far too complex for a terse phrase to be a useful guide to action. Yet a magic incantation, a talisman, a battle cry is terribly appealing. But those who can resist the temptation of relying on a simple playbook and face the complexity and uncertainty of their environment are likely to steer a better path. But understanding risk and adapting also demands far more courage that trusting simple ideas.
Ironically, if one reflects for a moment, that closing sentence is a pretty good executive summary! “…… understanding risk and adapting also demands far more courage that trusting simple ideas.”
Precisely!
By Paul Handover
Learning from Dogs 
In reference to courage, here is a question on financial regulations, only for the brave.
Currently the financial regulators in the Basel Committee requires the bank to hold 8 percent when lending to unrated small businesses and entrepreneurs but only 1.6 percent when lending to triple A rated clients.
What would have happened if exactly the opposite capital requirements had been imposed? The banks having to hold instead 8 percent in capital when lending to triple-A rated clients and only 1.6 percent when lending to unrated small businesses and entrepreneurs.
It would most surely have created problems, any regulatory discrimination does, but I hold that a crisis as large as the current one would not have happened… since no gigantic financial crisis has ever resulted from excessive lending to those who are perceived as risky, they have always resulted from excessive lending to those who are perceived as not risky.
We could also have had a lot more of jobs, since almost always the next-generation of decent sustainable jobs is to be found among the current small businesses and entrepreneurs.
Our biggest financial systemic risk is without any doubt our financial regulators
LikeLike
Wow! What a thought.
Per, I’m going to take the liberty of reproducing your comment as a separate ‘guest’ post to come out later this coming week.
The more people that read what you wrote, the better and broader the understanding of our societies.
Any other thoughts – drop me an email.
Paul
LikeLike