A more philosophical view of recent years.
I admit to being too free with my silly clichés including, “I can predict anything unless it involves the future!” So now that millions of informed people have the benefit of “20:20 hindsight“, why is it years since the banking crisis first erupted and we are still without a root and branch overhaul of the governance of the industry?
Did you see Per Kurowski’s interview with a leading regulator on Learning from Dogs yesterday? Aren’t we so slow to learn!
Anyway, I waffle on! Let me get to the point of today’s post.
Back on the 1st September, there was a post called Understanding Europe. One of the resulting commentators was Pendantry who is author of a blog called Wibble. He included a link to a poem that he wrote on the 28th February, 2009! The fact that the poem is still so relevant (and when we see what’s happening in Europe perhaps even more relevant now!) is truly shocking. I wanted to republish it which I do with the kind permission of Pendantry. Here it is.
House of cards
When the inevitable strikes,
when the house falls down,
do you patch up the walls,
fix the holes in the roof,
shore it all up,
splash it with paint?
You learn from the mistakes.
You start from scratch.
You call in the architects.
You rebuild the foundations.
You use new materials;
replace wattle and daub
with a sounder design.
Because you’re lost outside the box,
and your mates demand
to regain their riches (and, now!):
You set up the same as before,
perhaps with a few bells and whistles
(spun to persuade that they’ll work).
And… in the end, we’ll believe
that your clothing is not invisible.
“Who is more foolish?
The fool, or the fool who follows him?”
Written over three years and five months ago. Shame on us all!
20 thoughts on “House of cards.”
When a country gets into the kind of mess we see in Greece or Spain, conventional economic wisdom ceases to apply. It is analogous to sub-atomic particle physics in that Newton’s Law of Gravity and/or Einstein’s General Theory of Relativity cease to apply. Therefore, the markets may have rallied yesterday upon the announcement that, in order to protect the Euro, the European Central Bank will buy unlimited Bonds from the governments of these failing economies… but nothing has changed. Once you get in the kind of mess that these countries are in, austerity doesn’t work. The Greeks are complaining about their repayment schedule and the Spaniards are refusing to ask for help; they are both refusing to take the medicine: Faced with a lengthy course of chemotherapy, they have both decided they would prefer a transplant.
But, don’t get me wrong, I have no easy answers. I have even been supporting the UK government in insisting that we cannot spend our way out of a debt crisis; and that our borrowing costs would sky-rocket if we tried to do so. But now, I just think that this demonstrates how crazy our globalised economic system is: Governments should be free to dictate fiscal and monetary policy; instead of which they are being dictated to by banks and rating agencies… And, for once, Ed Milliband (Labour Party leader) is right; allowing people to build extensions onto their houses without planning permission will not kick-start the UK economy – it will just result in a whole load of inappropriate development; and lots more people falling out with their neighbours…
I agree totally with your perspective and am left musing on how these times will look when we look back in a few years time. I confess to worrying that it will get a deal more worse before it gets better.
Thanks for the moral support; can you spare a few bucks for the poor people (who are revolting) in Madrid?
BTW, where did you find that brilliant image of a house of cards?
Neither Hollywood nor Bollywood, would have ever permitted a box-office flop such as Basel II, (current bank regulations) to now have a sequel, Basel III, produced by the same producers, with the same lousy directors and actors, and the same faulty script (their current regulatory paradigm).
Who did Europe in? http://bit.ly/t3mQe0
That’s an interesting article, so much so that it crossed my mind to have this as a guest post from you on November 10th this year and ask for your thoughts one year later. What do you think? Paul
Paul you know I am always game!
But what about that of November 19, 14 years later?
Per, I’m being a tad dumb here but having trouble connecting November 19th, 14 years later .. with what?
Paul. The article I referenced there I wrote in November 1998
OK, got it – will read that before the end of the week-end. P.
PS thanks for the repost!
Corrected. My apologies.
Nicely done, Pendantry!
Who is more foolish?
The fool, or the fool who follows him?”
Who is more criminal?
The foolish criminals, or those who follow them?
For ferocious analysis, see: http://patriceayme.wordpress.com/2012/09/07/greatest-nation-on-earth-really/
When Patrice writes ‘ferocious‘ it’s not an understatement!
We all get a bit upset now and again, unfortunately, I don’t think it is really so healthy
A much recommended read, in my opinion.
Dear Per: One should not confuse ferocity and anger. Nor should one even confuse anger, and being “upset”. My health is actually excellent. Passion, including a bit of anger, sometimes, even if it’s fake, do help.
When I read your post about Warren, you sounded pretty angry yourself, personally, against her.
I do agree with what you say (sort of 100%, with the caveat it’s only part of what’s wrong in finance!) The capital requirements ought to be modified, they should be made enormous for CDS (and other financial derivatives) and tiny for real businesses…
I could not leave a comment on your site, as there was no comment box.
Dear Paul: Thank you for the appreciation, once again! Any question, or spicy perspective?
Yes I sound angry in my comments about Elizabeth Warren (as I also often do when commenting on Joe Stiglitz) because it infuriates me when people get so much voice on very important issues, and then waste the limited attention span there is, by not being able to fully understand it, or, worse, by falling in love with their own voice. By the way there are also some NGOs which unduly monopolize the debates, hindering those not belonging to their network from participating, which causes incestuous and incomplete debates.
But, on the “its bad for your health” part, I thought I had included a smiley… it might have gone somewhere else??? I hope not to an inadequate context.
I view anger, if justified, as healthy, part of the gymnastics of the mind. Unjustified anger is of course bad, just as is unjustified cool.
Joe Stiglitz also irritates me. Why does he irritate you?
Here is why