The human mind cannot grasp the causes of phenomena in the aggregate. But the need to find these causes is inherent in man’s soul. And the human intellect, without investigating the multiplicity and complexity of the conditions of phenomena, any one of which taken separately may seem to be the cause, snatches at the first, the most intelligible approximation to a cause, and says: “This is the cause!”
Leo Tolstoy, War and Peace [via The Big Picture]
The populist pitch-forking movement has duly commenced, and fingers are pointed in all directions. In a classic case of pot calling the kettle black, all the players are now seizing populist rage to divert attention from itself. The momentum must be maintained, should the public calm down and re-assess, everyone is culpable.
The whole debacle surrounding the AIG bonus is ridiculous. The government passed the legislation with the inserted lines that allowed for bonuses in the first place. Even if Chris Dodd is the culprit, surely it only serves to highlights the incompetence and indifference of the system. If what he’s saying is true (that the administration made him do it), then it shows complicity. This indignant outrage shown by politicians from both sides is nothing but political grandstanding to placate mass anger. Better this mess is channeled towards the evil executives than at the government, right?
The de-regulation of US financial system started with Clinton, and continued with the Bush administration. Policies from ten years ago directly contributed to the California black-out (Enron), and the current mortgage crisis. Without the government’s collusion in both banking deregulation and predatory lending practices, corporate greed would’ve had little opportunity to spread.
It doesn’t take much digging to see the hypocrisy of politicians now railing against exorbitant executive compensation or incompetence. For the most part, those very politicians were responsible for the rise in reckless risk-taking behaviour of those financial Einsteins. Members of the public are beginning to see the thinly-guised witch hunt as a way to deflect blame and secure public support. This kind of shameless and ingratiating behaviour from publicly-elected officials is insulting and condescending: because it pushes accountability away from itself, and props up effigies of greedy corporate executives for the public to burn.
It’s hard to see how the phrase “financial innovation” could return with any kind of goodwill. Driven by his “Ayn Randian passion for regulatory minimalism”, and fearing lack of competitiveness that regulation weighed on said “financial innovation”, Greenspan opened the Pandora’s box.
In the aftermaths of banking collapses and Ponzi schemes, the SEC can hardly deny its failure in oversight. In one embarrassing expose after another, SEC is blasted for its inept and financial illiterate handling of warnings, its cozy relationship with the very bankers it was charged to regulate, and became a puppet that was captive to the powerful industry. So the court can put the likes of Madoff away and the public can demonize the banking executives all they might, but the SEC deserves just as much wrath as its former wards.