I liked this set of thoughts from Ben Stein:
This all sounded good to my small-town "regular Republican" heart.
Anyway, when I woke up, I lay in bed a long, long time trying to figure out what we learned from The Great Recession.
First, we learned that prudence in finance is never out of date. Prudence in the way we manage our finances as a nation and as families is simply never a bad idea. That means not overspending, not undersaving.
Second, we learned—again—that man is a greedy animal. If left to his own devices, he will steal. Man is also a hypocritical animal. If left to his own devices, he will steal and he will lie about it.
What we really had in the period 2002–2006 was a time of colossal fraud about corporate earnings and values. If the true liabilities of banks and insurers had been known, if a truly appropriate reserve had been taken at financial entities for the likelihood of default, we would have had far lower stock prices and less for them to fall.
If the truth had been told to potential borrowers and lenders about the likelihood of defaults, we would have had far less risky borrowing and lending. This would have led to a far more modest housing boom and a far smaller bust.
Third, it’s very risky to create financial instruments that have the power to destroy the whole world. Warren E. Buffett called derivatives “financial instruments of mass destruction” and I think he’s given a good description.
But we also had a booby-trapped system in which if one small part, sub-prime mortgages, were detonated, they would set off a chain reaction that would blow up all matter.
It was only very timely work by Mr. Bernanke that saved us.
Finally, we learned the limits of selfishness. Laissez-faire is great. Individual initiative and ambition are great. But there has to be some force controlling them and countervailing them. We have cut back so much on regulation and on private securities law enforcement that the financiers basically were on the playground without supervision—with nuclear weapons. Not good.
Well, just a few thoughts. Of course, as always, the real stars are in Ramadi and Tikrit and Mosul and Baghdad and Fallujah and the Panjshir Valley and Kabul—and more real stars are taking care of their families and their wounds at Walter Reed and Bethesda and all over the world. There is a lot to be said for the ordinary people whose work is caring and not making money.
First, we learned that prudence in finance is never out of date. Prudence in the way we manage our finances as a nation and as families is simply never a bad idea. That means not overspending, not undersaving.
Second, we learned—again—that man is a greedy animal. If left to his own devices, he will steal. Man is also a hypocritical animal. If left to his own devices, he will steal and he will lie about it.
What we really had in the period 2002–2006 was a time of colossal fraud about corporate earnings and values. If the true liabilities of banks and insurers had been known, if a truly appropriate reserve had been taken at financial entities for the likelihood of default, we would have had far lower stock prices and less for them to fall.
If the truth had been told to potential borrowers and lenders about the likelihood of defaults, we would have had far less risky borrowing and lending. This would have led to a far more modest housing boom and a far smaller bust.
Third, it’s very risky to create financial instruments that have the power to destroy the whole world. Warren E. Buffett called derivatives “financial instruments of mass destruction” and I think he’s given a good description.
But we also had a booby-trapped system in which if one small part, sub-prime mortgages, were detonated, they would set off a chain reaction that would blow up all matter.
It was only very timely work by Mr. Bernanke that saved us.
Finally, we learned the limits of selfishness. Laissez-faire is great. Individual initiative and ambition are great. But there has to be some force controlling them and countervailing them. We have cut back so much on regulation and on private securities law enforcement that the financiers basically were on the playground without supervision—with nuclear weapons. Not good.
Well, just a few thoughts. Of course, as always, the real stars are in Ramadi and Tikrit and Mosul and Baghdad and Fallujah and the Panjshir Valley and Kabul—and more real stars are taking care of their families and their wounds at Walter Reed and Bethesda and all over the world. There is a lot to be said for the ordinary people whose work is caring and not making money.
This all sounded good to my small-town "regular Republican" heart.
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