ferguson

How AIG Bamboozled the Government

David Merkel for Secretary of the Treasury beginning January 1, 2008 replacing Henry Paulson. It never was a particularly good idea to allow the wolves to guard the henhouse.

The Bane of Broken Balance Sheets

David,

Great, but very discouraging summary. Question. Has all of this vast expansion of credit and investment bought nothing of value?

What about globalization? If living standards have been raised around the world, is it possible that our vastly expanded productive capacity will eventually find a use?

What about technology? Will the computer revolution, the internet and automated processes in manufacturing raise productivity standards to levels that will make it possible to absorb the losses?

What about the environment? Degredation of the environment probably continues, but at a slower pace and recognition of the need to reverse that trend grows daily. Is it possible that what we are seeing is a world-wide recognition that we need to ratchet down toward a sustainable world?

What about capital? Trillions of dollars have been lost around the world, a few of them mine. Is it possible that we might gradually come around to realize that some things are more important than capital?

The Failure to Admit Failure

The logic here suggests that the basic problem here is not economics. It is a failure that seems to be built into human nature. My mother described it best when I couldn't finish my dinner.

"Your eyes," she said, "are bigger than your stomach."

So, it is. Whether we are on Wall Street or Detroit, we can imagine all sorts of things that we think can be finessed or managed. But, that doesn't necessarily mean they can. When did they stop teaching about human nature, responsibility and ethical behavior in business schools?

Or, more to the point, why did those who had some understanding of these things all get passed over for promotion, while the pure money-changers got promoted ad infinitum?

Simple. Money, money, money. When nothing else matters, serious mistakes will be made.