Streetwise Professor

November 22, 2009

Be Afraid. Be Very Afraid.

Filed under: Derivatives,Economics,Exchanges,Financial crisis,Politics — The Professor @ 9:30 am

Via SeekingAlpha:

“One of the huge lessons of our work over the last few years has been how shockingly stupid incredibly smart people can be,” said Davidson, who with Blumberg has been reporting on the crisis for nearly two years as part of  National Public Radio’s  “Planet Money” team. “That includes bankers, regulators  and investors.”

OK, that’s a given. Lesser known is this: Our elected officials in Congress — the ones trying to reform our financial services industry as we speak — don’t really understand the issues at hand.

“We spent a day with the Financial Services Committee — Barney Frank’s committee — and it was an amazing experience,” Davidson said. “We talked to 13 congresspeople, 12 of whom admitted that they don’t understand this  at all. And the guy who thought he did really didn’t.”

It’s interesting, then, that these are among the folks calling for investor protections and significant financial reforms. And by “interesting,” I mean “anxiety-inducing.” I’m willing to give them the benefit of the doubt; their intentions are good, after all. But you know what they say about the road to hell.

NB: the directly quoted material in this excerpt is from two NPR reporters.  N. P. R.  Hardly the hotbed of libertarian firebrands.

Personally, I am far less forgiving than the authors of this piece (who are directors of the Maryland Association of CPAs). Anyone who, in full knowledge of their ignorance, nonetheless feels entirely justified in completely restructuring complex markets involving trillions of dollars at risk is a public menace.  A public enemy, in fact, all the worse because they presume to be performing “public service.”

Don’t do me any favors.  The greatest public service these people could perform would be to put away their wands, and stop playing Sorcerer’s Apprentice (or, more accurately, stop playing junior apprentices to Sorcerer’s Apprentice Barney Frank.)

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  1. I read more and more stories like this as the days go by and it just floors me. I’m headed home for Christmas soon and I can’t wait (well maybe not) to talk to my Obama-loving friends (including my own sister) and see if they really do have faith in this government. It all seems surreal to me living abroad and only reading about it from afar. Meanwhile, I still have some comments I want to make on a few of your other posts in the past week but am way behind. Stay tuned.

    Comment by Howard Roark — November 22, 2009 @ 5:09 pm

  2. Looking forward to reading them, Howard. Happy trails.

    The ProfessorComment by The Professor — November 22, 2009 @ 5:18 pm

  3. Howard–saw your comment at LR re “Russian soul.” A topic of interest to me too. Often a form of self-stereotyping used to rationalize doing the irrational.

    We should discuss some time.

    The ProfessorComment by The Professor — November 22, 2009 @ 6:07 pm

  4. You make a good point and in our town hall meetings with CPAS all across Maryland there is grave concerns about the economy and the efforts to do a “quick fix” of our massively complex regulatory infrastructure. My personal recommendation is to adjourn Congress and State legislatures for a couple of years to allow us all to breathe and figure out things. A little tongue-in-cheek but points to the heavy hand of government at all levels…

    Comment by Tom Hood — November 23, 2009 @ 6:31 am

  5. Yes, SWP, I think I recall some comments from you in the past about interest in the Russian soul. The whole topic fascinates me. I stumbled upon one book that I haven’t read yet called “Motherland, A Philosophical History of Russia.” Not sure what it will be like, but I hope it helps. I actually don’t think it’s a solvable puzzle, though, so it will always just be an endless journey. Meanwhile, everyone just says, “Dostoevsky, Dostoevsky, Dostoevsky.” I agree but he makes Charles Dickens look like Richard Simmons. He’s a tough read. Anyway, I’d love to discuss it with you some time. I think we have quite similar views (suspicions!) of the Russian soul.

    Comment by Howard Roark — November 23, 2009 @ 12:32 pm

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