Saturday 11 July 2009

Economic fools ...


A Nobel-laureate economist, Joseph E. Stiglitz, has examined the history of the financial crisis in the US, and in this article identifies five key mistakes ... it's worth a read to get a general picture of what went on in America (as it mirrors in many ways what's happened in the UK too), and to understand the roles played by 'leaders' and the impact of de-regulation too (see Mistake 2, described as "Tearing down the walls").  

In November 1999, Congress repealed the Glass-Steagall Act — the culmination of a $300 million lobbying effort by the banking and financial services industries. Glass-Steagall had long separated commercial banks (which lend money) and investment banks (which organize the sale of bonds and equities) which had been enacted in the aftermath of the Great Depression ...

So why are Governments (e.g. and in particular the UK) holding back bringing in a 21st century version of the Glass-Steagall Act now? ... is it the result of i) not wanting to admit to their mistakes, ii) yet another extensive and expensive lobbying activity by the banks, spearheaded & supported by lobby groups such as the CBI (who have proved to be the "Voice of Banks", rather than the "Voice of Business", during the crisis - which is not surprising given the CBI is heavily funded by the banks!) ? ... or iii) the lure of a lucrative job in the city for 'leaders' once they leave office (e.g. like the one Tony Blair landed)  - i.e. the application of more Poweromics? ... or iv) ignoromics, or ... v) a combination of all of them ...

Whichever is the case, they are all accountable for their actions (Poweromics), and their lack of action (Ignoromics), and we must continually expose them, rather than forgive them, for what they do ... if only they had learned from history, instead of ignoring it and irresponsibly 'tearing down the walls' (i.e. deregulation) to re-create history, then we wouldn't be in this mess now ... and yet they still haven't learnt, or admitted to their mistakes, and are just trying to deflect blame away from themselves ... trust, honor, responsibility, respect ... the biggest joke ever, except it's no laughing matter.



NB As an aside, this article (from its title onwards) also shows how even the supposedly most prestigious of economists are way out of date, as 'traditional economics' was effectively dead nearly 20 years ago. Dr. W. Edwards Deming (a 'creative outsider') highlighted the need for a "New Economics" ... and my blogs regularly highlight (and build on) this fact too ... as well as articulate what the 'new economics' will look like (i.e. Leanomics) ...