Wednesday, September 17, 2008
So, to sum up, the banks have lost all the money they ever made - Nassim explains how - AIG has been nationalised prior, probably, to liquidation, Merrill Lynch and Lehman no longer exist and HBOS doesn't look too great. I find myself feeling nostalgic for the dim, distant days of Northern Rock, a memory of simpler, happier times when it was clear that only Gordon Brown's catastrophic chancellorship was to blame. But is there, in this context, such a thing as blame? There was, on Monday, an exchange on Newsnight between Jeremy Paxman and Diana Choyleva. She said the high liquidity, low interest rate policies of governments were to blame, the banks had, in effect, no choice but to take what we now know were insane risks. Paxman scoffed. But did she have a point? At the level of individual bankers, she did. They had to compete to survive. But, at the level of the banking system as a whole, Paxman was right to scoff. If banks were as smart as they claimed to be, they could have got together to assess and limit risk, but they didn't. Instead, they behaved like fools - except, of course, that they keep their bonuses. Choyleva, though she was defending the banks, could only do so by describing them as insensate beasts, reacting dumbly to their environment. They rise to partial consciousness only when demanding government intervention. Is this just the way of the human world or is it fixable, by, for example, as Nassim woud probably suggest, sacking all the statisticians?
Posted by Bryan Appleyard at 7:22 am