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This book is an essay in what is derogatorily called "literary economics," as opposed to mathematical economics, econometrics, or (embracing them both) the "new economic history." A man does what he can, and in the more elegant - one is tempted to say "fancier" - techniques I am, as one who received his formation in the 1930s, untutored. A colleague has offered to provide a mathematical model to decorate the work. It might be useful to some readers, but not to me. Catastrophe mathematics, dealing with such events as falling off a height, is a new branch of the discipline, I am told, which has yet to demonstrate its rigor or usefulness. I had better wait. Econometricians among my friends tell me that rare events such as panics cannot be dealt with by the normal techniques of regression, but have to be introduced exogenously as "dummy variables." The real choice open to me was whether to follow relatively simple statistical procedures, with an abundance of charts and tables, or not. In the event, I decided against it. For those who yearn for numbers, standard series on bank reserves, foreign trade, commodity prices, money supply, security prices, rate of interest, and the like are fairly readily available in the historical statistics. ↗
In Chapter 5 we consider swindles and defalcations. It happens that crashes and panics often are precipitated by the revelation of some misfeasance, malfeasance, or malversation (the corruption of officials) engendered during the mania. It seems clear from the historical record that swindles are a response to the greedy appetite for wealth stimulated by the boom. And as the monetary system gets stretched, institutions lose liquidity, and unsuccessful swindles are about to be revealed, the temptation to take the money and run becomes virtually irresistible. It is difficult to write on this subject without permitting the typewriter to drip with irony. An attempt will be made. ↗
Politicians have often declared that unbridled competition among financial intermediaries promotes failures that will harm the public. Although the evidence that competition does this is extremely weak, it has not stopped the state and federal governments from imposing many restrictive regulations. ↗
The American share of the crisis began with grossly improper mortgages provided to wholly unqualified borrowers, all directly caused and encouraged by government distortion of and interference in the market. The government’s market deformation and market intervention was in turn the result of two factors: political favouritism and Leftist ideology, on the one hand; and upon the other, corruption: the blatant cooption of such Friends of Angelo as Mr Dodd and of such bien-pensant Lefties as Mr Frank. The stability and efficiency of any market is directly proportional to the amount and trustworthiness of market information. The Yank Congress, for blatantly partisan and ideological reasons, gave out false information to the market, pushing lenders into making bad loans and giving out, with the appropriate winks and nudges, that Fannie (will Americans ever realise how that sounds) and Freddie, imperfectly quangoised, were ‘really just as good as the Treasury’ and were in any case ‘too big to [be let] fail’: which, as it happens, was untrue. Similarly, this moronic mantra of ‘too big to fail’ was chanted desperately and loudly to drown out the warning sounds of various financial institutions on the brink and of the automobile industry. Incomprehensible sums of public money were thrown at these corporations so that they could avoid bankruptcy, and have succeeded only in privatising profit whilst socialising risk. ↗
What I’ve noticed in a lot of other cartoonists is a sullen resentfulness about their lack of attention and tiny checking accounts. I vowed back in the days when I had no money that I would not allow that kind of bitterness to overtake me. . . . Cartooning, in general, is a very solitary occupation, and it breeds all sorts of self-punishing thinking ↗
Ideology follows the money." "Governments don't protect people, people protect governments." "To accept the legitimacy of the state is to embrace the necessity for war. ↗
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If the world were full of the self-seeking individuals found in economics textbooks, it would grind to a halt because we would be spending most of our time cheating, trying to catch the cheaters, and punishing the caught. The world works as it does only because people are not the totally self seeking agents that free-market economics believes them to be. We need to design an economic system that, while acknowledging that people are often selfish, exploits other human motives to the full and gets the best out of people. The likelihood is that, if we assume the worst about people, we will get the worst out of them. ↗
What's with the disco lights?" Michael said, rolling down the window between the driver's compartment and the back. Eve turned around, and her face brightened. "You like it? I thought it looked really cool. I saw it in a movie, you know, in a limo." "It's cool," Michael said, and smiled at her. She smiled back. "Can't wait to lie here and watch it with you." Claire said, "You don't have to wait; it's working now. Look--Oh. Never mind." She blushed, feeling stupid that she hadn't gotten that one in the first second. Eve winked at her. ↗
