Crisis! What crisis?
There is something horribly fascinating about watching normally intelligent people submitting to the ‘herd instinct’ and engaging in actions that are self-evidently wrong. Irrational behaviour builds on irrational thinking that is itself based on incorrectly drawn conclusions. And once the cycle is started, it becomes a destructive vicious spiral. Such behavioural patterns occur in a large number of situations but never more so when driven by politicians who feel, just because they are politicians, that they have superior intellects and are so much better informed that the ‘common man’ and so much more able to make decisions that are best for everyone. This delusional attitude is supported by some journalists who have equally unfounded self-delusions.
And this is exactly what is happening with governmental reaction to the financial institutions and the mess they have made of their economic value and the economy as a whole. The extraordinary thing is that the UK government is not alone in its idiocy – other governments around the world are going down the same path in the sublime, but ridiculous, belief that if all governments agree then they must be right. Read the rest of this entry »
In the wake of collapse of the banking system, it is understandable that we want to make sure that is does not happen again. Politicians, those who are ostensibly elected to act on our behalf, are the ones who have to take the responsibility for finding a solution – not because they are knowledgeable and competent in the field but because it is the responsibility of politicians to act at a national and supranational level, a level at which we, as individuals, simply cannot. Unfortunately, the world’s politicians have assumed that they are competent to act directly (i.e. they are knowledgeable and have the skills in the field), rather than accepting that their role is to seek considered and thoughtful input from those that do know what they are talking about and then to mange the process so that a solution is found. The result of assumption of competence has been a rush by politicians to develop policy and enact law – and to get it spectacularly wrong!
Nicolas Sarkozy, the President of France and a member of the G20, has recently called for a tax on financial transactions as a method of reducing risky behaviour amongst bankers. This is profoundly flawed as an idea Read the rest of this entry »
I actually heard a politician say something sensible this weekend! It was Alistair Darling, the UK Chancellor, and he was echoing something President Obama said last week. What caught my attention was the statement “there is nothing wrong with rewarding success, but there has to be a penalty for failure”. I’m afraid that, after that, the standard dropped again.
Like most western and developed nations, both the administrations in the UK and the US have stimulus packages in place (if not yet delivering) and both have found their proposals under fire from the opposition politicians (how unsurprising is that!). The issue that seems to enrage the opposition and the populace equally is the idea of bonuses for top bankers – especially those in the banks that have had to take government (tax payer’s) money in the current crisis. On the one hand, there are the free-marketeers who are saying that top bankers should get their bonuses and then there are the socialist reactionaries that say they shouldn’t.
Let’s take a closer look at the issue. Read the rest of this entry »