Quote Of The Day
Ezra Klein, reviewing Michael Lewis’ The Big Short, on the financial meltdown:
Like the poor, idiots will always be with us. In fact, we’ll frequently be among them. The seductions of group-think, the tendency to trust experts, the incentives for employees to go along with their bosses rather than contradict them and the need to deliver short-term profits even at the cost of long-term risk are more powerful than any regulation and will exist long after the visceral lessons of the subprime meltdown are gone.
Sounds like the exact problems facing Congress and most of the regulatory agencies, not just Wall Street.
The short version is that incentives and human nature matter and are more powerful than regulation. But Ezra goes on to show how new regulations will solve these issues, which I’m absolutely sure will be free of gaming and loopholes and lax oversight. I’m sure once we get new regulators, incentives and human nature will magically change. The King is dead! Long live the King!