Today is a B-day at the Congressional Financial Crisis Inquiry Commission (FCIC) Hearing. The main-stream media (MSM)has awakened, and the blogs are positively bubbly.
Under those circumstances, I thought a little lite question to enliven the hearing might be in order, like adding a little fizz to the gin and the tonic.
Distinguished Gentleman Bankers: Look to the colleague banker next to you, to your left or to your right, look carefully and estimate the sum-total cost of your colleague’s haircut, his tie, his shirt, his suit, his shoes, and his watch, and multiply that number by 40 in your heads, and tell me what it is.
I have a number in mind. If your number exceeds my number, you win the prize behind the door named “Bernie”; if your number does not exceed my number, you get the prize behind the door named “Pitch Fork.” Numbers and risk management experts that you all are, you shouldn’t need more than 10 seconds to get at your number.
I know movies are made purely as entertainments, but once in a while we are lucky to find movies that do a double duty: as entertainments and as commentaries on what’s happening in our world.
For the Financial Crisis of 2008, Up In the Air has a great deal to say, butI nominate 1977 John Badham’s Saturday Night Fever and 2007 Coen brother’s No Country For Old Men as perfect metaphors for debt and gambling in America.
A scene in Saturday Night Fever opens with John Travolta as Tony Manero walking down a busy Brooklyn Street. The walk has the rhythm and the swagger down to his shoes. Life full with confidence. A picture of a young man on the go. He stops to order the pizza, his usual the double. Further on down the street he spots a shirt he likes. He goes into the shop, and said to the salesman: “Hey, you guys do layaway?” The salesman’s quick response: “As long as it didn’t turn into a 30-year mortgage.” Tony to salesman: “Here is five dollars for a blue shirt in the window, hold it.” The next scene opens with Tony asking an advance on his salary from his boss at the hardware store he work, as the latter was closing the shop for the day. The boss said to Tony: “You can save a little and build the future.” Tony to boss: “F… the future!”. Boss : “No Tony, you can’t f … the future; the future f…. you; it catches up with you, and f… you if you ain’t plan for it.”
The next movie is No Country For Old Men. A scene from it is a perfect coda to the scene from the Saturday Night Fever.
A man come into a lone gas station in a desert at dusk. The man look menacing, apparently looking for troubles. In the middle of a desultory conversation between the lone attendant and the man, the man take out a coin, ask the attendant “What is the most you ever lost in a coin toss?” and toss it. And while still covering the coin with his hand, he instruct the attendant to call it. The attendant demur by saying “We need to know what we are calling it for here,” But the man continue to press on calling it. He said “I can’t call it for you, or it wouldn’t be fair.” Finally, the man said “You know what date is on this coin?” “1958” he answer himself, and without pausing he said that the coin has been “travelling 22 years to get here; and now it’s here; and it’s here, head or tail.” “You need to call it.” “I didn’t put nothing up,” the attendant reply. The man still would not let go. The attendant finally give up by asking what he stand to win by calling it. “Everything” reply the man. The attendant made the right call, and his life was spared.
In our case back in the real world, the Fed Chairman Ben Bernanke has been telling us what the American economy is suffering from. He said it is a Great Repression, instead of a Great Depression which would have been unimaginably worst.
Thanks. Well done.
But still what I really like to know is when or where was the Great Repression hatched. Is DEBT the reason for the CRASH? I can’t believe that an ordinary kind of debt – the grease of modern economies – can cause such extensive damages. After all, we have been demanding from each other our pound of flesh ever since Adam and Eve walks the earth. Venice was not built in a day.
If debt really is the culprit, then it must be debts from the double and the triple deckers.
So what is the great lesson we all must learn? You can’t fool Mother Nature all the times or some of the times? Or that you cannot fool the people with the money because they can fool you first.
Bookended by the twin calamities of9/11 and the 2008 Financial Meltdown, this 2009 year-end punditry had an easier time of it. If you are a pundit, you can hardly go wrong by choosing one or the other as the reason for the American predicaments. No one will make a big fuss about it, because we have all shared the sufferings stemming from both.
However, for a nuanced explanation of a slow but sure decline of American preeminence in the world, what we need is a small-sieve -- but an extended -- examination of the causes of the failures.
In wars, Vietnam would be a good place to start, because many of us have lived through it and certainly can related to it viscerally and intellectually. It is the same for Iraq and Afghanistan. We can ask: Why Iraq? Why Afghanistan? Why one after the other?
In economic and finance, we have had any numbers of small but significant failures that can be considered as the precursors of the current Big One. That is if we had the intelligence to learn from such failures. Most of us lived through these failures, and there isn’t much excuse for not learning.
What did or should we have learned? We could have learned that
Savings and loan crisis of the late 80s and early 90s was an old-fashioned chicanery involving bankers and certain senators, whereas the failures of Long Term Capital in late 90s, Dot-com bubble in 2000, and Enron a year later in 2001 were a modern-day versions of an old-fashioned snake oils, cloaked within the claims of triumphalist technological sophistication of computers and computations. A new form of scientism gone wild.
The next question that we need to ask is “Is there a common thread to all these failures, large and small?”
