These are the newest media headlines floating around the last few days.
Give me a break. The theme is just dumb. It's a great sensationalistic story. But, dumb for a variety of reasons.
I'll start this argument with one of my favorite sensational quotes from a great movie created out of another financial crisis – "Greed is good." Gordon Gecko from Wall Street made that line famous. I don't necessarily agree with it. But, the point is that greed is a universal attribute. It doesn't begin with American capitalists and it certainly doesn't end with so many other financial executives around the world who willingly took part to create our current economic mess.
Yes, our U.S. economic and political system should be blamed as a willing leader of this debacle. But, what about all those other banks who willingly took part based in Scotland (RBS), Great Britain (HSBC and HBOS), Switzerland (UBS), Iceland (every bank) and the list goes on and on and on...
And, I haven't even mentioned that it was AIG's London arm that led the entire derivatives program which helped to push the global insurer over the edge.
Like anything that is too good to be true, human nature pushes human beings to stop asking questions and jump on the money-making bandwagon. That's what happened here. And, the United States is but one large culprit. Many others clearly deserve blame as well. As the New York Times reported yesterday, the real cause is actually skewed financial incentives around the world. These distortions have operated on multiple levels:
1) An imbalance in world trade – China has huge surpluses, while everyone else is operating in serious deficits.
2) Bailing out world financial systems whenever they are in trouble – This has greatly distorted the market.
3) Having banks in many countries that were simply “too big to fail” – These banks took too many risks because they knew that bail outs would occur should the unthinkable happen (which actually did.)
4) Lopsided incentive plans for the financiers – This created havoc in an otherwise naturally working free market system.
I really have to tip my hat to CNN, the Financial Times and all the other media that have carved out and pushed this tabloid-like storyline. With President Obama in Europe for the Summit meeting, it makes perfect sense to admonish our economic system for being too capitalistic. And, those sound bytes from other socialistic European economic leaders really nicely pit our leader who supposedly represents ‘free market’ capitalism (Obama) against everyone else.
The main problem is that this is not a cut and dried issue. Yes, there are many extenuating situations such as the fact that countries like France and Germany have had stagnating economies for over a decade with some of the worst unemployment in Europe. So, while they blame the US for its laissez-faire ways, they shouldn't forget that their policies, which border on socialism, have created state governments that had problems competing on a world scale and couldn't even employ their own employable workers much before this global crisis ever hit.
Maybe it's time to turn the tables. How about if we pin the blame squarely on the shoulders of our media? I know. They've only helped to spread the rumors and harp on these negative themes so that they would be believed by all of us. They certainly didn't create the laws, provide the loans, or make the funky markets that traded us into crisis. Still, their powers have gone too far and if we could villanize them just for a week or two, it could certainly entertain many more people than what their stories intend to do now.
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