(The following is a guest post, please read my guest posting policy) – The Weakonomist
The bankers make a lot more money than you or me. They are stupid people. Smelly too. And they dress funny.
I’m fine on all that. However, there’s one matter on which I believe that the bankers are getting a raw deal. They did not cause the economic crisis. Did not. They did not do this thing to us!
I figured this out by noticing that no one ever answers a basic question. Lots of people blame the bankers for what happened. But no one ever says precisely what it is that they did. Did they stick all the money in suitcases and catch a plane to another time zone? How can we know that they caused the crisis if we do not even know how they went about doing so?
There’s one thing they did do. They miscalculated risk. I vote them “guilty” re that one.
I’ve got a problem with recommending the death penalty. The trouble is — We’re guilty of that one too!
We miscalculated risk too, didn’t we? We kept buying stocks even when they were selling at insanely high prices. Yikes!
If we absolutely must blame someone, I say we make it the economists. They’re the ones who came up with that Efficient Market Theory thing which ultimately led to all the Passive Investing gibberish. And they’re got tenure. That’s not annoying as making heaps of money. But I wouldn’t describe it as endearing behavior.
If we don’t pin it on the economists, there are always the investing experts. They said Passive would work. It didn’t. We should demand our money back. No?
Or we could go for the personal finance journalists. Jonathan Clements, the former Wall Street Journal columnist who often endorsed what the experts told him, said the other day that he’s not apologizing. That’s not an attitude that appears to be aimed at winning any sympathy points with middle-class investors.
It might be that we shouldn’t hang anybody from a tree. That’s the other way to go. The bankers make too much money and the economists were wrong about their dumb theories and the experts fell for the dumb theories and the newspaper columnists were too lazy to check things out carefully enough. But there was no law that required us all to go along with what any of them told us. Our common sense told us that once stock prices got to those insanely high levels they were sure fall and to fall hard.
Maybe we should hang ourselves from a tree.
Yowsa!
Rob Bennett writes the “A Rich Life” blog. His “The Investment Strategy Tester” shows investors how they can recover all of their recent stock losses by converting from the Passive Investing strategy to a valuation-informed strategy.
 By The Weakonomist |
The Weakonomist is the founder of Weakonomics. Clicking the picture of the puppy will tell you more about him. If you like what you're reading consider subscribing to the blog, following him on Twitter, and checking out the related posts below. Please consider a donation if you really enjoy Weakonomics. Also keep in mind that nothing I say can be construed as financial advice. |
