Admit, repent, reform, recover

The ability to recognize and admit our errors is a crucial step in the path to recovery and healthy progress.  When the credit crash first hit in 2007, banks began bursting.  I remember a few moments of candid admission such as one terrified CEO lamenting, “We are getting to a time when we will all look back and wish we had done things differently.”  That was then and a fleeting flash.  Banks began begging governments to rescue them or face promised Armageddon for all.  Their fears were contagious, their threats successful.  They extorted tax payer funds in the final hour–and bounced.  A few months later the financial elite acted as if none of it had ever happened.  They resumed old ways of levering up and bonusing out. 

Unfortunately for all of us, our governments and policies enabled a dangerous financial sector, allowing them to escape the experience without having to repent or reform.  So the boil was not lanced.  The pain is not yet past, and the world economy is continuing to suffer ad nauseam.  There is no escaping this.  We can either admit, repent and reform, or we will continue to pay and lose until we do.  The choice is ours.

One of the hideous legacies of protecting people from the consequences of their bad behaviour, is that many are now vigorously rewriting history–busily devising scapegoats and fantasy about the what, who and whys of what happened.  We must not leave this unchecked, unconfronted–lies will not serve our recovery.   We must face the facts as painful as it may feel.  Whether it be for acts of commission or omission, in truth, there is some blame in this for all sides.  This article from Barry Ritholtz is a good start: 

Why are people trying to rewrite the history of the crisis? Some are simply trying to save face. Interest groups who advocate for deregulation of the finance sector would prefer that deregulation not receive any blame for the crisis.

Some stand to profit from the status quo: Banks present a systemic risk to the economy, and reducing that risk by lowering their leverage and increasing capital requirements also lowers profitability. Others are hired guns, doing the bidding of bosses on Wall Street.

They all suffer cognitive dissonance — the intellectual crisis that occurs when a failed belief system or philosophy is confronted with proof of its implausibility.

And what about those facts? To be clear, no single issue was the cause. Our economy is a complex and intricate system. What caused the crisis? Look…

Read:  What caused the financial crisis?  The big lie goes viral for the 12 key causes as a template to understand the changes needed now to reform our system.

See also this excellent article from Paul Volcker:  Financial Reform: Unfinished Business.

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6 Responses to Admit, repent, reform, recover

  1. Robert says:

    This blog seems to represent the Washington insider’s view that more government regulation and more management of the economy by government is necessary and that corporate greed is the cause of current and recent economic crises. The links recommended above gloss over government responsibility smearing the blame around blurring the focus of the ultimate responsibility of progressives politicians of both the Democrat and Republican parties. This is not to say that there are no greedy, unscrupulous, and unlawful individuals on Wall Street but rather that they are partners in crime with progressive politicians such as the current regime in the White House. A virtual Fascist dictatorship run by Wall Street, Democrats, Rhinos, and Obama was in place for the first two years of the Obama presidency. Every attempt to institute reform has been stonewalled by these people in the last decade. A more accurate analysis of the economic crises is to be found at:

  2. JW says:

    Well said. That’s why there is the OWS movement. That’s why people has little faith in the politicians and the law makers. I sincerely believe the best action anyone can take is to get your money out of those TBTF banks, close your accounts, stop doing business with them. By withdrawing your money, it will force them to downsize. Don’t wait for the politicians or regulators to do it for you. This is also the best way to keep your money safe. My two cents. JW, Vancouver.

  3. dazzo says:

    Credibility Trap: US Congressmen and Their Staffs Regularly Engage In Insider Trading

  4. michael says:

    Although it would be great if all of a sudden the Fascist cabal that is in control would get religion and change their ways that is not going to happen. Not until the unwashed feel a lot more pain and get to the point where they take back what has been taken from them. This may happen at some point but it will not be for awhile.

    The QQQ which in my opinion has been on a stealth bull since late 2002 looks like it is getting ready to break out of major resitstance.
    The shills are busy trying to sell you “holes in the ground with liars standing beside them”, flavour of the day for the greater fools.
    Remember when all they wanted to sell you was a dot com’s with no earnings and no chance of ever making any money.
    Seems like a long time ago.
    Anyway looks like the Nasdaq is ready to bust out and once again take control.
    Even the Oracle has started to buy.
    If there is to be any recovery at all it will be lead by technology. As the driver, the FIRE economy is finished and going forward will play a supporting role only.

    So Corey maybe you could give us your take on the QQQ chart. Could be time to think about buying the breakout.

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