Monday, February 14, 2011

Money Never Sleeps: The Financial Crisis Revisited

The eruptions and possible transformations in the middle east have captured the media's attention for the moment, and rightly so. But, the global financial crisis continues to unfold - and it is important to keep our eye on the ball. I am ploughing through the recent six-hundred page report.

It is more hard-hitting in its criticisms than I expected, but still underestimates the moral element. Many commentators, especially those connected with the finance industry seem to be pretty squeamish about morality (when they are not simply being cynical) - as if it requires them to be pious goody-goodies with no business backbone.

Simple counterfactuals help highlight the causal impact of immoral behaviour: What if X (investment bankers, ratings agencies, hedge fund managers, etc.) had not been willing to Y
(choose from a long list of dubious actions)? Well the common answer, the one that straddles such questions, is that the crisis would not have happened. However, it will require a change of ethos to put the voluntary ethical constraints in place which can prevent such a crisis happening again. And, it is unclear, despite the surface rhetoric, that the finance world really wants such an ethos (even leaving aside the unfounded squeamishness just mentioned). Regulatory reform is a start, but it can never be sufficient if the prevailing moral attitude is wrong. For then, the first reaction is to look for ways to circumvent the rules or, as so often happens, turn them to the finance industry's further advantage.

By the way, Money Never Sleeps, the second Wall Street movie, is rather weak. It had a chance to nail the activities and atttitudes that caused the crisis, but after a promising start, it merely scratches the surface. One of the signs of the sorry state of our culture in the West is that its
art and literature have not yet been able to tackle the very grave issues raised by the current crisis. I suspect history will not look back on us very kindly in that respect.