I want to draw your attention to what I think is a simply brilliant post at Minyanville from Peter Atwater. In the post Mr. Atwater exploits a clever central metaphor for the banking crisis of the Great Recession:
In December 2010, I wrote that the policymakers’ approach to resolving the crisis was akin to the procedure recommended by flight attendants in case of a sudden in cabin pressure. Masks should go first on the adults and then on the children.
In response to the banking crisis policymakers took deliberate monetary and fiscal action targeted to helping the biggest banks and corporations along with the wealthiest in America, with the hope that once safe, they in turn would quickly breathe life into middle market and small businesses, as well as middle- and lower-class Americans.
We have now confused ends with means. We should be attempting to restore cabin pressure. Our efforts are mostly dedicated to keeping the so-called adults breathing.
A better analogy would be that the plane crashed due to the first class passengers overloading it with too much luggage got by selling overhead space to second class passengers.
The plane is now on a deserted island with few resources, and those resources are being diverted to the first class passengers to keep them and the extra luggage safe. They cannot repair the plane.
The second class passengers can repair the plane or build a new one, but their tools are in the luggage the first class passengers are keeping safe. Any resources they need to create new tools are being diverted to keep the first class passengers happy.
There was no heart attack, but that would mean that Doctor Obama and his medical team did not have a clue about what they were doing. I am tired of arguing with you all. When the patient is up and dancing, give me a call.
Seems like he is trying to hard to find proof that his theory was correct, even if the underlying premise obviously is.
Personally I think the analogy of systemic blood pressure is more accurate, although it requires a lot of knowledge of physiology so that limits it’s usefulness in conversation.
I do like TB’s analogy too though, and it’s more accessible than mine.
I think there were many hidden facets, deal-making opportunism, pay-offs, pie-in-the-sky strategies, faulty policies in place contributing to the ’08 crash.
Consequently, IMO, blame is more appropriately assigned in fractions rather than whole-clothe condemnation of one entity.
However, the endgame — saving the big guys in order to help the little people — might have worked better had the government not put a tourniquet of rule and regulations around big and small business, steadily tightening it, making investment and market expansion too risky, leaving the little people on the ledge with little opportunity to recoup their losses and make a living.