Satyajit Das is an internationally respected expert on finance with over 30 years working experience in the industry. He is also a best-selling author and a regular contributor to leading finance blogs – including our very own Naked Capitalism. His new book ‘Extreme Money: Masters of the Universe and the Cult of Risk’ is out now and available from Amazon in hardcover and Kindle versions.
Interview conducted by Philip Pilkington, a journalist and writer based in Dublin, Ireland.
Philip Pilkington: Your new book ‘Extreme Money’ is primarily a story about what our society has become — or rather: what we have become. It tells the tale of a sort of — although I hate to use jargonistic neo-English — hyper-financialised world in which money, or perhaps even the idea of money, has knitted itself into the social fabric and taken over. While there are some fascinating caveats in the book dealing with the inner-workings of this strange world, it is primarily the culture that I wish to focus on here.
So, let’s begin.
At the end of the debt-chains that blew up in the US in 2008 there was tied a mortgage-holder. In your book you describe the architecture that was built up to ensure that people who should not have received these mortgages did. It struck me that it was a remarkably cynical culture that grew up around this industry in the US — far more so than what formed in Ireland, where I’m from. Indeed, an entire dialect of fraud seems to have mushroomed in this industry during this period. Can you talk a little about all this?
Satyijat Das: It goes back to how financial institutions make money – primarily, by lending other people money (that has always been and still remains the core of banking profits). But there are a limited number of people you can lend to who will pay you back. Initially, when finance de-regulated (in the 1980s) there were opportunities to lend to people who were good credits but were restricted in their access to money. However, as banks expanded you exhausted the pool of people who could lend to and then moved onto the others – until you came to people who couldn’t ever really pay you back.
So the trick was to hide or get rid of the risk of non-payment – it became a case of ‘NMP’ (not my problem!) or as it is termed by the finance-crats: ‘risk transfer’. So you made loans that you shouldn’t and then transferred them to people who probably didn’t quite grasp the risk fully or were incentivised to look the other way. It was a culture of fraud and self delusion.
Mortgage brokers just lent to anyone they could find. Once they figured out the game borrowers just lied about their finances – this is why terms like ‘liar loans’ and ‘NINJAs’ (no assets no jobs or assets) sprung up in the mortgage industry. In a way it would have been downright unpatriotic of these consumers not to participate in this game – as remember they were now the engine of economic growth. Even minor players like valuers were complicit. There were ‘drive-by valuations’, where the valuer literally drove past the property in order to assess it. If the property value was insufficient to justify the loan, then the valuer added the required margin for kerb value.
Everybody cynically took advantage of the system that developed. Mortgage brokers didn’t disclose the risk to banks who didn’t disclose them to rating agencies who then rated them at levels inconsistent with the real risk and investors bought this whole nonsense because they were AAA securities. The whole thing took on a momentum of its own as everyone was making too much money to care how it was being made. No one was interested in that quaint thing called the ‘truth’.
The self delusion was astonishing. When the ratings proved to be egregiously wrong, chairman and chief executive Harold ‘Terry’ McGraw III defended S&P: ‘A couple of assumptions we made didn’t work out and we just totally missed on the US housing recession.’
There was the proverbial conga line of people who all participated in and deluded themselves into this the dialectic of fraud. I suppose no one cared as long as they thought it was working and they were getting richer. Predictably it ended in tears.
PP: There’s something so enclosed, so incestuous with those involved in the financial markets. In your book you document how the hedge fund industry in particular displayed this insularity to a rather remarkable degree. Some of your anecdotes remind me of a group of late-adolescent males preparing for a drinking trip or a football match. You worked in and around this industry, what do you make of this dynamic? What effects does it have on the way these people make decisions?
SD: Fraternities; ‘frat boys’ (and they are mainly boys) as the Americans would say. It’s a monoculture. They generally go to the same schools, the same universities; they have similar backgrounds and spend time with each other reinforcing their narrow worldview. Even the few outsiders who make it in – usually by dint of sheer desire and skill, usually in making money – seek to be ‘insiders’. It means that they can only see the world through the same lenses and perspectives. They can’t think outside the consensus – whatever it is at a given time. They can’t see that things could be different to what they perceive it to be.
They also see themselves as superior beings – ‘God but with a better suit’. The reason for their superiority is that they make more money than anyone else which in my view is purely accidental. But in their minds they see money and brilliance as synonymous. David Hare captured this neatly in his play ‘The Power of One’. He has a character, who looks remarkably like Gillian Tett from the Financial Times, say: “These people genuinely believe they’re masters of the universe. And why are they masters of the universe? Because they’re paid fifty times as much as anyone else. So they must be cleverer than anyone else.” Unfortunately, as subsequent events demonstrated, they weren’t that clever; they were just in the right place at the right time, at least for a while.
This culture creates a kind of ‘financial nihilism’ – those on the inside can’t see the consequences of their actions on other people at all. That’s because other people are inferior – outside the bubble. Justin Cartwright in his novel ‘Other People’s Money’ has one of his characters describe how financiers see ordinary people: “The rest of us are just the extras, without speaking parts, just fill in the blank spaces in the frame.” I think that’s accurate – these people really have a weird sense of being always right, not to mention generally superior. They can’t see what damage they have caused. They still think that they were right. The fascinating thing is that ordinary people and even powerful people like politicians actually believed that they were really special. Maybe, they still do.
PP: How disturbing. And this seems to reach all levels, right? In your book you portray the upper-management as vacuous clones. They come across as simply mouthpieces that spout vague jargon in order to ensure that everyone continues to ‘believe’ in whatever it is that they’re selling at a given time. Surely this isn’t the typical picture of an ‘entrepreneur’ taking risks and innovating to make money while shattering bureaucracies and truisms?
SD: It’s amazing how much money you can make just shuffling paper backwards and forwards. Malcolm Gladwell wrote a piece praising John Paulson who made a killing from the subprime disaster as an entrepreneur. But what did he make? What did he leave behind? Paul Volcker, the former chairman of the Federal Reserve, argued: “I wish someone would give me one shred of neutral evidence that financial innovation has led to economic growth — one shred of evidence. US financial services increased its share of value added from 2% to 6.5% but is that a reflection of your financial innovation, or just a reflection of what you’re paid?”
Management and directors of financial institutions cannot really understand what is going on – it’s simply not practical. They cannot be across all the products. For example, Robert Rubin, the former head of Goldman Sachs and Treasury Secretary under President Clinton, encouraged increased risk taking at CitiGroup. He was guided by a consultant’s report and famously stated that risk was the only underpriced asset. He encouraged investment in AAA securities assuming that they were ‘money good’. He seemed not to be aware of the liquidity puts that Citi had written which meant that toxic off-balance sheet assets would come back to the mother ship in the case of a crisis. Now, if he didn’t understand, others would find it near impossible. And I’m talking about executive management.
Non executives are even further removed. Upon joining the Salomon Brothers Board, Henry Kaufman, the original Dr. Doom found that most non-executive directors had little experience or understanding of banking. They relied on board reports that were, “neither comprehensive … nor detailed enough … about the diversity and complexity of our operations.” Non-executive directors were reliant “on the veracity and competency of senior managers, who in turn … are beholden to the veracity of middle managers, who are themselves motivated to take risks through a variety of profit compensation formulas.”
Kaufman later joined the board of Lehman Brothers. Nine out of ten members of the Lehman board were retired, four were 75 years or more in age, only two had banking experience, but in a different era. The octogenarian Kaufman sat on the Lehman Risk Committee with a Broadway producer, a former Navy admiral, a former CEO of a Spanish-language TV station and the former chairman of IBM. The Committee only had two meetings in 2006 and 2007. AIG’s board included several heavyweight diplomats and admirals; even though Richard Breeden, former head of the SEC told a reporter, “AIG, as far as I know, didn’t own any aircraft carriers and didn’t have a seat in the United Nations.”
PP: Okay, you say that it’s impossible to tell what’s really behind many financial assets. I think most people would accept that. But a lot of things in this world are uncertain and most of us seem to get by fairly well. Are you sure we’re talking about simple ignorance here or are we talking about willed ignorance? I mean, there’s a fine line between the two but still, at some level these executives must say to themselves, “Wow! I really have no idea what’s going on here! I have responsibility for a great deal of societal wealth, of pension funds, of taxpayer guaranteed money — and yet, I have no idea what I’m doing.”
I don’t want to make it out that they’re all engaged in fraud — I don’t believe that, although some undoubtedly are — but if a doctor can tried and convicted for criminal negligence, then surely we are not dealing with simple ignorance. You’ve worked in the industry; you’ve met these people; what do you think?
SD: It’s silly to think that everybody in finance is ‘evil’ or engaged in fraud (though there are people who assert that). Most people involved are very smart, diligent, hard working and passionate about what they do. Ironically, so were most of the people who created great social upheavals – the Chinese Cultural Revolution, Pol Pot’s Year Zero project, pogroms etc.
It’s ‘groupthink’. They have ways of thinking about the world. They think it’s the right way so they keep trying it again and again. At least until there is a horrendous disruption and then they go: “Oh dear! There’s a problem.”
Take Alan Greenspan. He thought deregulated markets were the solution. He thought that any problem could be fixed by flooding the system with money. He was wrong, but even today he doesn’t really see that his world view is erroneous. They are very good at rationalisation and don’t tolerate dissent.
As for responsibility, they are doing what is accepted practice – they think they are doing the best for their stake holders. Galbraith’s observation is very accurate: “The conventional having been made more or less identical with sound scholarship, its position is virtually impregnable. The sceptic is disqualified by his very tendency to go brashly from the old to the new. Were he a sound scholar… he would remain with the conventional wisdom.”
As you long as you follow convention you are unlikely to be successfully prosecuted or made liable. Ultimately that’s the only purpose of corporate governance – to ensure that by following a set of accepted practices you make yourself and your organisation litigation proof.
That’s what is really interesting about this period of history. I think you parsed it accurately when you said that extreme money changed the world by altering the way we think about money; by embedding it into the social fabric. I would go further though; it changed our ways of approaching problems and thinking. That’s the most interesting thing about it – some would say sinister.
This is also why it’s so difficult to fix. It’s like a shift in our views of the cosmos – does the sun spin around the earth or vice versa? It took a few centuries to change that – despite evidence as to the correct view. I think David Hume was right when he noted: “All plans of government, which suppose great reformation in the manners of mankind, are plainly imaginary.”
PP: One much commented on phenomenon in the financial markets is that they’ve started recruiting very highly educated people, such as physicists. This seems like a total waste of resources – Fukushima melts down, as physicists help create turbulence in the markets. Maybe you could say something about this? But also, in the book you give the impression that, even though these people are highly educated, perhaps even overly educated for their role, they still engage in groupthink. I’d love to get your perspective on that.
SD: Finance has led to a serious misallocation of resources. The best and the brightest moved from real engineering into financial engineering. If you believe that real growth comes from innovation, improvements in productivity etc. then this was a serious issue.
The reasons were also interesting. The supply of jobs in science, for example, decreased as the Cold War wound down and the research jobs in academic institutions and things like the Bell Labs became scarcer. Another reason was the disproportionate rewards available in finance. It wasn’t related to the value created by finance. It was really the fact that financial products were sometimes mispriced because of complexity and lack of transparency and also because it was possible to measure contributions more directly. How do you measure a surgeon’s or nurse’s value in terms of the work they do? In contrast, a trader can tell you immediately what they think they made.
Scientists applied their approaches to modelling to markets. The problem is that it is much more difficult to model financial outcomes than people think because we don’t really understand the process very well. Former Goldman Sachs’ quant Emanuel Derman, a trained physicist, was right when he observed that : “In physics, a model is correct if it predicts the future trajectories of planets or the existence and properties of new planets… In finance, you cannot easily prove a model right by such observations.” Derman concluded that: “Trained economists have never seen a really first-class model.” Most financial models are wrong, only the degree of error is in question. Differential equations, positive definite matrices or the desirable statistical properties of an estimator rarely determine the price of traded financial instruments. So this was all an egregious waste of resources.
Of course, it begs the question why people used these models and spent so much money on them.
The answer to this is quite troubling: it was for a significant part a gigantic fudging exercise. The models were really created to package up relatively simple products and make them more complicated to allow banks to earn economic rents – that is, excess returns – from them. They were designed to arbitrage capital rules and increase leverage. They were also useful in helping banks’ upfront earnings. Everybody appeared very clever, but it was all kind of a fake sophistication. Why would anyone want to trade a dollar/yen double barrier digital knockout with Elvis pelvic thrusts?
None of this appears productive to me, but a lot of resources went into the process. And as everybody was making a lot of money doing this stuff it was hardly in anyone’s interest to stand up and point out the reality of what modern finance had become.
PP: It’s really interesting that you mention the lack of scientific funding after the Cold War. The eminent economic historian Philip Mirowski has noted this time and again. In his books he writes about how scientists found themselves increasingly in oversupply as the Cold War ran down and spending on military research dwindled. He contends that much of the ‘mathematicisation’ of modern economics – that is, the move away from realistic theories that help the public purpose and into ‘pure’ models that don’t really do or say anything – was due to this emigration from the hard sciences. Clearly without the threat of the ‘Evil Empire’ Western governments no longer see as much need to spend on expensive research. I mean, while I’m not hugely keen on the military-industrial complex, at least a lot of this research ended up serving the public purpose when it was released by the military.
Now we’re seeing less interest in real innovation and more interest in releasing our best and brightest into the toxic waste dump that is the financial sector. Without the government to spend large outlays on serious research, these people have moved into the private sector. And since the private sector is geared toward nothing but making a quick buck the results are catastrophic. While it’s difficult to make prognostications do you see any evidence of this changing? In your experience were the scientists you encountered in the finance sector in any way disillusioned with what they were doing? Especially so after the 2008 crash?
SD: You probably need to ask the ‘quants’ that question. After Traders… came out, I was outed as “anti-quant” (whatever that means!).
My observation would be that most people who are honest think the science is trivial. Many really don’t quite get the impact of what they do – it’s a sort of ‘cogs in a machine’ syndrome. I know a few who find their work less than satisfying – it’s a lot like Stfan Zweig’s observations of chess in The Royal Game. “Thought that leads nowhere, mathematics that adds up to nothing, art without an end product, architecture without substance.”
But they have their consolations. They get paid a lot for what they do, certainly more than they could ever make in their scientific pursuits, unless they struck it really lucky. They have also created a fascinating tribal culture – awards, societies, tribal leaders and, naturally, critics (most notably Nassim Nicolas Taleb). The culture would excite anthropologists and ethnographers and you wouldn’t have to go to the Gobi desert to do the fieldwork.
As for changes. It’s hard to make the types of changes that you need. Keynes hit it on the head when he observed that: “the difficulty lies not so much in developing new ideas as in escaping from old ones.” Unfortunately, finance generally approximates what John Kenneth Galbraith astutely predicted does happen: “faced with the choice between changing one’s mind and proving there is no need to do so, almost everyone gets busy on the proof.”
Part II coming soon, in which Satyajit Das and Philip Pilkington discuss carnivalesque ‘money shows’, the function of the financial system, ‘haves and have nots’ and much more…
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I take issue with the notion that the sad mathematization of economics is the fault of physicists. Having studied both math and economics, the level of math used in economics is laughable.
When physicists get involved in economics you do not get kindergarden notions like the Black Scholes option pricing model (a “Nobel Prize” for solving a stock second year college differential equation) but something a lot more sophisticated. See for example Bouchaud’s “Theory of financial risk” or Sornette’s “Why markets crash”.
The first thing all these physicists do is look at the data, something economists forgot to do after Adam Smith. They have only recently started dipping their toes into the water of actual data.
Look at the hard time Mandelbrot was given for pointing out that changes in financial market prices did not obey a normal distribution, which economists had decided, from pure thought, they must have.
You seem to be missing Das’ point. Physicists and mathematicians HAVE been hired in droves by Wall Street, including ones with top pedigrees (as in PhDs in pure math from top rated programs). He clearly says he does not think this is a good thing
And as Das has explained elsewhere, quite a few of these “quants” do not bother understanding the phenomena underlying the data they have been asked to parse.
Yes, Yves is right — and not just about the market ‘quants’.
As Mirowski has shown, physicists have made important forays into economic theory since at least WWII:
http://www.amazon.com/Machine-Dreams-Economics-Becomes-Science/dp/0521775264
Mirowski is ambivalent on this and points out how much more superior the physicsts maths is to the neoclassicals. He’s right on this. But my feeling is that those who make these forays don’t usually bother to understand much about economics as such and so put forward theories that — while rather pretty in their design — work within the mainstream mold (i.e. assume ‘rational agents’; leave out debt dynamics etc.).
Their interventions seem to only lead to mathematical economists being reinforced in ther belief that they are following the right path and as encouragement for the ‘quants’ to follow such a line of work — after all, eminent figures like Von Neumann took it seriously, so why not them?
Finally, when those from the hard sciences actually migrate to the economics departments they set to work on economic theory at the most abstract and useless level. Once again, this reinforces the conviction of the ‘lesser’ economists that what they’re doing is scientific in the sense that physics is scientific.
The whole things is toxic.
Also, when physicists do actually try to undertake economic studies they come across as laughable conspiracy theorists. Yves showed this in a critique on a ‘study’ that purported to show that a few wealthy people own the stock markets. (Would someone who knows the reference link to this below please?).
It’s not surprising they come off as cranks when they do this. If I tried to write a paper on physics I’d come off as a clown too. Physicists are often quite arrogant because they think that their science is King. They should recognise that there are different ways of thinking about the world other than the physical sciences and these are not necessarily invalid.
To take an example from outside of economics one only needs to invoke Alan Sokal’s asanine ‘attack’ on certain elements of so-called ‘post-structuralism’. That was a dark day for the physics discipline indeed. It showed the true colours of some of those within it who were so arrogant to think that their way of thinking was objectiviely the only way of thinking. It displayed — for me at least — a certain authoritarianism at the heart of the discipline of physics.
Physicists are pretty worthless by now as well, but as I recall Sokal made complete jackasses of the meta-scribblers.
Many have pointed out the profound implications of this hoax. At the very least, articles should be reviewed by experts in the field covered by the article. Sources and references named in the article should be checked by the editors.
Above all, however, the Sokal hoax demonstrates how willing we are to be *** deceived about matters we believe strongly in ***. We are likely to be more critical of articles which attack our position than we are of those which we think supports it (Gilovich).
**** This tendency to confirmation bias affects physicists as well as professors in the social sciences and the humanities. ****
http://www.skepdic.com/sokal.html
Skippy…Or Attempters. It has been said, There are no enemy’s…in…a Cemetery. Zelots…shezzzzz
Depends on if you consider trolling a low-rank journal as a productive way to engage in academic criticism. Because if it is, physics itself has proved to be a load of scribble too:
http://en.wikipedia.org/wiki/Bogdanov_Affair
Thanks for reinforcing my point. I especially like all the hand-wringing about the quality of their credentials. (Then as an afterthought it gets to the disputed quality of their ideas.)
I forget – what were the credentials of Thales, Anaxagoras, Plato, etc.?
Skippy, what’s an example of an article which undermines my premises or the conclusions I draw from them? If you can point me to one, I’ll happily give it all the consideration it merits.
“Physicists are pretty worthless by now as well”
Your brush is so broad, so self assured, although purely rhetorical in its stance, you must have a mighty fine arm chair.
Skippy…Zelots are incapable of learning. their ideology is complete and incapable of refutation. I would sooner have a conversation with the pope.
PS. where can I send you a smoking jacket and pipe or would a fez hat imbue a greater sense of intellect…eh. Rhetorical flourish is a smokescreen to disguise its masters true intent, out side a few mechanics with Ag yous is strangely missing.
‘I’ll happily give it all the consideration it merits.”
Where do I kneel to submit my humble offering? Will i be graced with your image or must I have my vision impaired by the pulpit…life is so unfair!
Skippy…are all the planes in your small universe reflective?
“Thanks for reinforcing my point.”
Absolutely not what I was trying to do. My point was that trolling a journal with a fake essay is a terrible way to ‘discredit’ something.
Low to mid-ranking journals tend to seek out contributors rather than have contributors seek out them. So, when they get someone with reasonable qualifications they tend to run their stuff.
Also, not all journal editors fully understand everything that goes into the journals — this is true of high-ranking journals too. If you have a 100% new idea chances are that no-one will understand it on the first pass — if it’s truly original you might not fully understand it yourself.
Sokal — being a published academic (though not very widely in his own field if my estimation is correct!) — should have understood this. His act was childish, loathsome and pathetic. I hope it ruined his chances of ever getting any of his own work published again — if, indeed, he has anything original to add to his discipline and didn’t just get his degree to come across as holier-than-thou.
OK Skippy, I’m not playing your stupid games anymore. First you say there are articles which go against my premises, then you’re offended when I ask for an example.
I’m sure you’ve never seen an example. You’re just still angry that I touched on your corrupt spot where it comes to Big Telecomm.
Games, corrupt spot, articles to substantiate, n’est-ce pas? Ahh, the trick of painting your accuser as the villain, never having to answer any charges, total redirection. I never, replete never said, anything about telecoms (putting words and thoughts, meanings into my comments and then attacking them), when it was your largess on government ie. *all* government is bad. Which you then conflated into all kinds of speculative arguments, clouding my original and only argumentative inquire.
Then_again_I call into question your broad brush approach “Physicists are pretty worthless by now as well” only to observe confirmation bias affect writ large *ALL WORTHLESS * (let us dance upon their grave). I have agreed in principle with some of your statements, but, I have never offered my fealty, become an acolyte of your brand in toto (more of your projections…”Now I know this is a joke, or you’re high on something, or this is a different Skippy…”…) Is this the real skippy, are you high, is this a joke, nice stuff attempter, cheep questioning emotive character assassination. Your massive knee jerk to my original statements concerning government is telling, almost[?] a fundamentalist reaction?
Disclaimer, I have zero exposure to any market positions, have zero debt, do not count electrons as value, my only passions are helping wife out with her medical career, my kids education, and assisting everyone around me…as best as my ability’s allow…with knowledge, time or my back, expecting nothing in return.
Skippy…Responding in your approach…how do you make it though a day…fighting all those strawmen…in your minds fields…seething hate behind the till….are you the real attempter?
“…but as I recall Sokal made complete jackasses of the meta-scribblers.”
Absolutely. Sokal was awesome.
Responding to the Sokal affair/article “Transgressing the Boundaries: Towards a Transformative Hermeneutics of Quantum Gravity”, the mathematician Gabriel Stolzenberg argued that “Sokal and allies insufficiently grasped the philosophy they are criticizing, hence, rendering their criticism meaningless”.
He advised readers to slowly and skeptically examine the arguments proposed by each party, bearing in mind the dictum that “the obvious is sometimes the enemy of the true”. (wikipedia)
No, they completely grasped it, since they knew it was vacuous.
The “Yes Men”…(“Save The World”)
“What is truth?” asked a jesting Pilate, but he did not stick around for an answer.
Pilate was ahead of his time.
Indeed Phillip.
There is a sort of savant like associative agnosia that begets a crass and misguided refusal to entertain the possibility that there are numerous constructs and interpretations of the same phenomena.
Not seeing the wood for the trees and all that.
On the observations raised in the interview, and this point in general, I really cannot overstate how illuminating and brilliant a read Iain McGilchrist’s “The Master and His Emissary: The Divided Brain and the Making of the Western World” is.
While it has nothing specific to say about finance and/or economics, it is, nevertheless, a truly groundbreaking work in both psychiatry and philosophy from one of the world’s foremost psychiatrists. Erudite to the point of being utterly astonishing. Without intending to he lays bare the mind and soul of many modern financiers.
Read it and finally understand that there is actually something of a collective mental illness in modern finance.
I’m a little averse to attempts by neuroscientists ‘reinvent’ philosophical observations and call them science. In this case, at a glance, it appears that McGilchrist is dividing the world into the old Idealistic split of ‘Universal’ and ‘Particular’ and then projecting these two forms of thinking into the ‘two sides of the brain’.
The ‘two sides of the brain’ in his theories appear to be nothing but a metaphor to explain his philosophical system. A bit like when you tell a myth about a Robinson Crusoe island to explain a point about economics. I don’t mind this practice per se (I did it in my articles on profits here), but with neuroscientific writings it often leads the reader to confuse the reader (and sometimes the author) between the myth and the theory.
Anyway, Mary Midgely gave it a plug and that’s good enough for me. I might check it out. But if it has too many biological metaphors taken to be biological facts it may irk me so much that I’ll have to, rather ironically, hit myself over the head with it!
“It is up to us to entertain a radically different philosophical vision of this situation: the non metaphorical use of scientific concepts doesn’t carry with it an effect of truth because there is no longer a definition of this science just as there is no longer a definition of our real world.”
“Henceforth it is no longer the human that conceives the world; it is the un-human that conceives us.”
“So far, so good. One enters the critical zone only when this system breaks down – the critical zone of the critical mass, the depolarized zone where polar opposition and dialectics don’t operate anymore, where confusion and short cir cuit, the collision of every pole, open up on an exponential drift.”
– Jean Baudrillard. “From Radical Incertitude, or Thought as Imposter.”
“…perhaps we may see this as a kind of adventure, a heroic test: to take the artificialization of living beings as far as possible in order to see, finally, what part of human nature survives the greatest ordeal. If we discover that not everything can be cloned, simulated, programmed, genetically and neurologically managed, then whatever survives could be truly called “human”: some inalienable and indestructible human quality could finally be identified. Of course, there is always the risk, in this experimental adventure, that nothing will pass the test – that the human will be permanently eradicated.”
– Baudrillard, “The Vital Illusion”, pg 15-16
“To take an example from outside of economics one only needs to invoke Alan Sokal’s asanine ‘attack’ on certain elements of so-called ‘post-structuralism’. That was a dark day for the physics discipline indeed. It showed the true colours of some of those within it who were so arrogant to think that their way of thinking was objectiviely the only way of thinking. It displayed — for me at least — a certain authoritarianism at the heart of the discipline of physics.”
There’s an alternative view that Sokal exposed a certain cargo cult mode of scholarship at the heart of postmodernism. It was a dark day for that “discipline”, but richly deserved.
People in the hard sciences were minding their own business until they were attacked. The editors of that trendy, cutting-edge journal decided to put out a special issue titled “Science Wars”. Let me know when a physics journal publishes “Humanities Wars”.
You dare to scoff at AIG’s variation of the Binomial Theorem?
You dare to scoff at the extensive use (and abuse) of the Bivariate Gaussian Cupola formula?
You dare to dismiss Fischer Black’s strategy at Goldman Sachs to always encourage zero interest rates at the Fed?
You dare to scoff at those mindless bots who were programmed at an early age by close watching of Peter G. Peterson’s Sesame Street???
Yup, think we got us a scoffer here…..
Finance is NOT an empirical science. It’s not even a science period. It’s a joke where the professional practitioners don’t even follow the tripe they teach in Finance 101.
Take “Modern Portfolio Theory” (Markowitz). According to this theoretical “gem” of a model (which is a teaching touchstone for all students of finance), all mutual funds should offer ONE stock portfolio to ALL their clients.
But do they?
Every finance department in university should be terminated for waste of funds and preaching quackery and propogating fraud on the public (It’s always the B and C students who fall for business school anyways).
Most delicious interview. Laugh and cry all at the same time. Thanks, Philip.
There’s plenty a gold, so I been told: http://amoleintheground.blogspot.com/
What I take out of this is that you have a large number of people who are highly skilled in mathematics, trained to analyze and find a solution to a problem on a purely theoritical level, and hired to find solutions to the problem “$OURS > $THEIRS”, then put into a tribal structure where personal value is strongly correlated to compensation, then managed and abetted by persons who, are borderline or actual sociopaths, and who got their experience during a time when all valuations tended strongly positive.
I can see how this turns out well.
Pilkington: “I don’t want to make it out that they’re all engaged in fraud — I don’t believe that”
Das: “It’s silly to think that everybody in finance is ‘evil’ or engaged in fraud (though there are people who assert that).”
For Pilkington and Das, it is a toxic mixture of attitude, bad behavior, and yes, some fraud, but basically they believe that the underlying system is sound. But what gives the lie to their views is the houcoudanode upon which it depends. We are to believe that no one in the finance industry could see or be expected to see a multi-trillion dollar housing bubble built on millions of individual frauds with scams and cons at every point overlain by an even larger system of multi-multi-trillion dollar bets and Ponzis, none of which could be paid off on. Except there were many of us out here who did see these things. Precisely because they were so vast A) they were dead easy to see and B) so were their consequences.
There is this weird push and pull between downplaying fraud and seeing it everywhere, the financial world as toxic dump. I mean which is it? Fraud receives a few mentions, but not a word about criminality so of course nothing about kleptocracy. The result is a mishmash. People did things. Things happened. It is all so agentless. It’s like some people stored some gas cans. Oh, and the cans happened to be near your house. They also like to smoke, flick matches and other harmless fratboy fun like throwing flares and grenades. As it was no one really understood that this would cause the gas cans to go up, did I mention they stored them not so much near your house but against your house, and oh yes, they leaked. Anyway it was a complete surprise that your house burnt down. And it is purely coincidence that they had taken out insurance on your house a few days before, just in case it did go up in flames. But it is preposterous that there was anything like a criminal conspiracy in this. Just because the judge was their uncle and the police their cousins, and there was no investigation or prosecution, anyone could tell it was just a series of unfortunate events, at most some immature and misguided behavior.
Hugh, you selected the exact two quotes I did.
I’ll just add that both of these flat-earth assertions are made with zero evidence offered. Neither offers even a single example of what a big bank does which isn’t fraudulent, or a single example of anything it does which is productive or necessary at all.
This is religious fundamentalism, or insidious lying.
It goes back to how financial institutions make money – primarily, by lending other people money (that has always been and still remains the core of banking profits).
Let them explain why this lending, the alleged “purpose” of banks, should exist at all. The answer can’t include any reference to capitalist imperatives. It must be prior to capitalism and stand on its own if capitalism ceased to exist. (Like the way it’s inadmissible to define a term using other forms of the same term.)
Furthermore, profit maximization can only be Good if The Invisible Hand exists and functions as advertised. Ditto trickle down, which is merely a variant of Hand, The Invisible. Growth is also sacrosanct, beyond criticism. It is only when we religiously accept these (and other) foundational beliefs as beyond dispute and critical analysis that banking as a profit-seeking, growth-oriented, money-fabricating ‘industry’ is necessary and good. Once we have dismissed these myths, we are free to construct a very different set of explanatory stories about how the world works.
Once again, attempter nails it!
When we observe that between 2005 to 2007 there was around $700 billion in structured finance leveraged loans (i.e., based upon credit derivatives structures) from the top banksters to the private equity leveraged buyout firms, who then did their pirate runs on any number of companies (and remember, while the top firms like Blackstone Group, Carlyle Group, KKR, TPG, Citadel and Fortress were involved, there are thousands of PE firms out there) loading them with unconscionable layers of debt to enrich themselves — the private banksters — then when any number of those firms were heading towards bankruptcy — in come the ostensibly unrelated secondary parties to load up on credit default swaps against said debt-ridden LBO’d companies (and sometimes buying necessary bonds to interdict any Chapter 11 moves, taking legal action to be sure bankruptcy occurred) and when the credit event occurs — their bankruptcies — reaps huge payouts on said CDSes.
Of course, the circuitous nature of said scams would bite those banksters like Blackstone and Carlyle with their complete credit derivatives involvement when the meltdown occurred, but then they simply got that free money which the Fed pumped out (which was $16.1 trillion thanks to the recently revealed GAO audit).
A completely fraud-based society…….
Isn’t due diligence as basic to real estate banking as flour is to bread. It’s hard for me to believe that at some level due diligence was not being performed. I suspect rather that it was being ignored, but that’s just it, I don’t know.
I just want an accounting of what went wrong. Straight forward questions. “Did you or did you not perform due diligence investigation on these loans”?. “Why or why not”? “Who in your organization performed the due diligence investigations”? May I see their “due diligence reports detailing the results”? “Who were these reports communicated to”? “May I see any emails, office documentation, executive correspondence, or other recorded evidence of the due diligence documentation and related communications on the due diligence reports”? Who are the internal auditors and external auditors and may I see their work papers and reports”? “May I see the reports of any operational and financial audit work papers in regards to whether the safeguards surrounding due diligence operations were in place and were being carried out”. “Who were the results of these audits communicated to”? ……?
It just seems to me that the general public needs some straight forward answers to straight forward questions before any hope of restoring trust in the “system” can be restored. At least for me anyway.
“Isn’t due diligence as basic to real estate banking as flour is to bread.”
Well…Article 3 of the Uniform Commercial Code is the law in all 50 states, and we’ve witnessed easily over ONE MILLION FELONIES with those robo-signings (false affidavit filings, etc.) — so that, plus all the purposeful hiding of capital and debt with off-balance-sheet accounting, reminds us that the only law is that of the jungle……
…not if the intent is “Shock Doctrine” privatization of all government auspices, to be paid for by rube public…
“Intentional ignorance” works for the majority of people involved in corrupt systems. How culpable are the “intentionally ignorant”?
For the few movers/shakers, it’s plain amorality that veers into the sociopathic personality—those who love only power, along with its pleasures (as they are perceived by him/her).
To most efficiently clean up a huge degraded system, find/extract/convict those with sociopathic tendencies because the others are essentially followers.
Blame needs to be carefully parsed but broadly judged. There’s little honor in it, but that’s the way it is when we let things get this far down in the hole.
That’s probably true Patricia.
But I’m asking what was the point of all of this Sarbanes-Oxley legislation (in response to Enron and Worldcom, etc) that companies had to put in place to tighten internal controls and assure that internal control breaches were communicated to top management and the board?
I believe, for publicly held companies, serious breaches of internal controls, such as due diligence operations had to be communicated, in writing, to top management per this Sarbanes-Oxley legislation. And the top management had to sign off on it and develop a plan of action to address it. It’s the law.
The main stream media exposes us to hour after hour, day after day, month after month of sensationalized reporting on tragedies surrounding the murders of or by celebrities, but for an event that took down the entire global economy we get a “stuff happens” explanation from the press?
“But I’m asking what was the point of all of this Sarbanes-Oxley legislation..”
The point was that individuals at both Enron and WorldCom actually went to jail, ergo, when the law is actually upheld, people go to jail.
But one requires honest people at the SEC, FDIC, FBI, etc., to uphold the law, then by extension one requires honest people at the DOJ, DOT, etc., to be sure said laws are upheld.
And where, oh where, was Obama when Gov. Wanker overturned the right to bargain in Wisconsin? President Kennedy — the last democrat to ever serve as president — would have sent in a DOJ attorney team????
Well then, if that is in truth the case, then by implication that would mean that all of the high level politicians on Capitol Hill are aware of the lawlessness and choose to remain silent, in effect enabling it. That is, how could they not be aware of it?
And that would confirm the American public’s suspicions that Wall Street and their elected officials are all a bunch of phony crooks, just like we have suspected all along.
Great interview and great response by Yves that somewhat diverted the wolves for the blood of physicists, mathematicians, economists and more.
AvgJohn was excellent to focus on the argument of the media to wash away the real importance of Sarbanes-Oxley legislation. Well, how will the Amurican people vote in 2012 given the failure of media to get serious to inform citizens of reality and wash it away with brain-dead sideshows called infotainment.
“For Pilkington and Das, it is a toxic mixture of attitude, bad behavior, and yes, some fraud, but basically they believe that the underlying system is sound.”
The underlying system was the mortgage payment stream. How could anyone believe that was sound?
“As for responsibility, they are doing what is accepted practice – they think they are doing the best for their stake holders.”
The problem is that they have no “stakeholders.” Goldman Sachs deliberately created and sold securities to its own “clients” that it was simultaneously actively shorting into garbage.
The only stakeholders they have is THEMSELVES.
I also disagree that this is “conventional behavior.” Conventional behavior in the mortgage origination field is to NOT grant mortgages without adequate proof of ability to pay. This is the kind of conventional behavior to which the Galbraith quote applies, the kind of rule-following that enables originators to escape prosecution.
Plenty of people had to jump through the mortgage application hoops or do without house (and commission), until the finance boyz perverted the market by convincing the RE field that there was a “market” for higher and higher risk because they could “manage” it.
Many of these mortgage origination people surely knew better, but they went along with the “new” convention, coming from “upstairs,” as it were.
This conventional subservience to ones’ alleged betters is a huge part of the problem.
“The answer to this is quite troubling: it was for a significant part a gigantic fudging exercise.”
I think we can stick with convention here. That’s fraud.
To me, the bottom line is clear: Stop tolerating massive anti-social behavior at the top of the finance pyramid that perverts its underlings, stop subsidizing them out of the wealth of the nation, and put these financially and culturally impaired institutions under.
We need to bring *our* will to bear on *our* government and git ‘er done.
And the elephant still sits, right there. One quadrillion or so in derivatives. Not on an Exchange, not regulated.
When it Blows, it will all be a big surprise, to those who prospered from it. Why is Robert Rubin given a free pass in this interview, the great genius allowed to plead idiocy?
Rubin- you are either an idiot or a criminal, which is it?
Wonderful read…did Satyajit Das quoted all those dead economists verbatim or did the interviewer later pulled a Johann Hari when transcribing the interview?
Can’t wait for part two of the interview
He quoted them. It seems to be his style. It’s done throughout the book.
“The supply of jobs in science, for example, decreased as the Cold War wound down and the research jobs in academic institutions and things like the Bell Labs became scarcer.”
Fukushima would have happened even if more talent had gone into engineering. We aren’t dealing with a “Darn it, if only that kid had studied physics and not finance” phenomenon. The Wall fell politically and the walls put up by energy and transportation oligarchies – in Europe, Japan as well as in the US – got thicker. Alternatives have been there for a long time and they were not pursued because in part Big Energy and Big Auto (and related unions) blocked their development. Just look at Conyers support of SUVs.
Golly, I could have sworn there was this guy, Jack Welch, who was CEO of GE back in 1985, who then shipped an incredible number of scientist, researcher, engineering and programmer jobs offshore?
Wasn’t GE really crucial to getting the GNP reclassified as the GDP????
Curiousity killed the ……..
A couple of points:
1)While “group think” surely exists, and has a role, it does not explain the complete breakdown of morality and ethics not just in Finance, but across the entire spectrum of elite activities. The rot is now evident everywhere, from students cheating their way to their MBS’s to Big Pharma faking research to Monsanto using the legal system to force farmers to use its product to everyone in government lying for “security” reasons to the abysmal states of law and sound medicine to….
The “Masters” know full well how completely they’ve subverted former standards of moral, ethical and legal conduct. The fact is, they achieved what they set out to do, and correctly adduce that nobody is going to do anything about it – because so much of the rest of society bought so heavily into exactly the same, fundamentally anti-social ethic. The examples of witless Duffers on Boards gives these people a pass they absolutely should not receive. Let’s not forget the pizza guy is doing 20 years for being late.
2) I think it’s a misread of history to see the fall of the Soviet Union’s role in this as a contraction in research that then sent unemployed scientists into finance, though that may be trivially true. Far more importantly it’s when the “Masters” finally had a free hand to, in their miracle of modern management way, attempt to engineer the entire world according to their incredibly myopic vision. The result has been unambiguous disaster.
Exactly and well said, Fiver.
It was about the same thing it has always been about:
OTHER PEOPLE’S MONEY, and how the banksters steal it.
By creating a global financial virus they have a modicum of control over (securitized financial instruments, credit derivatives) JPMorgan, GS, Morgan Stanley, Citigroup and BofA can raid, but that pesky tort reform never quite made it through, although both Bush and Obama tried (Obama having voted for tort reform as a senator), so BofA et al. are being hit with an enourmous number of lawsuits.
Speaking as an ex oil trader, I can assure you that 99% of the banking and proprietary traders (J Aron, Vitol, Glencore, Citi, MS, Mercuria, etc.) are pretty much “evil” by any common-place, rational measurement. Half of the traders working at majors are evil with a few companies having higher proportions than others.
By evil, I mean ripping off customers, cheating on contracts, falsifying documents, bribing public and private officials, accepting bribes, kick-backs and gratuities, inflating end of year results, manipulating markets or participating in market manipulations, lying to authorities, reporters, and management, as well as all the non-market immoral behaviour which typify traders of all ilk.
Having worked alongside metals and ags traders, fx traders, and interest rate traders, I know they are pretty similar. I extrapolate that all traders (bonds, stocks, real estate, cars, women, and drugs) are similar.
So, Das is being political, but even such otherwise illuminated insiders as Barry Ritholz still maintain it’s just a few bad apples in finance. This is a joke, of course, since while most of the people working in finance don’t create the structures, sell them to clients, or make trades (all the front office and management), they ALL know what is going on. It’s like claiming you did not rob the store because you were waiting outside in the getaway car.
Expat – I would like to emphatically support your very pertinent observations. I especially appreciate that your perspective comes from ‘inside’. The most dismaying thing for me in Das’ piece was his, to me incredibly naive, notion that few people actually know the fraud and toxicity being perpetrated. And especially that somehow or another ‘top’ management is so removed from the actual mechanics of the operations that they are in some way ‘ignorant’. That is so inane that it is more than ludicrous – it goes to the level of dumb if I can be so blunt. For just a tiny start into supporting that assertion, there are any number of documented articles (many here in Yves’ columns) of risk management functions informing the highest levels of the executive suite of the toxicity and risk of the products. How can anybody be so willfully naive at this point to not understand that almost the entire staffing of these financials is engaged in toxic fraud and completely aware of it – and even intensely competing to see who can create the most lucrative fraud with the highest ‘take’ (or rent as the term is applied).
Why are the more ‘urbane’ members of our culture so reluctant to be clear and blunt about the malefactors ??? The malefactors are intensely aware of this and contemptuously take advantage of it with the arrogant assurance that they will prevail. The meek will NOT inherit the earth – the brazen always have – and always will.
Great comment, with an interesting sociological conjecture (in my own words, that “traders” very generally defined exhibit sociopathic behavior).
Just a thought…if this is what you really believe, Expat, shouldn’t you be publishing the details of your working life? I’m assuming that through your line of work you’re tidily set up. I would buy up ten copies and distribute them to people coming out of RBS and Lloyds with glum faces.
Hey Eleanor…I’m deep in the belly of the beast too. My in-laws were supposed to be ‘cautious investors’ but their bank played fast and loose with their money and lost about 95% of it. They’ve been offered a pathetic sum and are now going through more official channels which causes anxiety and they’re getting real old now. I have loads and loads of similar stories and I live in the back of beyond. I find finance interesting but the people that work in it are morally compromised but can’t see it. I resisted using the word ‘scum’…oh dang!
I apologise for not adding anything to the discussion but your contribution, Expat, made me laugh so much it’s really cheered me up on a dank, windy day in the Scottish Highlands. Cheers buddy!
Lovely interview with some fine comments. The Scottish highlands sounds fine to me, sitting here in the middle of North America, in the belly of the beast.
Great interview, Phil.
The perspective split in this thread is interesting. On both sides there are excellent comments:
1. Fiver at 5:00 am who believes the problems in the Financial Zoo are caused by Elites/Masters.
2. Expat (5:15am) and Hugh (3:30 am) who believe the problems are far more pervasive, tainting all those connected to finance.
No doubt, there is merit to both positions; but there seems to be something missing as well. It’s similar to the analysis of Nazi Germany. Was Germany in the late ’30s the product of Nazi totalitarian elites, or do you include a wider swath of Germans, as in Hitler’s Willing Executioners?
It’s hard to take a stand without succumbing to the rigidity of a permanent Gestalt Shift.
Quick note Dan:
I see no incompatibility between my comments and those of Expat. I simply argue that the pervasive lying, illegality, greed – the entire crude Darwinist complex of sociopathology that is Me Firstism is deeply entrenched across the entire culture, not exclusive to Finance – and that it is what it is precisely because elites have made it so. Who has been calling the shots if not the Managers? I’ve opposed it, quite uselessly, all of my life and have had to simply watch in horror as this anti-humane ideology consumes everything it encounters – on the way, I fear, to some form of fascism as a last stage prior to complete disintegration.
Fiver
I think you make a very important and crucial point. The behavior has become pervasive throughout our entire culture in all aspects. So much commentary, this blog included, are spectators of the details of the ‘decline and fall’ devolution as it happens and do not, perhaps, look up to see where the end result may be – and I am NOT being in the slightest critical since there is so much to consider in each aspect of the devolution.
More directly to your point, it seems beyond question at this point that the plutocracy/oligarchy are now in complete control of this country’s government – from the congress to the administration to every single agency (perhaps one or two excepted). It is axiomatic that once the plutocracy/oligarchy get dominance that their greed and short-sighted self-interest stupidity will bring down the country. The literature abounds – added to recently in great detail by Reinhart and Rogoff. And dismayingly, once they get control it does not take them very long to bring about the demise of their host country – every single time.
One interesting extension of your comment on what form it will take – is indeed what may happen. If the republic paradigm is still intact enough, there could be a restructuring to return to a working capitalism and somewhat reasonably functioning government. But it is a fine line and it is probably uncertain in the case of this country whether that inherent strength is still there – I would desperately hope that it is. If not, then some form of autocracy will take hold. The thing I worry about is whether there are any truly strong individualists in this country who could raise the banner. And on the danger side, 9/11 has insidiously been used to install an incredible autocratic force in this country. I really don’t think it is lacking in sense to feel that the republic is indeed in peril.
Philip, you’re getting some great interviews — was impressed you had David Graeber on here as well. Now if you ever got Phil Mirowski on NC….
Top notch idea. He’s next on my list — which is becoming rather long.
Good job with these Phil and thanks for your efforts. These interviews are a nice feature for the NC blog, it seems to me.
A comment about the physicists and mathematicians.
The models developed based on ‘distributions’ of what ‘might happen’ have a number of absolutely fundamental fatal flaws. Nassim Taleb has done a commendable job of detailing some of the more technical aspects. But his discussions are long enough that they are a little obtuse. A somewhat simplistic but nevertheless informative to consider analogy as to the fatal flaw would be to consider taking a revolver with a thousand round chamber (or pick a number) where only one chamber has a live round. The models all reasonably predict that the likelihood of the live round coming up if you spin the barrel and pull the trigger are very very low (tail probability). So the rationale of the financials is – gosh, it is so unlikely that our company will be blown up. The revolver analogy, though, has the elegance that it is starkly obvious what happens IF the live round comes up – your company is not ‘damaged’ or ‘seriously hurt’ – it is DEAD. Taleb dramatically calls such an event a ‘black swan’ of course. But it still abstracts the reality a little bit – if it happens, it is not an ‘event’ – it is the death of your company.
So the big financials hired all of the physicists/mathematicians to tell them what they wanted to hear (duh) – and that is that their risk was, day in a day out, low. Proceed full speed ahead – actually even faster and more toxic. And guess what ? The live cylinder came up. One of the issues that I don’t understand why isn’t discussed more is that the herd behavior of the financials really creates a situation where the same revolver is aimed at all of their heads. So when the live round comes up, you get ALL of the herd dead at the same time. Anybody who doesn’t think that all of the big financials went insolvent hasn’t been reading these blog pages and others.
One of the devastating things to come out of the bailouts of the financials has been something they must absolutely believe to the very bottom of their psyches. And that is that the government is absolutely determined that they don’t have to even worry in the slightest about the live round. How can anybody NOT think what kind of effect this will have on the entire staffing of the financials who were already addicted to fraudulent activity ??? They are now rightly convinced that the government has taken the aim of the revolver to its own head and ‘who, me worry’ is the mantra of the day. There is NO way to even begin to ameliorate this toxic structure without completely dissolving the financials – and there is no possibility of that happening currently with the plutocracy/oligarchy in next to complete control of the country.
Back to ‘models’. Comments were made about more and more data being incorporated into the models. (These are system models rather than the distribution models). The simplistically fatal nonsense (and it is nonsense) is due to the simple fact that ‘data’ is all historical. Just how much does all of the ‘historical’ data in the world tell you about what macro events are going to happen in the future ???? Heh.
Getting back to the situation where the financials are sure that there is no revolver pointed at their heads, an interesting ‘what if’ or extrapolation would be – what do they really need all of the ‘quants’ for now anyway ? The answer to that extrapolation might show up in declining positions for quants. Should be interesting. There may be some high-priced physicists/mathematicians on the job market.
Pilkington: “I don’t want to make it out that they’re all engaged in fraud — I don’t believe that”
Das: “It’s silly to think that everybody in finance is ‘evil’ or engaged in fraud (though there are people who assert that).”
Right on. Unsavory dealmaking is not against the law. People do not do time for acting badly or ripping off clients who fail to perform their due diligence. At least not in the world of finance. This is America, after all.
And besides, by correctly betting against the housing market, Goldman helped mitigate the crash, and the world is a better place as a result.
If only more firms had shorted mortages as we did, fewer crappy loans would have been written in the first place.
Goldman Sachs: Doing God’s Work since 1869.
In a sense it’s like saying that SS members were not all murderous psychopaths. Possibly not… but the difference is just that they were not locked in a madhouse and their behavior was not just legal but even encouraged in their reality.
Similarly, judging the behavior of financial workers, as cogs of a much larger machine or as willing accomplices of a organized crime is a matter of subjective judgment. I understand that in Argentine they issued a law to make sure that the “cogs” who obeyed orders in political assassination were not tried nor went to jail.
Ethically evil, legally allowed and even encouraged… that’s the “grey zone” where such behaviors dwell.
If there is a Hell there must be a, quite crowded department, known as “the grey zone”. If…
” It struck me that it was a remarkably cynical culture that grew up around this industry in the US — far more so than what formed in Ireland, where I’m from. ”
so… re those 100,000 empty houses in Ireland, what happened? Everybody slipped on a banana peel and took out a mortgage?
The culture of the industry was not as cynical as in the states. It was far more self-deluded. In the US people cynically manipulated each other. In Ireland people believed their own bullshit.