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Whoops Why Everyone Owes Everyone and No One Can Pay

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Lanchester has mastered the finer points of finance so you don't have to In Whoops he explains in language everyone can understand what really happened and what on earth we do next About the Author John Lanchester is a journalist novelist and winner of the Whitbread First Novel Award He is a regular contributor to the London Review of Books and the New Yorker with a monthly column in Esuire John's piece on our love affair w. FROM DrManu KalaThe Head of File and Auditing Department BANK OF AFRICA BOA Ouagadougou Burkina Faso West Africa REMITTANCE OF US205; BILLION CONFIDENTIAL IS THE CASE VERY URGENT ATTENTION My dearest SirThis message might meet you in utmost surprise however it will be my Urgent need for foreign partner that made me to contact you for this transaction I am banker by profession from Burkina Faso in West Africa and currently holding the post of director Auditing and accounting unit of the bank This is major opportunity which friend have given to me your email so pardon for that I have the opportunity of transferring the left over Funds 205 billion of one of my bank clients who died Along with his entire family in the plane crash All expenses incurred by you and me in this transaction will be deducted out from the 10% of the total fund before the sharing of the fund according to the part of the percentages agreed Please I want you to understand that a stitch in time saves nine so write back and tell me This payment will be effected through Swift Telegraphic Transfer Your Urgent response is needed for immediate transfer of this fund in to your receiving bank accountWith most deep wish for a speedy transaction enriching both partiesDr Manu kalaHey Carl look at this email I just got this sounds great We should do this This is just what Citibank needs It could really get us out of the hole we dug ourselves in Shit Dave this could save our asses 20 billion This guy is is just walking into our lives with his 20 billion and he's going to make everything good again Dr Manu Kala I love youHe don't know who he be dealing with brotherHe sure don't Now then let's not tell the boss about this This will just be our thing rightRight A Color Sampler you don't have to In Whoops he explains in language everyone can understand what really happened and what on earth we do next About the Author John Lanchester is a journalist novelist and winner of the Whitbread First Novel Award He is a regular contributor to the London Review of Books and the New Yorker with a monthly column in Esuire John's piece on our love affair w. FROM DrManu KalaThe Head of File and Auditing Department BANK OF AFRICA BOA Ouagadougou Burkina Faso West Africa REMITTANCE OF US205; BILLION CONFIDENTIAL IS THE CASE VERY URGENT ATTENTION My dearest SirThis message might meet The Stars Are Made of Tears you in utmost surprise however it will be my Urgent need for foreign partner that made me to contact Mirrored you for this transaction I am banker by profession from Burkina Faso in West Africa and currently holding the post of director Auditing and accounting unit of the bank This is major opportunity which friend have given to me Yuppies Invade My House at Dinnertime your email so pardon for that I have the opportunity of transferring the left over Funds 205 billion of one of my bank clients who died Along with his entire family in the plane crash All expenses incurred by Her Secret Santa you and me in this transaction will be deducted out from the 10% of the total fund before the sharing of the fund according to the part of the percentages agreed Please I want Those Annoying Post Bros. you to understand that a stitch in time saves nine so write back and tell me This payment will be effected through Swift Telegraphic Transfer Your Urgent response is needed for immediate transfer of this fund in to The Taming of the Tights (Misadventures of Tallulah Casey, your receiving bank accountWith most deep wish for a speedy transaction enriching both partiesDr Manu kalaHey Carl look at this email I just got this sounds great We should do this This is just what Citibank needs It could really get us out of the hole we dug ourselves in Shit Dave this could save our asses 20 billion This guy is is just walking into our lives with his 20 billion and he's going to make everything good again Dr Manu Kala I love Breeding the Coachs Wife (Men Only youHe don't know who he be dealing with brotherHe sure don't Now then let's not tell the boss about this This will just be our thing rightRight

Read & Download ↠ PDF, eBook or Kindle ePUB free µ John Lanchester

Ith the City 'Cityphilia' generated much response on its publication in January 2008 and indeed predicted a worldwide crash based on the misuse of financial derivatives In October 2008 he charted the crisis as it had developed over the year in 'Cityphobia' which also attracted much attention as a piece that explained not only what had happened but how we felt about it John was raised in South East Asia and now lives in Lond. From time to time I like to read about the recent financial collapse in an effort to try to understand what happened This book is written by an author who normally writes novels so he knows how to explain things very simply In the early part of the book it was so simple that I thought it might insult my intelligence But my mind got stretched soon enough He used simple fictional examples to try to illustrate how each new financial instrument worked I think I almost understand now what derivatives are but don't ask me to explain itWhen it's all over and we look back on what happened it's a case where all the profits from the boom years went into private hands and when things went bust it was public money taxpayers that cleaned up the mess It's anything but fair Looking to the future the author says that we will probably look back on the 20 years prior to the financial collapse as the golden years because our future economy will be weighted down paying off the rescue payments Even if the resulting national debts are not paid off the lingering burden of paying the interest costs will limit public spending in other areasIt’s all a lesson in how financial incentives can lead intelligent people to do stupid things When I say stupid I’m thinking of the college educated math whizzes who calculated the odds of a nation wide collapse in housing prices to be less than on in a billion ie impossible The problem was that their models were based on history that did not include a boom in subprime mortgages ie a changed condition The following uote from the book is a good illustration of why statistics are not good at predicting financial markets “how do we know that the normative distribution applies to events in financial markets The way in which people move and jostle around a room might be plotted and mapped with statistical tools and shown to resemble something like a normative distribution—sometimes people are over here somewhere in the middle But shout “Fire” and the movement of people in the room will look very different—it will feature a stampede toward the exits” Perhaps those math whizzes need to study chaos theoryOne interesting observation is that not a single bank in Canada has gone broke during the past couple years The author suggests presumably in jest that they were spared because of their propensity of not act like their ultra free wheeling capitalistic neighbors to the south Their desire to not be like us saved them from doing stupid stuff like us So they owe us a big word of thanks for our being such a positive influence on them Actually there is a rational explanation for the Canadians conservatism in banking They had their own banking crisis about a decade ago and they fixed it with stringent banking laws The rest of the world in contrast moved into the direction of total deregulationOn the lighter side here’s my favorite uote from the book “I’d like to think he would have enjoyed the old joke about accountants “What’s two plus two” “What would you like it to be” The above uote is referring to the fact that Luca Pacioli the first person to write in the 15th Century a book that laid out the method of double entry bookkeeping was also a writer about magic in the sense of conjuring No doubt if he were living today he would have also written a book about mortgage backed derivatives Speaking of big words have you heard of the following words Collateralized Debt Obligations Collateralized Debt Swaps Synthetic Asset Backed Security Off Shore Special Purpose EntityThis book does a good job at trying to explain what these words mean Using tools such as these the big investment banks figured out ways to make money available for loans “risk free” Their system allowed them to keep loaning the same dollar hundreds of times over without any of the corresponding risk obligations showing up on their balance sheets This led to an increase in the amounts of funds available to be loaned With lots of new money to loan there was money than good borrowers Suddenly subprime loans to people who had previously been considered not credit worthy looked very appealing The loan creator didn’t care if it could be paid off because the mortgage was immediately sold to others This in flow of money to the housing market increased the completion among buyers thus resulting in an artificial increase to the cost of houses I think the core cause of the financial collapse can be summarized by the following three statements 1 Risk was separated from the originator of the loan2 Investors and insurance companies who took on the risk were willing to believe statistical euations based on historical data that indicated the risk was virtually nonexistent 3 When lots of money is suddenly being made by others nobody wants to be left out This book leaves me with this unanswered uestion How can something so obviously crazy in hindsight not be recognized as such when it was happeningThe following review is from PageADay's Book Lover's Calendar for 102312CURRENT AFFAIRSThe New York Times calls it “angry enough to clear your sinuses” as well as “thoughtful funny and unpretentious” There have been many books explaining the real estate and credit market crashes and the resulting recession but few are as witty and easy to swallow as IOU British journalist John Lanchester gives us the big picture and synthesizes the data in a way that is pleasurable for insiders and financial amateurs alike IOU WHY EVERYONE OWES EVERYONE AND NO ONE CAN PAY by John Lanchester Simon Schuster 2010 Free Dirt year in 'Cityphobia' which also attracted much attention as a piece that explained not only what had happened but how we felt about it John was raised in South East Asia and now lives in Lond. From time to time I like to read about the recent financial collapse in an effort to try to understand what happened This book is written by an author who normally writes novels so he knows how to explain things very simply In the early part of the book it was so simple that I thought it might insult my intelligence But my mind got stretched soon enough He used simple fictional examples to try to illustrate how each new financial instrument worked I think I almost understand now what derivatives are but don't ask me to explain itWhen it's all over and we look back on what happened it's a case where all the profits from the boom Møllehave - et liv har fem akter years went into private hands and when things went bust it was public money taxpayers that cleaned up the mess It's anything but fair Looking to the future the author says that we will probably look back on the 20 All Our Trials years prior to the financial collapse as the golden A Color Sampler years because our future economy will be weighted down paying off the rescue payments Even if the resulting national debts are not paid off the lingering burden of paying the interest costs will limit public spending in other areasIt’s all a lesson in how financial incentives can lead intelligent people to do stupid things When I say stupid I’m thinking of the college educated math whizzes who calculated the odds of a nation wide collapse in housing prices to be less than on in a billion ie impossible The problem was that their models were based on history that did not include a boom in subprime mortgages ie a changed condition The following uote from the book is a good illustration of why statistics are not good at predicting financial markets “how do we know that the normative distribution applies to events in financial markets The way in which people move and jostle around a room might be plotted and mapped with statistical tools and shown to resemble something like a normative distribution—sometimes people are over here somewhere in the middle But shout “Fire” and the movement of people in the room will look very different—it will feature a stampede toward the exits” Perhaps those math whizzes need to study chaos theoryOne interesting observation is that not a single bank in Canada has gone broke during the past couple The Stars Are Made of Tears years The author suggests presumably in jest that they were spared because of their propensity of not act like their ultra free wheeling capitalistic neighbors to the south Their desire to not be like us saved them from doing stupid stuff like us So they owe us a big word of thanks for our being such a positive influence on them Actually there is a rational explanation for the Canadians conservatism in banking They had their own banking crisis about a decade ago and they fixed it with stringent banking laws The rest of the world in contrast moved into the direction of total deregulationOn the lighter side here’s my favorite uote from the book “I’d like to think he would have enjoyed the old joke about accountants “What’s two plus two” “What would Mirrored you like it to be” The above uote is referring to the fact that Luca Pacioli the first person to write in the 15th Century a book that laid out the method of double entry bookkeeping was also a writer about magic in the sense of conjuring No doubt if he were living today he would have also written a book about mortgage backed derivatives Speaking of big words have Yuppies Invade My House at Dinnertime you heard of the following words Collateralized Debt Obligations Collateralized Debt Swaps Synthetic Asset Backed Security Off Shore Special Purpose EntityThis book does a good job at trying to explain what these words mean Using tools such as these the big investment banks figured out ways to make money available for loans “risk free” Their system allowed them to keep loaning the same dollar hundreds of times over without any of the corresponding risk obligations showing up on their balance sheets This led to an increase in the amounts of funds available to be loaned With lots of new money to loan there was money than good borrowers Suddenly subprime loans to people who had previously been considered not credit worthy looked very appealing The loan creator didn’t care if it could be paid off because the mortgage was immediately sold to others This in flow of money to the housing market increased the completion among buyers thus resulting in an artificial increase to the cost of houses I think the core cause of the financial collapse can be summarized by the following three statements 1 Risk was separated from the originator of the loan2 Investors and insurance companies who took on the risk were willing to believe statistical euations based on historical data that indicated the risk was virtually nonexistent 3 When lots of money is suddenly being made by others nobody wants to be left out This book leaves me with this unanswered uestion How can something so obviously crazy in hindsight not be recognized as such when it was happeningThe following review is from PageADay's Book Lover's Calendar for 102312CURRENT AFFAIRSThe New York Times calls it “angry enough to clear Her Secret Santa your sinuses” as well as “thoughtful funny and unpretentious” There have been many books explaining the real estate and credit market crashes and the resulting recession but few are as witty and easy to swallow as IOU British journalist John Lanchester gives us the big picture and synthesizes the data in a way that is pleasurable for insiders and financial amateurs alike IOU WHY EVERYONE OWES EVERYONE AND NO ONE CAN PAY by John Lanchester Simon Schuster 2010

John Lanchester µ 5 review

We are to use a technical economic term screwed The cowboy capitalists had a party with everyone's money and now we're all paying for it What went wrong And will we learn our lesson or just carry on as before like celebrating surviving a heart attack with a packet of Rothmans If you want to know but are the sort of person who finds it hard to tell the difference between a CDO a CDS an MBS and a toasted cheese sandwich John. This brilliant scary little book is the first account I've seen of the credit crunch which truly made sense I read it in a day and if you're at all interested in politics economics or current affairs I can't recommend it too highly Lanchester is an acclaimed novelist which shows in the witty and stylish writing; here he also proves that he's a great investigative journalist The credit crunch was a first magnitude disaster and at several points I found myself comparing Whoops to the magisterial report written after the Columbia Shuttle crash in 2003 The Columbia Investigation Board looked at the accident from three perspectives First they had to determine the proximate cause of the accident in engineering terms what specific mechanical failure made the Shuttle break up over Texas and crash Second they wanted to know what went wrong at the managerial level how did this problem slip through the elaborate net of safety checks that preceded the launch Third and most far reachingly they tried to understand the problem at the level of the whole NASA organizational ethos Why was management focussing on the wrong targets to the point where safety standards could erode and allow a catastrophe like this to happen As everyone now knows their answers were as follows The proximate cause of the accident was a piece of falling foam which cracked the front edge of the Shuttle's wing allowing incandescent gas to get into it on reentry and melt everything inside The managerial problem was in a now famous phrase NASA's broken culture of safety Even when things had previously been considered dangerous a tendency developed to assume that they were in fact safe if they had been seen to occur before without an accident having happened Finally the Board concluded that NASA had lost its way No one knew any what they were trying to achieve and the artificial nature of their main goal to keep building the probably useless Space Station meant that senior managers were unable to prioritise sensiblySo back to the credit crunch The Western World's banks filled up with toxic debt and very nearly fell from the skies Why And how I'd heard many of the pieces before subprime mortgages CDOs deregulation excessive leveraging But I couldn't put it all together Some American and British banks had lent money to people who rather too often weren't capable of paying it back Was that such a bad mistake that it had the potential to break the whole world's financial systems And if it was how could they have been so stupid as to allow it to happenHere's a précis of Lanchester's explanation; I'll start as he does with the broken culture of safety You deposit your money in the bank and they lend it out at interest As long as they do this carefully and are sure enough of getting the money back they make money for you and money for themselves The bank's business is to manage the associated risk of not getting back the money that it's loaned out A crucial issue is leverage The bank would ideally like to lend out as much money as possible so that it can make as much profit as possible At the same time caution dictates that the bank shouldn't make bets that are too large because that increases the probability of something going wrong If too many people default on their loans the bank will run out of money The leverage is roughly the ratio between how much money the bank loans out and how much it's keeping to cover loans that default By 2008 British and US banks had a leverage of about 50 So they had to be very careful because if even a small proportion of their loans went sour they would be bankrupt Evidently they weren't sufficiently carefulWhy Well some very smart people had recently invented these complex financial instruments called Collateralized Debt Obligations CDOs They let a bank package up a bunch of debt pull it apart into various pieces with different associated levels of risk and sell those pieces on to other banks The CDO was basically insurance on the debt The banks loved this idea because once they'd turned their debts into CDOs and sold them to other people those debts weren't formally counted as debts any They could still pick up interest on them but they were free to loan out money and make larger profits Unfortunately the mathematics of CDOs is incredibly complex Even if you have a PhD in statistics you won't necessarily understand it very well I'm pretty sure that the CEOs of these big banks who were making the key decisions didn't all have PhDs in statistics The banks loaned money to every home owner they could find who might be considered a reasonable risk but they still wanted profits They started to wonder about the other people the ones who normally wouldn't be considered reasonable risks; people with bad credit histories or unsafe jobs or no jobs at all I had not previously come across the phrase ninja mortgage no income no job or assets Bankers astonishingly decided that they could sell ninja mortgages It was all a uestion of managing risk Suppose there was some mathematical way to combine a lot of risky propositions and turn them into a safe bet It's not as far fetched as it seems You'd be insane to bet your life on the toss of a coin But suppose someone said that they'd flip a coin 100 times If it came up heads at least five times you'd collect a million dollars but if there were 96 or tails you'd die I'd definitely consider this offerSo there were all these uncertain subprime mortgages and what the bankers wanted was some way to use the magic of CDOs to turn them into safe bets And now we come to the piece of falling foam a part of the story that I previously hadn't heard at all Another very smart mathematician thought he'd found a solution using the so called Gaussian copula function Here it is the formula which nearly destroyed Western civilizationThe Gaussian copula function it was claimed did the magic trick and let bankers combine all those risky bets into sure fire propositions The credit rating agencies were so convinced that they gave the resulting CDOs triple A ratings they thought that they were as secure as US Government debt Alas it turned out that the mathematics wasn't as clear cut as the bankers had believed Well hardly anyone understood it and it had never been seriously tested Worse the CDOs had hidden the original debts so thoroughly that people buying them didn't actually know what they were based on And worst of all the bankers had somehow persuaded the US and British governments to deregulate the market in CDOs which by now was worth tens of trillions of dollars an amount comparable to the whole world's GNP Unrestricted trade in CDOs was legal but it obeyed the letter of the law while completely flouting its spirit As Lanchester said it was rather like discovering that if you drove at than 70 in an area where the speed limit was 30 the speed cameras couldn't see you That's roughly what the bankers were doingWhen the US housing market went into a downturn the subprime loans started defaulting The Gaussian copula functions didn't model this situation correctly because the statistics used to make the estimates were all very recent and came from a rising market The sure fire bets weren't sure fire at all and unrestricted trade in CDOs had spread these bad bets everywhere For a few days it seemed possible that the entire world banking system would collapse And what was it that made this whole absurd adventure possible in the first place How could the CEOs of the large banks risk the futures of their corporations and indeed their countries on a piece of untested mathematics that they didn't even understand Lanchester has two answers One is plain old fashioned greed They had a lot and they wanted and they didn't think that they personally were risking very much Indeed these people are still mostly in their jobs and the ones whose banks have collapsed have retired with fat pensions They called it right The second answer was the faith many people had that markets were the correct answer to everything Markets were smarter than people and people shouldn't presume to try and control them But with the answers now in it seems that Adam Smith Milton Friedman and the rest of that crowd were wrong Markets aren't always smarter than peopleMy personal feeling is that the credit crunch concluded the story of the 20th century which was largely a demonstration of what happens when people believe in things without adeuate grounds to support those beliefs An absolute belief in the excellence of the free market turned out to be not very much sensible than an absolute belief in the superiority of the Aryan race or an absolute belief in the dictatorship of the proletariat I'm completely with Kurt VonnegutSay what you will about the sweet miracle of unuestioning faith I consider a capacity for it terrifying and absolutely vileHaving seen the above examples it would be nice to hope that people will be sceptical in future But I wouldn't count on it How Bizarre you want to know but are the sort of person who finds it hard to tell the difference between a CDO a CDS an MBS and a toasted cheese sandwich John. This brilliant scary little book is the first account I've seen of the credit crunch which truly made sense I read it in a day and if The Complete Elmore you're at all interested in politics economics or current affairs I can't recommend it too highly Lanchester is an acclaimed novelist which shows in the witty and stylish writing; here he also proves that he's a great investigative journalist The credit crunch was a first magnitude disaster and at several points I found myself comparing Whoops to the magisterial report written after the Columbia Shuttle crash in 2003 The Columbia Investigation Board looked at the accident from three perspectives First they had to determine the proximate cause of the accident in engineering terms what specific mechanical failure made the Shuttle break up over Texas and crash Second they wanted to know what went wrong at the managerial level how did this problem slip through the elaborate net of safety checks that preceded the launch Third and most far reachingly they tried to understand the problem at the level of the whole NASA organizational ethos Why was management focussing on the wrong targets to the point where safety standards could erode and allow a catastrophe like this to happen As everyone now knows their answers were as follows The proximate cause of the accident was a piece of falling foam which cracked the front edge of the Shuttle's wing allowing incandescent gas to get into it on reentry and melt everything inside The managerial problem was in a now famous phrase NASA's broken culture of safety Even when things had previously been considered dangerous a tendency developed to assume that they were in fact safe if they had been seen to occur before without an accident having happened Finally the Board concluded that NASA had lost its way No one knew any what they were trying to achieve and the artificial nature of their main goal to keep building the probably useless Space Station meant that senior managers were unable to prioritise sensiblySo back to the credit crunch The Western World's banks filled up with toxic debt and very nearly fell from the skies Why And how I'd heard many of the pieces before subprime mortgages CDOs deregulation excessive leveraging But I couldn't put it all together Some American and British banks had lent money to people who rather too often weren't capable of paying it back Was that such a bad mistake that it had the potential to break the whole world's financial systems And if it was how could they have been so stupid as to allow it to happenHere's a précis of Lanchester's explanation; I'll start as he does with the broken culture of safety You deposit MahaBrahmana your money in the bank and they lend it out at interest As long as they do this carefully and are sure enough of getting the money back they make money for Investigative Poetry you and money for themselves The bank's business is to manage the associated risk of not getting back the money that it's loaned out A crucial issue is leverage The bank would ideally like to lend out as much money as possible so that it can make as much profit as possible At the same time caution dictates that the bank shouldn't make bets that are too large because that increases the probability of something going wrong If too many people default on their loans the bank will run out of money The leverage is roughly the ratio between how much money the bank loans out and how much it's keeping to cover loans that default By 2008 British and US banks had a leverage of about 50 So they had to be very careful because if even a small proportion of their loans went sour they would be bankrupt Evidently they weren't sufficiently carefulWhy Well some very smart people had recently invented these complex financial instruments called Collateralized Debt Obligations CDOs They let a bank package up a bunch of debt pull it apart into various pieces with different associated levels of risk and sell those pieces on to other banks The CDO was basically insurance on the debt The banks loved this idea because once they'd turned their debts into CDOs and sold them to other people those debts weren't formally counted as debts any They could still pick up interest on them but they were free to loan out money and make larger profits Unfortunately the mathematics of CDOs is incredibly complex Even if The Mortal Heart (Beautiful Creatures: The Untold Stories, you have a PhD in statistics The Wild West you won't necessarily understand it very well I'm pretty sure that the CEOs of these big banks who were making the key decisions didn't all have PhDs in statistics The banks loaned money to every home owner they could find who might be considered a reasonable risk but they still wanted profits They started to wonder about the other people the ones who normally wouldn't be considered reasonable risks; people with bad credit histories or unsafe jobs or no jobs at all I had not previously come across the phrase ninja mortgage no income no job or assets Bankers astonishingly decided that they could sell ninja mortgages It was all a uestion of managing risk Suppose there was some mathematical way to combine a lot of risky propositions and turn them into a safe bet It's not as far fetched as it seems You'd be insane to bet Aramaic Light on Genesis your life on the toss of a coin But suppose someone said that they'd flip a coin 100 times If it came up heads at least five times Souichis Diary of Curses; 双一の呪い日記; Sōichi no Noroi no Nikki you'd collect a million dollars but if there were 96 or tails درد زمانه you'd die I'd definitely consider this offerSo there were all these uncertain subprime mortgages and what the bankers wanted was some way to use the magic of CDOs to turn them into safe bets And now we come to the piece of falling foam a part of the story that I previously hadn't heard at all Another very smart mathematician thought he'd found a solution using the so called Gaussian copula function Here it is the formula which nearly destroyed Western civilizationThe Gaussian copula function it was claimed did the magic trick and let bankers combine all those risky bets into sure fire propositions The credit rating agencies were so convinced that they gave the resulting CDOs triple A ratings they thought that they were as secure as US Government debt Alas it turned out that the mathematics wasn't as clear cut as the bankers had believed Well hardly anyone understood it and it had never been seriously tested Worse the CDOs had hidden the original debts so thoroughly that people buying them didn't actually know what they were based on And worst of all the bankers had somehow persuaded the US and British governments to deregulate the market in CDOs which by now was worth tens of trillions of dollars an amount comparable to the whole world's GNP Unrestricted trade in CDOs was legal but it obeyed the letter of the law while completely flouting its spirit As Lanchester said it was rather like discovering that if Early Medieval you drove at than 70 in an area where the speed limit was 30 the speed cameras couldn't see Freakshow you That's roughly what the bankers were doingWhen the US housing market went into a downturn the subprime loans started defaulting The Gaussian copula functions didn't model this situation correctly because the statistics used to make the estimates were all very recent and came from a rising market The sure fire bets weren't sure fire at all and unrestricted trade in CDOs had spread these bad bets everywhere For a few days it seemed possible that the entire world banking system would collapse And what was it that made this whole absurd adventure possible in the first place How could the CEOs of the large banks risk the futures of their corporations and indeed their countries on a piece of untested mathematics that they didn't even understand Lanchester has two answers One is plain old fashioned greed They had a lot and they wanted and they didn't think that they personally were risking very much Indeed these people are still mostly in their jobs and the ones whose banks have collapsed have retired with fat pensions They called it right The second answer was the faith many people had that markets were the correct answer to everything Markets were smarter than people and people shouldn't presume to try and control them But with the answers now in it seems that Adam Smith Milton Friedman and the rest of that crowd were wrong Markets aren't always smarter than peopleMy personal feeling is that the credit crunch concluded the story of the 20th century which was largely a demonstration of what happens when people believe in things without adeuate grounds to support those beliefs An absolute belief in the excellence of the free market turned out to be not very much sensible than an absolute belief in the superiority of the Aryan race or an absolute belief in the dictatorship of the proletariat I'm completely with Kurt VonnegutSay what Pompeii at Dusk (Fresco Nights saga Book 2) you will about the sweet miracle of unuestioning faith I consider a capacity for it terrifying and absolutely vileHaving seen the above examples it would be nice to hope that people will be sceptical in future But I wouldn't count on it