The BBC has produced what it calls a “Series that offers a definitive account of what led to the greatest financial crisis in eighty years,” titled The Love of Money. The series is noteworthy because it provides a glimpse into the minds of those who were/are in the driver’s seat, and whose decisions, for better or worse, brought us to the current mess.
To be honest, I’m completely shocked by the admission of former Lehman Brothers CEO, Dick Fuld, that he simply didn’t know what had happened. You can see Fuld scolding the media, as if journalists had anything to do with his irresponsible business decisions. The cherry on top has to be another interviewee explaining that Lehman’s owed $44 for every dollar they had. How can one sustain that in the long run? You can’t, you couldn’t, but one of the supposed brightest minds on Wall Street simply “didn’t know what had happened,” couldn’t read the writing on the wall.
So, if Fuld was the initial villain, it’s now supposed that Alan Greenspan caused the problem many years ago by not adequately regulating credit default swaps, despite warnings from financial authorities, and for keeping interest rates too low for too long, thus contributing to the creation of the notion of free money. Since Greenspan was the puppet master who dictated the line that central bank heads worldwide should follow, his oversight is the ultimate culprit. Greenspan defended his position arguing what any sensible person would say: if you own or run a large financial institution, or any business, it’s best for you to take care of the store and not do anything stupid, like lending money to people you know can’t pay it back, regardless of whether the money you’re lending was given to you “for free” or not. That’s pretty straightforward, right? Obviously, no one told the bankers that there are no free lunches. Greenspan’s position was based, I think, on the belief that any businessman is doing their best to maximize profits while appropriately considering risk and ensuring investments are backed by some tangible value, not at a ratio of 44 to 1. Greenspan is, of course, a principled man who acted as such; his mistake was thinking that everyone in the business world shared that particular premise with him.
And what about the politicians in charge who pressured banks to lend money for electoral gains? Enter Fuld, who must have thought that if the government didn’t force banks to lend, so that poor people could climb the property ladder, then it was logical that when Joe Doe defaulted on his mortgage payments, triggering a cataclysmic crisis, he could shift the blame to those who pushed, or anyone but himself. He miscalculated and, in doing so, ended up destroying the trust that shareholders and partners placed in him and, of course, his reputation.
This whole matter is supposed to be irrefutable proof that capitalism doesn’t work, and I regret to disagree. Because what it shows, quite clearly, is that for humans, greed and the prospect of improvement, personal enrichment, easy money, a handout—in short, personal gain—often get in the way of reason or collective well-being, in almost every case. This isn’t a problem endemic to capitalism; it’s human nature, and that’s precisely why communism will never prevail. Examples of this behavior can be seen everywhere, from Wall Street to Westminster, Harare, Havana, Caracas, or Seoul. Human errors are blameworthy, yet capitalism remains the system that offers the most individual freedom.