Wednesday, April 06, 2011

Socialization of losses and...

"Privatization of profits and socialization of losses": from goldbugs to Keynesians to trots and anarchists, the chosen syntagma to abbreviate the sequence of events that led us to where we are now. As if socialization signified some definite end to the process of enrichment. The financier stuffs himself, bails out on the check, calls a cab, and goes... where? Monte Cristo?

Even leftists are buying the idea that 'socialization' means the financiers lie in bed all day, waking only at two in the afternoon to pick up their welfare cheque. The lazy scrounging bastards are hoovering up entitlements.

That fiction will be maintained for as long as one believes that the crisis was created by greed-blinded stupidity: the Credit Default Swap cooked up over a boozy weekend in Boca Roca; Quant-fetishism; or the 'ideological' inflexibility of people who have read too much Ayn Rand... all explanations propounded by the popular press and novelistic accounts of the crisis. Those are all reasons put forward for the "shocking" neglect of the "miscalculated" risks incurred by finance before the crash.

The simple fact is that risk was allowed to be miscalculated to an insane degree precisely because crisis had been prepared for so efficiently.
"Socialization of losses" isn't the end of the story, it's just the beginning.