Things Never Change

From the NYTimes: Some Analysts See an End to Market Rally.

Really? Some do. Some don't. I guess there's always sufficient noobs to make such a headline interesting.

There are many clichés extant as to why times are tough: greed, inequality, hubris. In general, these are bad things, and they always exist they remain perenial causes of bad things. As if Gilian Tett's ridiculous Fool's Gold, which also blames the drive for perpetual innovation--really blew the lid on greed and hubris. Arnold Kling mentions this book as one of the 10 he would use in an economics course, probably because it highlights securitization as a key driver. I'd put that up there with sunspots and El Nino, because the home ownership craze was multifaceted, with hardly any bottlenecks singularly affecting it. CDO's were an enabler, but investors would have put money into homes other ways too, especially with the GSE's guaranteeing so much of it. After that great bit of investigative journalism, we should decide as a society to identify all self-interesting, overconfident people put them on an ice-flow and send them to a watery grave (excepting the good guys who know the good and true, e.g., authors). Good riddance.

I am reading an interesting book on the Roman Empire, and it's really depressing. All the dysfunctional diagnoses and remedies, leading to decline. You get the feeling society's optimal sphere of military control was greater than its optimal governance size, making most of its last 5 centuries a disequilibria of waxing and waning coalitions and dynasties. I don't think our politics is much better. Certainly, the best of the Romans are better than most modern politicians, but bit by bit they misunderstood what was sustainable, how to balance authority with sustainable power. Eventually it was no longer Holy, Roman, or an Empire.

What was most interesting was the part on how Romans needed to raise money, but had to resort to debasing the currency by decreasing the amount of silver in their money, which really took off in the third century AD. As prices rose they were totally flummoxed as to the cause, and blamed this on 'greed', a common enough political response in the twentieth century to excessive money growth. But fundamentally, there was no solution because the size of the Empire was larger than could be sustained, and monetizing the debt was a symptom of this problem. No politician gets power saying we should do less, the assumption is always that a state can achieve whatever it wants if it tries really really hard. Blaming symptoms we don't like, such as greed and hubris, is a constant refrain. Some things never change.