I was asked to give a presentation on the financial crisis. I didn’t want to just do the same old song and dance, so I came up with….The financial crisis will produce a battle
And that is, “What will be the narrative?”
They will tell you that the failure was all moral
But I say it was mostly cognitive
The loans a bank regrets are what I call bad bets.
They made a bigger mess with leverage to excess.
And when they spread their woes they fell like dominoes.
They spoiled each others’ fun with new-style banking runs.
What made it all go wrong?
Just listen to my song.
Capital regulations were sure arbitraged
Bank protection against risk was just a mirage
With securitization, requirements did fall.
With a SIV a bank needed no equity at all.
Capital regulations were unsafe and unsound.
Their perverse implications brought the whole system down.
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There is a dance that goes with it, but it’s hard to dance holding a piece of paper. The thing is, you need the paper to help you remember the lyrics. I guess that’s why professionals have these things called “rehearsals.”
After suffering through that, the audience was relieved that the rest of my presentation was just a talk.
READER COMMENTS
RD
Jul 24 2009 at 10:01am
YouTube performance coming?
fundamentalist
Jul 24 2009 at 11:47am
Excellent, dude!
AJ
Jul 24 2009 at 12:39pm
Hilarious. Arnold, that’s great. You may not have gotten the nobel prize in economics, but can be the poet laureate of economics.
Niccolo
Jul 24 2009 at 4:45pm
Probably one of the best, most concise, and entertaining to think about explanations I’ve heard yet.
Bravo!
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