Wednesday, December 24, 2008



No doubt it will, and the anticipation is mounting.  But the idealization -- the glorification, in some places  -- is mounting as well.  Some can't wait for it to happen, some dread the moment, some believe it will never occur.  Obama, as Newsweek put, is "the one," inheriting the legacy of every great historical figure:  Lincoln, FDR, Kennedy.  We seem to need a Saviour right now, and he is the inevitable candidate.

He himself, I suspect, it too smart to go for this, and consciously we are too.  But I suspect we don't know how much we are coming around to buying into into it.  A number of pundits thought his choice of Hillary Clinton to head the State Department was the mistake, but that has died down amid the choruses of praise for most of his appointments.  More recently, his invitation to the evangelical minister Rick Warren to speak at his inaugural aroused a storm of protest among gays, but that too has died down, as we are reminding ourselves of the importance of tolerating a diversity of voices.  In one way, of course, Obama is showing really thoughtful leadership, but how long before he stumbles?  Or we allow him to stumble?  Or we want him to stumble?

Perhaps I am not the only one to have wondered if the widespread anxiety about his being assassinated masked an underlying desire for him to fall.  To be sure, inspiring and charismatic leaders have been assassinated, including, of course, Lincoln and Kennedy.  But it would be a mistake to underestimate the role of envy in politics, or simply the underside of idealization and hope.  In investing so much in Obama, we might wonder who are we protecting?

He will make mistakes, and we will be disappointed.  That simply can't be helped, and with so many overwhelming problems to solve it is likely to happen soon.  But it is not too late now to think about protecting him and us from the backlash of denigration and rage that will accompany those failures and, perhaps, spoil the realistic leadership he is able to offer us.

Monday, December 15, 2008


"Something is Happening Here"

Our minds are boggled by the recent scandals.   What is so hard to grasp is how Governor Blagojevich's could think his attempts to sell Obama's senate seat would not be uncovered?  How could Bernard Madoff's believe his 50 billion dollar Ponzi scheme could succeed.  Where is reality in this?

It is not as difficult to grasp how others are deceived by such acts.  The persistence of old perceptions and the desire to believe can easily override normal doubt, particularly in a group context where the group sets up norms to which members silently conform.  But how can the "perpetrators" come to believe that they will not be found out?  Are they sociopaths, without the regulating influence of conscience?  Are they in a state of manic denial?  Could they be psychotic?  Clearly, they seem to be narcissistic, but that is hardly enough to account for such extravagant misbehavior.

These are the kinds of explanations we tend to use to account for such individual acts of self-deception, but none of them seem to fit what we know about the personalities involved.  How does fraud lose touch with reality?

First of all, there must be something about our culture that supports such audacious gambles, such extraordinary ambitions.  We have seen again and again over the past decades a number of people who seemingly arise out of nowhere to possess great wealth and fame.  It has become something of a norm, and because we tend to assume that people are responsible for their own achievements and celebrity we discount the collective efforts that lie behind such accomplishments.  In effect, we encourage a kind of delusion about what it takes to succeed.  False expectations and standards are set up.

But while that may explain how such unrealistic expectations are established, how they become goals for many to aspire to, that is not enough to explain these scandals.  I suspect that what happened here is a more gradual process.  Each man, aiming for great success, no doubt, ventured to break the rules bit by bit, starting small and then venturing more as they found they got away with it.  A little graft, to test the waters, a little cooking of the books.

Their beginning successes, no doubt, then convinced them to venture more, to up the ante -- and that seemed to work as well.  At some point, they must have become convinced that the old realities just did not apply.  And it must have been that they found supporters and assistants who seemed to confirm their new beliefs along the way and they lost touch with or severed connections with those who might have challenged their judgment.  As they ventured further and further out on the thin ice, it did not break;  they became more and more confident.  Maybe the ice wasn't so thin after all.

Another analogy:  if you put frogs in a pot of cold water and then turn on the heat, the frogs will stay in the pot until they die.  There is no signal to warn them of danger, and so they stay put until it is to late.  Indeed, they may well be enjoying their warmer environment as they lose touch with it.  Similarly our consciousness can fail to warn us about a significant shift in our environment, until is too late to change.   

In both cases, it seem clear that there were warning signs;  suspicions were aroused.  Perhaps the lesson here is that others need to be more vigilant in following up the signs of fraud, but also that we need to be more careful to speak up in the presence of delusions.  Fraud of such magnitude requires assistance if not outright collusion.  It remains to be seen who will stand accused or convicted in these cases.  But it cannot be that these were simply individual acts.

Monday, December 8, 2008



For two hundred years our economy has endured vicious cycles of boom and bust, huge surges of capital accumulation followed by devastating contractions.  This not only profoundly affected investors (formerly known as capitalists) but shaped the lives of workers and all those who supplied them with food, clothing and shelter.  Looking back, if there is one thing which we learned from this was the need for regulation and oversight.  The investors, too preoccupied with the lure of profit,  do not attend to that, and the workers, of course, too dependent on others, cannot change the course of events.

How did we forget what we have learned?  How did we neglect the lessons of our economic history?

Now as we are discovering this lesson all over again, trying to put into place the oversight and controls needed to manage this essentially unruly system, we need to think about why we forgot.  What we don't know we know is how investors cannot be entrusted with the job of overseeing the system.

There are I think two prominent reasons.

1) After the collapse of the Soviet Union, the ideology of the free market clouded our collective judgement.  More accurately, those who stood to profit from the expansion of business opportunities, deregulation, and privatization, used that ideology to inhibit any attempt to control their profits.  James Galbraith has brilliantly outlined how this happened in his new book, The Predator State.

2) Gradually we all became invested through pension funds, savings accounts, etc. etc.  As a result we too became blinded to the risk.  Those who took out subprime mortgages or home equity loans, those who ran up credit card balances, who overextended themselves in our new credit economy -- they all lost the objectivity needed to keep in mind our economic history and the risk built into it.

As Obama puts together his new economic team and as we individually struggle to get out of this recession, how can we work to remember what we so easily forgot?

Tuesday, December 2, 2008

Team of Rivals?


There is so much criticism of Obama's choice of Hillary for Head of the State Department - and of others in his new team. Many believe he was influenced by Doris Kearn's book about Lincoln's cabinet, and very possibly he was. There is an argument to be made for keeping one's rivals engaged and close to the decision making process. On the other hand, rivals can and often do fight to the death, or at least undermine their leader.

The key is strong and determined leadership -- and that may be what Obama has confidence in being able to assert in bringing such powerful people into his cabinet.

There is another precedent and analysis that is relevant to this discussion: the role of Kennedy’s advisors in preparing for the disastrous Bay of Pigs invasion, and a few months later their response to the Cuban missile crisis. As analyzed by Irwin Janis, the Yale Sociologist, the team of advisors went way off course by virtue of “groupthink,” a process in which differences and debate were silenced and a consensus emerged without adequate testing. The next time around, as Soviet ships carrying missiles to Cuba approached, Kennedy encouraged vigorous debate in his team, a process that allowed him to think the problem through more thoroughly and arrive at an effective solution.

The team that Obama is putting together is very strong, a group of capable and independent thinkers – every bit as strong as the team Kennedy had around him over 45 years ago.  Obama appears to have confidence in his ability to tolerate conflict and dissent and to learn from it. Bush is notoriously conflict averse, no doubt a key reason he allowed Chaney essentially to take over his administration by operating behind the scenes and suppress dissent. Obama may see the benefits in the frank and full display of opinions as the run up to good decisions.

Maybe he wants a real team.

Saturday, November 22, 2008


What You Don't Want to Know

Countless numbers of people in the past few weeks have confessed to me they are not able to look at their balance sheets.  Mostly these are not professional investors -- but the list does include several portfolio managers I see regularly.  They can review their client's positions, of course, particularly when their clients call up in panic, but they can't seem to look their own losses in the eye.  Why?

Obviously bad news is unwanted.  On the other hand, little is to be gained from ignorance -- and more can be lost.  I think that when people confess to avoiding the facts, they are relying on this common sense idea that the news is just too painful to bear.  But if we dig deeper there are other motives, several in fact.

An obvious one is that knowing the extent of the damage creates a demand for action. It reminds people that they could do something about it, that they have the ultimate responsibility to act on their own behalf.  In many cases, though, this responsibility can be more frightening than simply accepting the loss, especially if don't let yourself know exactly  how much of a loss it is.  Vagueness and uncertainty can be preferable to feeling incompetent or irresolute.

Then there is the defense of optimism.  We can deny the fact of the damage or the extent of our losses if we believe that it will all work out in the end.  Markets go up and then they go down -- and then they go up again.  And our recent history seems to confirm that fact, along with the fact that when they go up again they eventually go up even higher than before.  All you need is patience -- sometimes a lot of patience and enough cash to wait it out.

I think there is a third and less obvious hidden motive here:  solidarity.  When someone confesses he hasn't looked at his portfolio, he is letting you in on a secret, assuming a certain complicity.  The hidden message is that "we are all in this together." It is a version of the fellow feeling that accompanies natural disasters.  We feel closer to each other because we share a common misfortune.  It is not so much that we help each other out, though we sometimes do.  It is that sharing the experience makes the world feel less alien -- at least that portion of the world that includes you and me.  There is a comfort in belonging to a larger whole.

These motives contradict the notion of a market driven by rational interests.  At least they modify it significantly.  Moreover, collectively, they suggest the power of inertia to curb the precipitous decline of markets.  As a psychologist, I would not begin to know how to calculate the effect on prices, though I am sure that armed with decent survey data someone could.  But it is obvious to me that markets would collapse even more thoroughly than they do were it not for the investor forces of avoidance, denial and shared misery.  

That may be bad for the individuals who do not act, but it may be good for us all.

Sunday, November 9, 2008



It did seem as if the so-called "Bradley effect" did  not come into play in the election after all.  Why?

Leaving our of account the possibility that there really is no "Bradley effect," no racism in our electoral politics, which seems impossible to accept, given the ubiquity of racism in our culture, what happened to our racism in the polling booth?

Benedict Carey argued in The New York Times on November 7th:  the election illustrated that  "mutual trust between members of different races can catch on just as quick, and spread just as fast, as suspicion."  Clearly we would like to believe this -- and there is some truth to it.  

On an individual level, person to person communication goes a long way towards mitigating prejudices.  But to a very large extent, racism is a group processes that involves the identities of group members.  One can hold to virulent racist views and still like and even enjoy friends who fit into those categories of  hate.  It isn't even that people make exceptions so much that these are two different types of experience, the experience of the personal and the experience of one's identity group.  They can exist side by side.

I know this from my own experience.  My father was an anti-semite who grew up in post-WWI Germany, but he loved and admired my jewish wife and he adored his jewish grandchildren.  No conflict, no contradiction -- except, of course, for me.

Obama, of course, never became a "friend" to the electorate, never established a personal relationship.  He was and remained "Black."

What happened, I think, is that over the course of the election he lost his strangeness. Repeated exposure in debates, interviews, advertisements, public appearances made him familiar to us, less threatening.  To be sure, many remained "uncomfortable" with him, as they said, but many more lost their feeling that he was too different to understand.  And, then, increasingly, Palin and McCain himself became strange, impulsive, intolerant, negative.

The process was a good example of how consciousness can, over time, and in the right circumstances, override unconscious prejudice.  

Thank god!

Tuesday, October 28, 2008



The speed with which a consensus has emerged about the underlying cause of our current financial crisis tells us that it was something we knew all along – but didn’t let ourselves know we knew it. The unwanted truth now is clear: we have been spending beyond our means. It was not just homeowners taking out mortgages they couldn’t pay for and consumers running up astounding levels of credit card debt, it was banks, hedge funds, mortgage companies, investment firms and governments that discovered how easily the traditional limits of debt could be ignored.

This presents as an economic problem, to be sure, but fundamentally it is a problem of mass psychology. Beliefs become validated as truth when opposing ideas became silenced or disparaged, when they become the only ideas that can be espoused without the fear of ridicule. Two forces contribute to bringing this about: the desires that pull people into convictions they want to believe, and then the fears that drive people away from alternative ways of thinking – the fears that rule out the doubts that might otherwise cross their minds. If everyone believes something is true – or appears to -- how can you stand up against it?

In this case, of course, the clear desire was for more wealth and more purchasing power. In a consumer society who could object? The consumers purchasing more goods and services? The manufacturers expanding production? The merchants increasing sales? And then the American dream of home ownership was activated for those at the lower end of the economic spectrum. The ambition to acquire great wealth and status kicked in at the top.

Moreover, after the defeat of communism, other ways of thinking became proscribed. The victorious ideology of the market silenced critics who thought markets needed to be monitored or regulated. Even Alan Greenspan in his recent congressional testimony now admits there was a “flaw in his ideology.” His faith in the market’s ability to self-correct was too great.

Realizing that government could not afford to sustain basic levels of security for all its citizens, we created an Ownership Society in which everyone could aspire to the goods and services they wanted. We didn’t cut back on our desires, we simply found a new way to pay for them. Leveraging assets, borrowing from abroad, hedging bets, bundling and securitizing debt, we created an alternative to the defunct promise of the Welfare State. Once, people were worried about being in debt, but now debt now became normal, even a source of profit. No one would be left out of the opportunities that debt created. We persuaded ourselves that the risks could be safely managed -- and democratized.

It became our biggest bubble ever – and no one raised a warning cry. To be sure, doubts were expressed about the housing market, and concern about the credit swaps, but no one thought it would led to the disaster we now face. And yet, in retrospect, it is all too clear.

But no amount of correction and reform learned from the lessons of this disaster will protect as against future bubbles. We continue to be vulnerable to the hopes and fears reflected in Mass psychology.

Monday, October 13, 2008



Stocks are plunging. Investors can't fulfill their commitments to buy. Borrowers can't pay back loans. We have come to call such conditions in the financial markets "panic."

What it means is "sudden, uncontrollable fear or anxiety," and that fits current conditions. It has come upon us quickly, catching us off-guard. Moreover it seems that events outpace us; no matter what we do, we can't catch up. But if we look more closely at the definition, we see that it is the fear or anxiety that is out of control, not the events themselves. Indeed, we often enjoy the thrill and the challenge of fast-paced, unexpected change: skiing, running rapids, hockey games. What makes the difference with panic is that uncontrollable anxiety destroys the capacity to think. People panic when they lose their minds.

Markets too. In the midst of seemingly chaotic change, the group of people that makes up a market becomes stunned, paralyzed -- or they resort to stereotyped and ritual acts that only make things worse. In short, the group has lost it leadership, the voices of those who provide guidance and direction, the minds those who can still think about appropriate responses.

We see that all too clearly today. Last week's $700 billion bailout did very little to stem the panic. It was cobbled together as if mere action on the part of government itself could restore confidence. The more recent concerted action of European finance ministers and heads of state stands a better chance because, for one thing, it is concerted action. In a globalized economy, one country's actions alone is insufficient -- a lesson one might have thought we might have learned from the Iraq War.

The second thoughtful aspect of their plan is that it addresses directly the problem of assets and liquidity. Rather than simply buying up debt and hoping the market will do the rest, it pumps capital into the market, shoring up the institutions so they can function while at the same time giving government new control over their management. This counters the ideology of the free market, of course, but it addresses the reality of what is happening.

So we are beginning to reclaim our minds. Maybe we can then rebuild our bank accounts. What we don't know we know about panic is how dependent we are on leaders who can think.

Sunday, September 28, 2008



Greed has now become the preferred explanation for the Wall Street debacle. John McCain and much of Congress have joined in the chorus. There is no doubt that there are huge disparities in wages and bonuses between those working on Wall Street and those working elsewhere, and many have said to me in recent years that the compensation and profits made from hedge funds and investment banks are "crazy," "obscene," "unfair," etc. That has been true for some time. But why is this being called "greed"? And why now?

Standing back from the events of the last month makes it clear how many factors contributed to the crisis: the mortgage lenders who saw only more business for themselves, the investment banks who packaged the securitized debt, the investment advisors following the herd, the regulators who stayed on the sidelines, and, of course, the poor suckers who took out loans they couldn't pay. So we need someone to take the hit.

But it is not just the complexity of the problem that leads to this search for oversimplified explanation. We don't want to know how flawed and how risky our financial system is -- at the point when "free markets" and triumphed and all out pensions, health plans, college funds, and savings are invested. We want to believe that we should be secure. And if it turns out that we are not as secure as we thought, that risk has not been managed down to a negligible factor, someone must be to blame.

Gordon Gekko is famous for suggesting that greed is good. This is our revenge. Not only is greed not good, he himself and his ilk are bad. They let us down.

Thursday, September 11, 2008

Health Insurance for Wall Street

Lehman Brothers appears to be in its final throes, and the big question on front pages now is whether the government will intervene. A few days ago, of course, it rescued Freddie Mac and Fannie Mae – though the drastic treatment the mortgage giants got will compromise their quality of life for years to come. Six months ago, Baer Stearns went through a comparable life-saving operation. There are reports of other financial firms setting off red alerts.


At a time when markets are so interrelated and so many other institutions and individual investors have so much at stake, this may be the right thing to do. But more and more it does begin to seem that Wall Street is covered by a large and loose insurance policy. Some firms are just too big to be allowed to fail.

The mind thinks by analogy and metaphor, so here is one that comes to mind: Frannie Lou (I made the name up) lost her job at the moment she was diagnosed with cancer. As she was the family’s sole breadwinner, her 3 children face a bleak future. Food stamps will feed them, but she is behind on her mortgage, owes money on her car, and is scrambling to get child care. Without insurance, what will they do?

My example of Frannie Lou may not be the best analogy, but it is good enough to suggest how ordinary people are likely to perceive what is happening on Wall Street. Obviously, the collapse of Lehman Brothers would throw its 24,000 employees out of work, while Frannie Lou’s catastrophe affects only 4 or 5; the aftershocks of a Lehman collapse might destabilize our financial markets, while the collapse of Frannie Lou’s world would agitate and depress only her family and friends, and perhaps some others who would see in her fate an image of their own. To be sure, the employees and shareholders of Lehman will endure substantial losses, but the ordinary citizen, perceiving such an analogy, might well conclude cynically that government is only about the big and powerful – if our ordinary citizen hasn’t already made up her mind about that.

But what actually is the difference? Can it be explained, and who will bother to explain it? Usually such questions are characterized as matters of PR or “spin.” But what is “insurance” anyway? And who does get to decide who or what is insured? There is substance in the questions raised by analogy.

What we don't know we know about this is that there is an active under-life to such decisions and actions. They reverberate in our minds as they are assimilated, as people try to make sense of them. And this is where our political process enters into the picture. We need our leaders to shape our thinking and guide our responses. And we need to reflect on the kinds of leaders we need. How they answer such questions will help us to decide how useful they are.

Wednesday, September 3, 2008

The Other Side of Racism


Whatever has been said -- and whatever may be said -- about Sarah Palin as McCain's choice for VP, she is not a "stranger," some one who is unfamiliar and frightening to us.

On the contrary, her small town background and small town virtues, her pettiness, her limitations, even her go-go boots, are all too familiar. We may be worried about her lack of experience. We may be embarrassed about her views. But we know who she is.

This brings up the fact that we do need to be able to idealize our leaders -- at least to some extent. We do not want them to be too foreign, but at the same time they have to be better than we are. This is the other side of racism.

Perhaps this is my McCain's "gut" urged him to choose her, the antidote to the "stranger.' But what we don't know we know about such a choice is that to trust someone we have to think they are at least a little bit better than we are.

Sunday, August 31, 2008

Racism in the Election


The media is preoccupied with when and how the “race card” will be played in the campaign. But it is already in play for most of us - unconsciously. The real questions are how to play it right.

The basic fact is that as long as there is an unconscious, we will all be prey to racist thinking. It starts in the nursery when children learn to discriminate their caregivers from “strangers.” They cry or recoil in the presence of “strangers” and we can laugh, then, because we know that those “strangers” usually will be assimilated into the mental categories of “friends” or “family” – or else the child will learn to conceal and control his suspicion and fear. For most Whites, need it be said, most Blacks remain “strangers.”

In full-blown institutional racism, such reactions eventually get to be aligned with economic or social competition and amplified by group pressure. It becomes virulent and destructive. But even if society wakes up to the problem, even if discrimination is prohibited and opportunities for jobs and education are extended, the mental category of “stranger” and the mistrust it arouses will remain in the mind. It becomes a part of unconscious perception.

5% of whites in a recent survey said race would not affect their vote, but 19% said it would affect others they knew. “Welcome to the murky world of modern racism,” Charles Blow wrote in The New York Times on August 8th , “where most of the open animus has been replaced by a shadowy bias that is difficult to measure. As Obama gently put it in his race speech, today’s racial ‘resentments aren’t always expressed in polite company.’ However, they can be — and possibly will be — expressed in the privacy of the voting booth.”

For me, the frightening fact is that, often, it will not even be experienced as resentment. It remains as a vague discomfort, an undetectable shudder, an uneasiness that is felt but usually not understood. As a result it will be attributed to something else – but it will form the basis for action.

What we don’t know we know about racism is how much we still recoil from “strangers,” how hard it is to trust those who are different.

Tuesday, August 26, 2008

Another Sacred Cow: Deregulation


With the collapse of Lehman over the weekend, the distress sale of Merrill Lynch and the looming collapse of Washington Mutual and AIG -- and who know what else -- the urgency of imposing some form of regulation is beginning to be more widely recognized. It is increasingly apparent that, without it, we are facing a financial disaster of unprecedented proportions.

Paul Krugman writes in this morning's New York Times: "The real answer to the current problem would, of course, have been to take preventive action before we reached this point. Even leaving aside the obvious need to regulate the shadow banking system — if institutions need to be rescued like banks, they should be regulated like banks — why were we so unprepared for this latest shock?"

He accuses our financial leaders of playing ""Russian Roulette," but that is simply another form of denial. Taking such chances is based on believing that you really can't lose.


The mortgage crisis brings home again our need for some form of market regulation.  Without it there is little check on speculation or manipulation and great danger of markets running amok.  But regulation seems now to be in that great dead zone of ideas that we can't get our minds to engage.

So haunted with associations to old style capitalism, so discredited, such a bad idea, we stop thinking as we get close to it.  Whether it is the fear of ridicule from our peers, or the fear of being ostracized, or just the fear of being seen as stupid or out of touch, we keep our minds at a distance from the danger.  The surge of growth that followed deregulation, the victory of capitalism with the breakup of the Soviet empire, the power of special interest and their lobbyists on Capital Hill, the evisceration of existing regulatory agencies -- all have become sources of intimidation to anyone interested in curbing the power of corporations to compete freely in the market.

"Groupthink" has familiarized us with how groups censor and proscribe thoughts that deviate from an emerging consensus.  The failure of Kennedy's advisors at the Bay of Pigs, Nixon and Watergate, even Bush and the famous WMD -- all are good examples of how thought gets obliterated.  This dead zone of thought operates on a larger scale -- but it too is fueled by anxiety and fear and is no less pernicious to rational solutions to the problems we face.

To be sure, old style regulation did stand in the way of growth, and deregulation did seem to fuel significant growth.  Moreover, critics will add, there remain a host of regulatory rules that businesses and banks must comply with. But, surely, there is a middle way now in playing an active role to guide the private sector away from the disasters of unbridled competition.  If Washington can't do a good job of it, perhaps a quasi-private amalgam of senior financial statesmen, ratings agencies, and foundations could step up to the plate.  But in order for that to happen, we would have to face the need -- and to do that we would have to keep the need in mind.

What we don't know we know about deregulation is how frightened we are to do that.

Wednesday, August 20, 2008

Scapegoats Wanted


Just as our search to pin the blame on those responsible for the sub-prime mortgage crisis is winding down, the search for those responsible for the high price of such commodities as oil and wheat is revving up. We seem to need victims to account for our systematic failures. In the first case, the heads of investment firms rolled, and some firms themselves were dismembered. Now “speculators” are seen to be driving up the price of commodities – though, as yet, no fingers have been pointed at specific individuals. No doubt, they will be as Congress goes into action.

So long as investors search for increasingly profitable investments, banks and hedge funds will try to fulfill the demand. And because they are under increasing competitive pressures to produce results, they will take greater and greater risks. And, needless to say, caught up in their competition with each other, increasingly, they will tend to minimize the dangers. Greater and greater emphasis on “risk management” will not protect investment firms from the pressure to produce results in a competitive environment.

To be sure, some leaders of investment houses have been particularly imprudent and careless, and no doubt there are those who speculate in commodities futures. But so long as they are competing to succeed against each other in attaining unrealistic results, some will fail. So long as they keep looking to each other to see where they are in their own competitive race, they will minimize the dangers. And then some will be tarred and feathered with the blame for the whole fiasco.

It is a bit like campaign reform. No sooner does Congress pass legislation to restrict the influence of big donors and the power of lobbyists to affect the political process, than new loopholes are discovered. So long as campaigns are going to be more and more expensive and the benefits of winning increase, those running our campaigns will find loopholes to keep the system going. All can agree that the system needs to be reformed, but no one wants to give up a competitive advantage. It becomes a mass collusion.

What we don’t know we know about this is how we are all implicated: The banks that promoted cheap mortgages and home equity loans, the companies that continued to securitized them as they became less secure, the investment houses and funds that kept the bandwagon going, the regulatory agencies that looked the other way, and the home owners who minimized the dangers of debt. Most important: What we don’t know we know is what we would have to think if we didn’t have scapegoats to distract us and take the rap: our unrealistic hopes for endless gain, and the flaws in the system that keeps such hopes alive.