Stop blaming the messenger

A New York Times article (“Banks Bet Greece Defaults on Debt They Helped Hide”) sounds an alarm that “bets by some of the same banks that helped Greece shroud its mounting debts may actually now be pushing the nation closer to the brink of financial ruin.” A senior banker even makes a curious analogy regarding the trading of credit-default swaps (derivatives whose owners stand to profit if the debtor – in this case Greece – defaults): “It’s like buying fire insurance on your neighbor’s house — you create an incentive to burn down the house.” Hasn’t he opened the Economist lately? It has tirelessly explained for any dim-witted doubters willing to listen that all kinds of financial speculators do a most valuable service to the global investment community by pointing out that this or that king is, in fact, naked (or has pursued reckless fiscal policies). A recent article (“Bearers of Bad News”) lament the fact that speculators are often blamed for the financial fiascos cooked up by populist politicians. This undeserved skapegoating is rampant because “making money out of other people’s misery seems downright mean and unpatriotic” – and it shouldn’t. As we all know, in the 1990s a Chicago school economist won the Nobel-branded prize in economics three times in a row for proving incontrovertibly (if any one still doubted it) that money doesn’t stink. Oh, and we shouldn’t be as misguided as founding fathers Thomas Jefferson and John Adams who once (as mentioned in the Economist piece) despised speculators for the shrewdly sociopathic form their pursuit of happiness was taking.