Friday, June 29, 2012

Ordinary opprobrium...

"The wrongdoings were overwhelmingly the product, not the cause, of the bubble", clearly so but this won't assuage the opprobrium. Following on from yesterday's overflowing ordure and the Banks' perfect storm: Allister Heath From Boom to Bezzle, quoting US economist John Kenneth Galbraith: " the height of a bubble, a punch drunk world becomes so wealthy that it turns a blind eye to financial crime (embezzlement, or the “bezzle). But when the music stops, and the crash comes, everybody suddenly uncovers past scandals. It is worth quoting him at length: the bezzle, he said, “varies in size with the business cycle. In good times people are relaxed, trusting, and money is plentiful. But even though money is plentiful, there are always many people who need more. Under these circumstances the rate of embezzlement grows, the rate of discovery falls off, and the bezzle increases rapidly. In depression all this is reversed. Money is watched with a narrow, suspicious eye. The man who handles it is assumed to be dishonest until he proves himself otherwise. Audits are penetrating and meticulous. Commercial morality is enormously improved. The bezzle shrinks.” We are now at this stage of the cycle.

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