Thursday, October 09, 2008

Derivatives of the Postulates

I've mentioned the power of the "Big Idea" before. It's basically the lure of thinking you speak for the god, whatever "the god" is:

William F. Buckley called them the "postulates." Follow the postulates, and all is well. Failure to follow the postulates, the law, is the cause of sin, and the only reason allowable for failure. It is never the law that fails, but only the people who fail to meet the law's standards. It is an inhuman and unreal demand; and it always, as Gregg Mitchell notes, absolves the one relying on this argument, from responsibility.

But "religion is responsibility, or it is nothing at all." If we are going to draw from Christianity the notion that an idea is all we need to save us, then we had better at least take responsibility for drawing that lesson in the first place. No one can be allowed to build a system they are not willing to live in. No one can escape responsibility by pointing to the weakness of the other to live up to the requirements of a system they do not hold themselves accountable to. The Deuteronomists did not hold Israel accountable any more than the prophets did. They spoke for God, and stood under judgment and accountability and responsibility along with all the members of their nation. David Brooks, and William Buckley and Frances Fukuyama before him, want to speak for god, too. But their god is the "big idea" they have fashioned from reason and comfort and easy occupations lived out among people amenable to their ways, or at least agreeable to being of aid to them.
Alan Greenspan is at it today:

George Soros, the prominent financier, avoids using the financial contracts known as derivatives “because we don’t really understand how they work.” Felix G. Rohatyn, the investment banker who saved New York from financial catastrophe in the 1970s, described derivatives as potential “hydrogen bombs.”

And Warren E. Buffett presciently observed five years ago that derivatives were “financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal.”

One prominent financial figure, however, has long thought otherwise. And his views held the greatest sway in debates about the regulation and use of derivatives — exotic contracts that promised to protect investors from losses, thereby stimulating riskier practices that led to the financial crisis. For more than a decade, the former Federal Reserve Chairman Alan Greenspan has fiercely objected whenever derivatives have come under scrutiny in Congress or on Wall Street. “What we have found over the years in the marketplace is that derivatives have been an extraordinarily useful vehicle to transfer risk from those who shouldn’t be taking it to those who are willing to and are capable of doing so,” Mr. Greenspan told the Senate Banking Committee in 2003. “We think it would be a mistake” to more deeply regulate the contracts, he added.

Today, with the world caught in an economic tempest that Mr. Greenspan recently described as “the type of wrenching financial crisis that comes along only once in a century,” his faith in derivatives remains unshaken.

The problem is not that the contracts failed, he says. Rather, the people using them got greedy. A lack of integrity spawned the crisis, he argued in a speech a week ago at Georgetown University, intimating that those peddling derivatives were not as reliable as “the pharmacist who fills the prescription ordered by our physician.”
The Big Idea is always sound, always true, always inviolable. It is only the priests of the Big Idea who can fail.

Had Wall Street only not been greedy. Yeah, that was the problem!

Someone really needs to introduce Mr. Greenspan to the Christian realism of Reinhold Niebuhr. But who could do that...?

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