Fashionable Fictions

June 17, 2009

by Chidem Kurdas

Vanity Fair is not a magazine I follow, so I was taken aback when I flipped through an issue someone left behind at a café. According to the Editor’s Letter, “the chain of catastrophic bets made over the past decade by a few hundred bankers may well turn out to be the greatest nonviolent crime against humanity in history.”

Really? A few hundred bankers made millions of people live beyond their means, buy wildly over-priced houses, drive gigantic SUVs and put huge amounts of debt on their credit cards. Without those actions, the twin credit and real estate bubbles could not have inflated and hence there would have been no collapse.

“Never before have so few done so much to so many,” writes Vanity Fair editor Graydon Carter.  That’s a very convenient way of looking at it—some banker made me do it, he should pay for it and be hung, drawn and quartered. Always a handy story and right now supremely fashionable.No wonder it is endorsed enthusiastically by the high priest of chic, the elaborately coiffed Mr. Carter, whose strong suit is creating impressions and images. Reality, apparently, is not his thing. A former colleague described him as someone who does not deal head-on with reality or feel encumbered by the truth. As a young man, he told people that he’s Jewish. He is not.

Here is how he explained the fiction later to an investigating reporter. “I thought, If you’re going to be an intellectual in New York, you gotta be Jewish.” So, you fabricate the appropriate background. And you peddle the latest myth, with photos to go with it.

In this case the pictures are of the fraudster Bernard Madoff – including an artsy one of a younger Madoff in what looks like a black turtleneck – accompanying an account by Madoff’s secretary. She doesn’t say anything interesting, but the photos are glossy.

There are many kinds of fiction. Some are harmless, but many have the potential of going out of control like Madoff’s. He will spend the rest of his life in prison, as he should. Other fantasies are damaging on a vast scale but nobody goes to prison for them.

A sense of personal responsibility is the only real defense against financial debacles. Responsibility, though, is an antiquated idea that has been out of fashion for a long time and was probably never very fashionable. The blame game destroys what’s left of it.

Take the 1990s stock bubble. A couple of hundred brokers and analysts forced us to buy Pets.com for stratospheric prices. We lost trillions of dollars because of their venality. Then we were forced to buy real estate we could not afford. Someone made people acquire McMansions at the peak of the market. Now foreclosures dot the land.

By the way, I’m thinking of buying swaps on the Brooklyn Bridge—you can make 150% a year. If it turns out badly, there will be sleek photos in Vanity Fair and an editorial against the greedy characters that made me do it.

3 Responses to “Fashionable Fictions”

  1. Vichy Says:

    “Someone made people acquire McMansions at the peak of the market. Now foreclosures dot the land.”
    I saw a lot of these construction sites near the peak of the bubble, and the quality of construction was just awful. Walls and ceilings obviously crooked, driveways cracking, paint jobs and cabinet joins all awry. These companies were being pumped to expand and pop up much faster than they were competent to.

  2. Crawdad Says:

    Unfortunately Mr. Kurdas that is the dominant narrative at the moment, all evidence to the contrary. Washington and it’s fellow travelers are making sure this is being repeated in print, on most news reports and in official government documents. Arnold Kling has a blog post today on the new Financial Regulation White Paper issued by the government; same myth found in it.

    They are trying to convince us of the narrative so we will go along with the complete restructuring of the U.S. economy.

  3. Chris Says:

    Here is a good way to create a housing bubble.

    Let 20 million illegals in that need a place to live. Naturally the laws of supply and demand will drive prices up rather quickly since the invasion was going on quickly.

    The, with the massive invasion that quickly oversupplied the labor market thus driving wages down in many areas, along with more and more legal immigration and outsourcing then you get a cross in the indicies.

    Housing prices going up quickly while wages are going down or not moving. Doesn’t make sense that one can pay for the more expensive houses on lower wages.

    The banks knew what was going on and they still made loans either by their own will or the mandate of congress.

    Now, we have the same thing goiong on in healthcare. Too many illegals having multiple kids and not paying for it. When I had my kid, 80% of the people having kids in the hospital were foreigners and I asked the nurses there how many were from illegals, she said 85% had no insurance but they are forced to accomidate them. This is why healthcare, insurance and doctor bills have gone up. Lets face it, someone has to pay for the freeloaders. Again, it is the American Tax payer and the people that pay their bills that pay more and more.

    Some people want to call people like me racist or bigots or whatever, but I am not blind and I am not willing to pay the government 40 to 50% of my paycheck to support this facsist state of welfare.

    America has a SUCKER Complex thanks to the lawmakers of this country. The rest of the world see’s a SUCKER whenever America comes up in conversation. We are laughed at everywhere, and we deserve to because people in this country are total idiots and do not get it at all.

    Get ready for the next stock market crash, well, if the government doesn’t stop the short sellers, because there is very little reason to go long on any company right now. Look at oil, another speculitive bubble coming so the congressional pin heads can scare us into global warming and peak oil, Again America is laughed at around the world. The oil reports keep saying month after month there is no big demand for oil yet it is up 135% since the bottom. Now, would you short it or long it? I’m on the sidelines right now myself.

    Good luck to all.


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