Skip to comments.Bystanders to this financial crime were many
Posted on 12/08/2008 2:33:01 AM PST by TigerLikesRooster
Bystanders to this financial crime were many
By Nassim Nicholas Taleb and Pablo Triana
Published: December 7 2008 19:18 | Last updated: December 7 2008 19:18
On March 13 1964, Catherine Genovese was murdered in the Queens borough of New York City. She was about to enter her apartment building at about 3am when she was stabbed and later raped by Winston Moseley. Moseley stole $50 from Genoveses wallet and left her to die in the hallway.
Shocking as these details surely are, the lasting impact of the story may lie elsewhere. For plenty of people reportedly witnessed the attack, yet no one did much about it. Not one of the almost 40 neighbours who were said to have been aware of the incident left their apartments to go to Genoveses rescue.
Not surprisingly, the Genovese case earned the interest of social psychologists, who developed the theory of the bystander effect. This claimed to show how the apathy of the masses can prevent the salvation of a victim. Psychologists concluded that, for a variety of reasons, the larger the number of observing bystanders, the lower the chances that the crime may be averted.
We have just witnessed a similar phenomenon in the financial markets. A crime has been committed. Yes, we insist, a crime. There is a victim (the helpless retirees, taxpayers funding losses, perhaps even capitalism and free society). There were plenty of bystanders. And there was a robbery (overcompensated bankers who got fat bonuses hiding risks; overpaid quantitative risk managers selling patently bogus methods).
(Excerpt) Read more at ft.com ...
Too Big to Jail
"Among a people generally corrupt, liberty cannot long exist." Edmund Burke
Although Nassim Taleb makes some excellent points he is a bit narrow in his analysis because of his superior knowledge and experience in a highly specific area of the crisis, which in some ways is a cultural crisis.
There may be enough fraud involved in the US over the past twenty years for multiple prosecutions under the RICO statutes. Or it just may be the end result of a general breakdown in morals, from the top down by example perhaps.
Although one does find some institutions appearing as enablers at the heart of every crisis, from LTCM to Enron to the Accounting Frauds to the Tech Bubble to the Credit Bubble.
No, this was worse than the silence of the witnesses to the assault of Kitty Genovese that gave the label to the bystander effect.
In this case there were 'bystanders' who financially benefited from the assault and who not only kept quiet but actively intimidated and silenced other bystanders through ridicule and fear of retribution.
There were many bystanders who did call 911 and were ignored because those in the enforcement chain were either asleep on the job or had other competing interests.
The practical problem is that the institutions involved are probably too big to jail.
Many got instantly irate whenever somebody express misgivings on the whole financial situation. Express alarm and you would be buried.
All those so heavily invested in irrationality of the market on its upswing are now seen preaching calm and rationality when the market reverse its course and is crashing down.
You cannot conveniently regain 'rationality' on the downturn. Much of the supposed gains on the upturn was mirage. A motherload of irrationality is being cleansed now. You can get rationality on the downturn only if you maintained rationality during the upturn.
I’m with TigerLikesRooster. Going back to the personal crime at the head of this story, I think I’ts a “group think” mentality of sorts, Why be seen as the one person willing to speak up, when it is far eaiser to go the herd way. I, and most of you folk would never do that.
I disagree with the author of this peice on how there is a parrelel with the bailouts, IT IS A PROVEN FACT THAT MOST AMERICANS REJECT BAILOUTS, the MSM simply does not willingly, or with intent, give a voice to persons that do not fit thier agenda. Ladies and Gentelman welcome to sheep status. Alls I got to say is that the Judiciary need to wisen up quick and start doing thier job, but I guess that upholding the Constitution is just so.. passe
I’ve taken a couple courses about abuse/peer pressure and bullying. While it would seem that the bystanders could do something to stop the incident, even after the students have become familiar with this and ways to intervene, the facts remain the same. No one gets involved.
I’m betting you have full understanding of exactly why it was they just could not bring themselves to convict him.
Adolf Hitler exploited European Jews and rose into infamy over their corpses. Class warfare is very seductive. Individuals commit crime, not social/political/economic groups. Don’t murder me please.
“the practical problem is that the institutions involved are too big to jail.”
yeah. just like the third reich.
“there may be enough fraud involved in the US over the past twenty years for multiple prosecutions under the RICO statutes.”
and they thought getting all those eye talian boys would solve the problem.
the problem really was that those other boys didn’t like the competition.
The institutions were threatened with discrimation convictions by our government, liberal lawyers, liberal judges and liberal politicians.
I am not an economists nor do I have any special financial expertise. What I do see in the stock market crash and the resulting “bailout” is the equivalent of a giant scam perpetuated by “our” Federal Government. Decades ago there began a drumbeat of propaganda and programs for the average and professional employee to deposit a portion of their income into the stock marked for their retirement. The idea was that companies could radically modify (or drop entirely) their pension plans because the employee would still have their own “individual” retirement plan which they could manage themselves (and presumably maximize their retirement income). Private companies loved it because they no longer had to maintain and manage a costly retirement program. The individual retirement programs morphed slightly as problems were discovered into the present day ones.
In my individual case, my IRA funds have decreased by 30% of what I had saved. It is a little difficult to determine just how many years I had to work to save what has just disappeared in the past few months. I feel as if I had been raped by an unknown force.
When I look at the national level (Congress, private and semi private organizations, and the President), I see no culpability expressed by any of the involved actors. No one is headed for the slammer. Our national debt has been doubled or increased by at least 50% (no one seems to know at this time) by their actions.
However, the main actors in this dispickable drama are rewarded by being inundated by my and your tax dollars. Not only are they rewarded, but it appears that the obviously guilty perpetuators are going to receive bonuses paid with our tax dollars! In addition, we have to listen to the gas bags in Congress that oversaw our descent into confusion tell us how the are going to clear away the rubble (as if they had the skill to do so).
And in conclusion, we (I) am going to let them get away with it (unscathed!)
All those cheerleading experts on business media were not rooting for CRA. They are all for inflating bubbles whatever its origin was.
~~President Andrew Jackson, on the 2nd National Bank
"The crisis of the abuses of banking is arrived. The banks have pronounced their own sentence of death. Between two and three hundred millions of dollars of their promissory notes are in the hands of the people, for solid produce and property sold, and they formally declare they will not pay them. This is an act of bankruptcy, of course, and will be so pronounced by any court before which it shall be brought. But cui bono? The laws can only uncover their insolvency, by opening to its suitors their empty vaults. Thus by the dupery of our citizens, and tame acquiescence of our legislators, the nation is plundered of two or three hundred millions of dollars, treble the amount of debt contracted in the Revolutionary war, and which, instead of redeeming our liberty, has been expended on sumptuous houses, carriages, and dinners. A fearful tax! if equalized on all; but overwhelming and convulsive by its partial fall. Everything predicted by the enemies of banks, in the beginning, is now coming to pass. We are to be ruined now by the deluge of bank paper, as we were formerly by the old Continental paper. It is cruel that such revolutions in private fortunes should be at the mercy of avaricious adventurers, who, instead of employing their capital, if any they have, in manufactures, commerce, and other useful pursuits, make it an instrument to burthen all the interchanges of property with their swindling profits, profits which are the price of no useful industry of theirs. Prudent men must be on their guard in this game of Robin's alive, and take care that the spark does not extinguish in their hands. I am an enemy to all banks discounting bills or notes for anything but coin. But our whole country is so fascinated by this Jack-lantern wealth, that they will not stop short of its total and fatal explosion."
~~Thomas Jefferson to Dr. Thomas Cooper, 1814
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.