Wednesday, 6 May 2009

Larry Summers and the art of financial spinning

Simon Johnson makes a wonderful point in a recent posting

What will be the overall impact of tomorrow’s stress tests announcements on understanding of our overall economic and financial situation? To paraphrase slightly Larry Summers’ smiling response to a question (actually on the future of Fannie and Freddie) after his recent speech at the Inter-American Development Bank, “if you think that was a clear answer, you weren’t paying close enough attention.”

While the Treasury and Fed believe that they can get away with this kind of answer (even if left implied rather than explicit), and more importantly the essential cynicism that it belies, one can rest assured that the financial elite believe that they can, through constructive ambiguity, prevent a systemic financial meltdown.

Not quite sure how, if at all, this fits in to this but one memorable quotation from Neils Bohr, the Danish physicist, comes to mind.

Anyone who is not shocked by quantum theory has not understood a single word.

It would be great to hear from anyone who feels suitably inspired to connect the dots (assuming there are any).

No comments:

Post a Comment