Back in July of 2008 G. W. Bush asked the crowd at a fundraiser in Houston Texas to turn off their cameras and said: ”There is no question about it. Wall Street got drunk.” Not everybody turned their cameras off. The former president uniquely captured
Keynes’ ”animal spirits” in the language of the homeowner who was seduced
into mortgages they couldn’t possibly pay.
When the ‘greek crisis’ first broke out about a year ago I found it preposterous and absurd that 10 million souls on a small peninsula screwed up the planet as was the consensus in the press. So much so, I felt, that were it to be true I would enjoy watching it all burn from the top of a cliff, scotch in one hand and cigar in the other, for that feat of my fellow greeks would be close to greatness… The country is now on its way to a long, winding road of austerity, recession and unemployment; raincheck on the cigar.
In October of 2010, Jean-Claude Juncker, chief of the Eurogroup, was quoted in the margins of the IMF and World Bank meetings in Washington DC as having said: ”I knew, I knew that even France and Germany were earning huge amounts of money on their exports (…) to Greece I could not make public what I knew”. The Greek society, along with the rest of the European south, got drunk (for reasons which have a long history) so the austerity the country is going through now may well be what a drunk driver deserved but Juncker’s unguarded admission screams for suing the bartender.
It seems to me we may need a dramshop law for the markets or otherwise moral hazard will be back to haunt us and it ain’t just gonna be about the Greeks or a bunch of American homeowners.
Update: Here is an instance of a (small) drumshop law punishment for irresponsible lending.