What doesn't kill you makes you cocky

On C-Span this weekend, Nicole Gelinas was promoting her recent book, "After The Fall", and made a fantastic point.

The jist of her book seems to be that financial markets should have a standard leverage ratio set for different asset classes. For example, mortgages typically used to require 20% down and you could only get one for 2.5 times your income. This served us well for a long time and it naturally dissuades bubbles because it is very clear when there is a deviation from the standard. I don't know how robust her conclusion is, and I look forward to reading her book, but on to her amazing point.

She remarked that when we have a crisis, such as the one we have had, no one involved thinks of the mistakes they made or the actions they didn't take. Quite the contrary, those in charge during the crisis often see themselves as saviors, as if their actions alone prevented an even bigger crisis. And that their special genius is what did it. Instead of failure humbling them, it emboldens them. And monumental failure leads to monumental hubris.

She couldn't have been more spot on. We see it all the time with this crisis: if the government hadn't had done this or that, the world would have come to an end. Banks were bailed out, clunkers were pushed, and it all had to be done NOW! Hogwash. No one knows what would have happened, and they still don't. Instead of acknowledging their utter ignorance and imcompetence, they pat themselves on the back for bearing witness to the worst economy in decades. And when the economy bounces up from bottom, which it MUST inevitably do, they take it as a sign from G-d that their genius is necessary to lead us. Government, is the only entity which celebrates it's success because the end of the world didn't happen.