The people at Big Think have posted their latest videos in the “What Went Wrong” series about the financial crisis; I am one of a consortium of bloggers who have been invited to submit questions the interviewees and to blog about their answers.
The most interesting of the current interviews is with hedge fund manager Peter Thiel. A few choice quotes:
Our priorities are massively geared towards saving the financial system rather than making sure the technological system works better…we had a $700 billion bailout for the banks in late 2008 even though it would have been unthinkable to give $700 billion to internet companies in 2000 or 2001. I think that’s sort of double standard reflects the ways in which our priorities are skewed…
I believe the villain is Keynes and there was a Keynes line that in the long run we are all dead. Whether or not that is true, I believe that in the long run Keynesianism will be dead and that the problem with never thinking about the long run is that in the long run, the short run becomes the long run. And I wonder whether the crisis of 2008-2009 was not just a crisis about finance or about technology, but also a crisis about short run thinking and it was a point in time where short run thinking had run out and there was no more time to think about the short term and that actually a lot of long term problems we have been putting off and deferring had finally come home to roost.
There were many people who failed to understand the housing bubble. I think that there were many different reasons because we were trying to analyze the psychology of it. The one that I find fascinating is why, how it was possible to have a housing bubble only five years after we had a tech bubble. One would have thought that you could not have had the same kind of massive financial delusion happen within five or six years. And normally, you require all the people who lived through one of these things to die before you can have this happen again and one would have thought nothing would happen for 50 or 60 years. So, I think the fascinating question in my mind is why this happened. I’m tempted to give sociological answers along the lines that the baby-boomers were America’s dumbest generation ever, but I don’t really know – I don’t have a good answer on why.