Good friend Harsh Gupta had sent me the link to Michael Lewis’ interview. Today, I happened to see the interview. The first thing I felt (I am a modest guy, you see!) is that he had been reading this blog and had managed to convert his readings into the book, ‘The New Third World’
Well, seriously, the arguments that we have been blindsided by peace and prosperity and that the P&P numbed us to risk and that the common element in this global crisis across investors, bankers, academics, policymakers and politicians was hubris. Hubris that growth is now permanently high and inflation permanently low. Therefore, risks did not matter.
This blog and/or my columns in MINT have also noted that the country that does the hard thing is the country that would bounce back sustainably. Michael Lewis makes these points. Good for him. It is not just those who are short financial assets make money in a crisis, you see.
The interviewer eggs him on to paint an optimistic scenario. Lewis responds unconvincingly and reluctantly. I cannot blame him. It is hard to paint one. Future, by definition, is unknowable and especially when it is anything but linear, as now.
It is hard to be optimistic when they do not get it. John Paulson does not get it. He thinks that the protesters should be grateful to him because he created hundreds of high-paying jobs in New York. How touching! He forgets to mention that he had Goldman Sachs help him pick bad MBS paper to short so that he could become a billionaire hedge fund manager.
Of course, the American public does not get it. They want higher taxes on the rich but want Medicare and Social Security to be left alone. Republicans are either out of touch and in love with their ideology or being loyal to their supporters. You can decide which is the driver here. By the same token, Republicans are not going to get their way in stopping Bernanke from printing more. Operation Twist will morph into Operation Surge (of dollars).
Welcome to the new Third World.