Tuesday, October 28, 2008

The Smartest Man In The Room

The smartest man in the room.

Anti-intellectualism in America.

I do not write poetry, but if I did, the above two lines would be my poem for today. There are different kinds of smart. There is the smart that can remember lots of facts and numbers, and there is the smart that can do something with the facts and numbers whether they are memorized or not.

The former chairman of the Federal Reserve Bank, Alan Greenspan, is, in my opinion, one of those people that can retain a lot of facts and numbers, and can use them to build a case for deregulation. This I think he did and now we have a financial crisis that has brought our economy to the edge. I do not believe that Alan Greenspan or Milton Friedman believed that deregulation would lead to an economic crisis, but then again, I do not believe Alan Greenspan or Milton Friedman ever played one down in the NFL either. If they had, perhaps they would not have embraced the philosophy of deregulation. Sitting in the comfort of one’s office in a nicely tailored suit is a long ways from the reality of the NFL on game day. Perhaps if each one had played a few downs of football at that level, they would have better understood the need for regulation in a competitive environment.

There were men of knowledge and experience that could have debated Greenspan on the issue of deregulation, but I am sure they were not in the room when the debate was going on. When I was working just a few years ago for the State of Ohio, I got to hear a lot of stories from marketers passing through. One story, I got to hear a few times that I would like to tell now is about who is the mark. The guy that told this story said his father had told him this as a piece of advice. “If you find yourself in a card game and you look around the table and you can not spot the mark, then you are the mark.” It is my opinion, that when Alan Greenspan argued for deregulation of the financial markets, there were several marks in the room and they all were Congressional representatives that did not know the difference between a bid and an asked price. They all thought that they were not the mark at the table, but they were. How do I know this? Simple, look at what deregulation of the financial markets has done to our economy. And, make no mistake, the present financial crisis is directly related to the deregulation of the financial markets and the lack of enforcement of banking and investment securities regulation by the SEC.

Hopefully, after this presidential election, and the Obama-Biden ticket wins, we will see steps taken to bring meaningful regulation back to the financial markets and banking. Trust and faith and all those nice words mean nothing without real enforceable regulation. I sure hope that when the debate begins that Arthur Levitt and Paul Volcker are in the room and sitting at the table.

Stay tuned.

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