Tuesday, March 3, 2009
Happy Square Root Day: 3/03/09
Today is Square Root Day, so, I am wishing everyone that reads my blog a Happy Square Root Day.
Would it not be great if economics was just about numbers? Unfortunately, it is not. Because we are people living in a complex society in the 21st century, and because there are so many sectors of the economy with so many special interests, that we have what I like to call a politico-economic interpretation of history.
We do not have royalty in the United States. By royalty, I mean we do not have titles like Duke and Earl. We once had two Dukes. One was a center fielder and the other lead a band, but I think you know what I mean. However, in any complex society there are people that fight harder than others to obtain status and privilege. I do not have a problem with that. What I have a problem with is fraud or quite plainly cheating. People that commit fraud like it even better if that fraud is outside the law. For example, the credit default swaps that were sold by the insurance companies were not governed by law or federal securities regulations. When it came time to pay on the credit default swaps, the insurance companies that sold them did not have the reserves to make good on their commitments. That is fraud. That is where some of our bailout money went.
In the months and weeks ahead, Congress will be dealing with the issue of banking and securities regulations. I hope that they realize that no small part of the problems this country faces with regards to the economy, the toxic assets held by the banks, the bond market meltdown and the destruction of trillions of dollars in wealth once held by the middle class, is directly attributable to the philosophy of deregulation that was pushed for by the banking and securities industry. Deregulation does not work any more than shooting fish in a barrel is sport fishing. I wish I had the forum of those guys on the radio to make my case. Anyone that has a sense of fairness in sports or any other thing for that matter, would understand that without regulation and people to enforce that regulation fairly, we will revisit these problems again.
The next Square Root Day is April 4, 2016, 4/04/16. If you are wondering the one after that, it is May 5, 2025 (5/05/25).