Financial Market Explanations as Personality Test

After the financial meltdown, people have pointed fingers. Who they blame seems to say more about their ideology than the reality of financial markets.

The Black Plague that began about 1350 killed about 30% of Europeans. When it hit a village, though, most people assumed that it was the result of sin. The question wasn't about disease transmission but instead about behavior and attitudes.

In today's world, we seem to understand systems dynamics about as well as medieval Europeans understood disease. That is, the gyrations of financial markets are a mystery to us. And how do we explain big falls? As a function of behavior and attitudes. We blame policy makers who made the wrong kinds of loans to the wrong kinds of people or greedy bankers.

If you hear someone blame government regulators who blame government policy makers for making loans to poor people who couldn't afford their loans, you're talking to a conservative.

If you hear someone blame greedy bankers who recklessly endangered the whole system, you are talking to a liberal.

That is, the popular opinions you'll hear tell you lots about who you are listening to and almost nothing about what actually happened.

Maybe it is time to take system dynamics as seriously as we take disease - and stop seeing financial catastrophes as punishment for past sin.