Wall Street’s Invisible Gorilla is killing America’s soul
By Paul B. Farrell , MarketWatch
ARROYO GRANDE, Calif. (MarketWatch) — On Lake Wobegon "all the women are strong, all the men are good-looking and all the children are above average" says the great American satirist Garrison Keillor in his "Prairie Home Companion" world.
But doesn’t that also describe all the too-greedy-to-fail fatheads running Wall Street? And, unfortunately, Main Street America’s 95 million irrational and self-sabotaging investors?
Yes, all of us! We’re Americans. Don’t confuse us with the facts, with reality. We’re the greatest in history, a legend in our own minds. And a rapidly mutating virus is spreading this lethal pandemic far beyond the shores of Lake Wobegon. Yes, folks, the "Lake Wobegon Effect" is hard-wired in America’s brain, an illusion of superiority, a smug arrogance where each knows we are the best, the chosen ones.
Warning: The Lake Wobegon Effect is the single best summary of today’s stock market psychology, high-frequency trading, behavioral economics theories and the new science of irrationality … and it’s sucking the life out of America’s soul. Here, listen to more of these arrogant musings surfacing everywhere from deep in our collective brains:
- All Wall Street bankers are worth 100 times any Main Street investor
- All Corporate American CEOs deserve to make 400 times their workers
- All children of all Forbes 400 billionaires deserve to inherit tax-free
- All lobbyists deserve millions when winning billions for special interests
- All taxpayers should pay for catastrophic mistakes of Wall Street Fat Cats
- All rich hedge fund managers deserve to be taxed at capital gains rates
- All senators deserve to become millionaire lobbyists when they retire
- And Goldman Sachs CEO Lloyd Blankfein deserves a $100 million bonus
[I disagree with the author on this point. Do most Americans agree with the listed statements? I think not, but rather those with power and those benefitting from the system either like that list or know something’s wrong, but like Sam Antar during his 18-year crime spree, simply don’t care. But keep reading, the article gets better. – Ilene]
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The investor’s brain is a very bad computer
Years ago America’s leading behavioral economist, Richard Thaler warned: "Think of the human brain as a personal computer with a very slow processor and a memory system that is small and unreliable … the PC I carry between my ears has more disk failures than I care to think about." And it ages badly.
Factor the Lake Wobegon Effect and the Invisible Gorilla into your computer. What do they tell you about the impact of billions of irrational decisions made by all gamblers betting at Wall Street’s 24/7 global casino?
Here are four irrational clues: Remember, between 2000 and 2010 Wall Street lost 20% of your retirement playing the stock market … Still Wall Street pocketed hundreds of billions for themselves … Still those fat cats off-loaded trillions of debt on taxpayers when in de facto bankruptcy in 2008 … and yet our brains let them get away with it.
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Get it? Your brain is wired to make bad decisions. Wired to make them over and over. Wired to miss crucial data. And this has a cumulative and collective effect that drives markets to the edge of a precipice with such powerful momentum that we’re blinded by euphoria, never see the Invisible Gorilla, the Black Swan, the WMD … never see the risks until it’s too late, a catastrophe happens and the invisible becomes painfully visible, tragically blowing up in our faces
Sound familiar? It did happen in 2008 forcing former Fed Chairman Alan Greenspan to admit to a congressional committee: "I found a flaw … I made a mistake." Actually Mr. Greenspan you were a miserable maestro. For 18 years the mistakes your irrational brain made blinded you to an invisible Reaganomics Gorilla that’s still destroying America.
Treasury Secretary Henry Paulson was even worse, later reluctantly admitted he should "have seen the subprime crisis coming earlier." But it turns out he’s a liar and con man. Yes, later Bloomberg News reported Paulson not only saw the Invisible Gorilla, he warned Bush’s staff at Camp David in 2006, two years before the meltdown. But then the Lake Wobegon Effect kicked in, our leaders all ignored the warnings until the 2008 crash.
Wall Street has no soul, is drowning America in Lake Wobegon
The irrational brains of our leaders are so self-destructive they let bubbles blow and blow … they will always fail to act early enough … they are trapped in their greedy brains in denial … trapped in their narrow ideologies … trapped, making endless stupid decisions … ignoring the obvious … they will let risks become increasing more deadly till minor pops becomes colossal WMD-category meltdowns, crashes, collapses of epic catastrophic proportions, worse than the estimated $23.7 trillion aftermath of the 2008 meltdown … and another is dead ahead.
Yes, tragically many more are coming because Wall Street is morally dead, it has no conscience, no soul, no ethics, no moral values other than getting as rich as possible, as fast as possible. Tragically, Wall Street is now the Invisible Hand of Capitalism 4.0. Tragically, Wall Street’s believes the best economy is an unregulated free-market system where the collective greed of the biggest players best serves the public good…
Picture credit: Elaine Supkis, Culture of Life News
