Narrative is the hot story of the presidential campaign. Just take a look at the New York Times Magazine on John McCain's search for one.
As a former English major, I am all for narrative. Stories do matter. Turns out, much new psychological research shows our brains are hard-wired for stories.
And what stories there are this year. Could you invent Barack Obama's story? Or John McCain's? Think about the power their life narratives bring to the campaign.
Now think for a minute about the story of the financial crisis. Hard to pin down, isn't it? And that's the problem. Until we have a clear story about what went wrong, it is unclear how to craft solutions for the long run.
Right now, the first narrative to emerge is "greed." Wall Street got greedy and we are all paying the price. I have written before that I don't find that narrative very enlightening.
But when I interviewed Vince Reinhart, a former top Fed staffer, he argued the "greed" narrative may drive the policy debate in Washington. If correct, that would portend a highly intrusive regulatory approach to financial reform.
I am not saying greed did not play a role, but it was not the prime cause of the crisis.
The other narrative that many are pushing is the "Fannie Mae Did It" story. In this crisis narrative, the government, pushed by Democrats, caused the markets to take on too much risk. Thus the crisis.
We saw another narrative play out when Alan Greenspan was brought to testify before Congress last week. In this narrative, it was a blind faith in deregulation that brought about our current debacle.
In the "greed spree, Alan Greenspan did it" narrative, government is largely blameless. And since government was blameless, we need heroic regulators to rein in the animal spirits on Wall Street.
By now you probably get the drift of my narrative: this story is too complicated to reduce to a simple morality tale. Many people failed to do what was needed. Many institutions failed. Wall Street messed up. So did government. Everyone needs to reform.
If we don't get the beginning of this story straight, we won't be able to write a happy ending.
Comments
The problem with narratives is that they tend to go in a straight line. Beginning, middle and end. There is no narrative here, there is a web. Advertising is designed to make us want; want more than we can afford. So many of us purchase what we cannot pay for, so we borrow. Lenders are happy to lend to marginal people on the theory that if some default, so what. There are plenty of others paying interest to make up for a few losses. So who is to blame when the bubble bursts and there are more defaulters than the system can tolerate? Is it the borrower, the lender or the atmosphere of material need that hss been created by media. We are all responsible for our own actions. The blame is equal among all.
I think the biggest issue here is the banks/lenders have been very reluctant to do anything, in concern with this current crisis as they are at the center of it. Not unlike our Government, which has turned itself into a pretzel over the last several months doing everything it can so that this can be avoided or lessen the blow we may feel. Which as everyone stated was due to banks/lenders creation of exotic products.
So what am I really saying until these business’s do something to assist the economy. No matter what our government does will not make a change. All you are doing is feeding the greed, I understand you are trying to help this matter, but if they continue to do nothing but take from you and force you (our government) into bending over until you can see your feet. Will not assist the people you have promised to help. That is one of the main reasons why everyone in our county is in an uproar.
Please return to the table and review the process that you have taken and what business has done. You will come to the same concussion that I have.
The problem isn’t with our government or its process, but with the same industries that discovers or takes advantage of the laws/policies that our government creates in order to benefit during either affect of U.S. economic change.