0xC9: This American Life :: The Watchmen #endthefed

I guess everyone is having a tough time economically. TAL (This American Life) is asking for donations from its listeners to cover their bandwidth costs. I can't say I feel that obligated to give them money, so instead, I'll help them out by hosting this episode on another server so they don't get hit by my review. This is a link to the episode, but if you listen to the episode on this page, it won't cost them anything. So there.

Anyway, there have been a few episodes of TAL about the economy that are noteworthy. This one has to be the best so far. They do an excellent job of explaining, in plain English, that the global economic collapse was in fact not caused solely by lack of regulation. In fact, once the problem started to snowball, it was the existence of certain regulations that prevented the market from being able to move with agility. You could say that market regulations made things worse.

Of course, these public radio types don't believe regulations made things worse. They just think we had the wrong kind of regulations in place. They think we needed better thinkers and better regulations. When are we going to realize none of that ever works?

I'm not a fan of regulation in the free market, but we don't have a free market, do we? Saying regulations would have prevented the snowball from forming in the first place is incorrect as well. Regulations imply regulators. The TAL folk do a good job of explaining why the regulators aren't solely to blame either.

Then there are the rating agencies and Congress. There's enough blame to spread around. But what TAL does not explain is that the "liquidity crisis" was not caused by any of these things. It was caused by the existence of excess liquidity in the first place. It's like blaming the cracks in the dam when the sheer amount of water is the problem.

Here's the episode in full: