Crisis

The financial crisis could have been avoided and was the result of poor decision making both in Washington and at top financial firms that fostered a culture of excessive risk taking, according to a draft report written by Democrats on a panel that investigated the meltdown and obtained by Reuters.

The big question, I believe, is whether the Italian and maybe Spanish crises are the kind of thing that might be brought under control by ECB bond purchases. This is often phrased in terms of whether they are facing liquidity or solvency problems; but I think it’s better phrased in terms of the possibility of self-fulfilling crises, a la Obstfeld. […] So there is a reasonable case that what we’re seeing in Italy is a self-fulfilling crisis trying to happen, in which fear of default is precisely what leads to default.

Are they right? Is pessimism correct? Could the state of the world, like the stripes on a barbershop pole, keep sinking lower and lower? It’s easy to see why people feel that way: every day the news is filled with stories about war, terrorism, crime, pollution, inequality, drug abuse, and oppression. And it’s not just the headlines we’re talking about; it’s the op-eds and long-form stories as well. Magazine covers warn us of coming anarchies, plagues, epidemics, collapses, and so many “crises” (farm, health, retirement, welfare, energy, deficit) that copywriters have had to escalate to the redundant “serious crisis.” Whether or not the world really is getting worse, the nature of news will interact with the nature of cognition to make us think that it is. News is about things that happen, not things that don’t happen.

I'm having a major crisis trying to wallpaper the living room.