Leadership and Critical Thinking in the Global Financial Crisis.

Many will already have seen or read Bill Moyers's October 10 interview with George Soros on his "Journal" program/blog. http://www.pbs.org/moyers/journal/10102008/watch.html What's striking about Soros is how he observes the groupthink grounded in basic human nature that has driven this crisis to the brink. "[O]ur ability to govern ourselves doesn't keep pace with our ability to exercise power over nature, control over nature."

This is especially striking when looking at the role of the SEC in permitting the five major investment banks to self-regulate. As Soros put it so well in his interview, the major flaw in Wall Street thinking as developed since the demise of Glass-Steagall is the belief that by distributing the risk, you reduce the risk. The real question is: at what point does blindness to reality set in?

What happened at the SEC in 2004 is succinctly put together by the New York Times's Stephen Labaton in his multi-media presentation on the subject. http://www.nytimes.com/interactive/2008/09/28/business/20080928-SEC-multimedia/index.html http://www.blogrunner.com/snapshot/D/0/9/stephen_labaton/

It's a powerful example of how quickly the belief in the all-powerful, self-correcting, invisible hand of the market always making things right became arrogance combined with pure greed. Who was worse? The SEC, for essentially rubberstamping a fundamental change in how risk is accounted for, or the firms and their lobbyists for squeezing out the last major run up this super bubble of a market these past 25 years? These human blindspots are curious. I'm struck by how stupid and mute we've become today, numbed by the "good" times to the point of some weird lethargy that's both blind hope and apathy. Which brings us to the psychology of leadership of the governments we now look to for "bailout" and "rescue".

How caught up are the world's finance ministers in clinging to their belief in the Market as the ultimate expression of Mammon? The Brits have, again, shown a capacity for both critical thinking and leadership that gives cause for hope. I wonder if, as Labaton suggests, it isn't strange that we have Henry Paulson leading the way in this crisis, and if we can't possibly crack the mold of our group think about what's possible and what's right to move out of this mess.