Journalists are just as “complicitous silent”

Sir Gillian Tett in “The financial doublethink that needs to be eliminated” August 21, comes down quite hard on politicians and regulators accusing them, in terms developed by Pierre Bourdieu, of “complicitous silence” and urge them to start thinking more about power structures, vested interest – and social silence”. As a journalist Tett could use herself a little spoonful of the medicine she prescribes.

In her interesting and very readable book “Fool’s Gold”, Tett manages to be very “complicitous silent” about the financial regulations coming out of the Fed and the Basel Committee; which did so naively ignore that by assigning so much power to the credit rating agencies to decide how much equity the banks needed, the regulators set the agencies up for big time capture.

If banks invest $1.000 billion dollars in AAA rated instruments they have only to put up $16 billion as equity… because the opinions of the credit rating agencies cover the other $984 billion even though for these opinions there are no capital requirements at all. Compared to the above, the other and indeed absurd paradox she refers to in her article could be regarded as of a secondary importance.

P.S. Gillian Tett and many other in FT know I have been writing about this serious issue, but they have preferred to be silent perhaps because of some “power structure” reason of their own, excusing themselves with the utterly stupid argument that I write too much.