I don’t think that I have given my explanation of our present financial or economic crises and how it came about. Now I suppose I could go into explaining about sub-prime mortgages and credit default swaps and collateralized bond obligations, but I bet you already know about those. Instead, I’ll just give you a quick allegory. Tell me if you have heard this one before? You probably have, it’s about 40 years older than my father and he’s been dead for almost 10 years now.
There is this boss who is hiring for a position in his company and he has 3 people come in to the office to interview for it. While interviewing the 3 people separately, he asks them the same question, “What is two plus two?”
The first candidate was a lawyer and he answered the question using historical and legal precedents, bringing up references to the Napoleonic Civil Code, the Magna Carta and even a few passages from the Koran and the Talmud. Finally he said, “As you can see, historically, ethically and legally, there is only one number that can be found to be a true representation of the sum of two plus two, and that can only be four.”
The second person was an engineer and thought there must be some trick involved, but she answered much more simply, "Depending on whether you’re dealing with positive or negative numbers," she said, "the answer could be plus four, zero, or minus four.”
The third person was an accountant and when he was asked the question, he looked to his right and then he looked to his left. He looked at the interviewer straight into his eyes and then he got up and walked over to the window. He pulled the venetian blinds down and closed them. Then he walked over to the door of the office, opened it and took a quick look outside. He closed the door and made sure that it was locked so that no one would enter. He walked back over to the desk and leaned over looking his potential boss in the face and said barely above a whisper, “How much do you want it to be?”
And that’s the crisis in a nutshell. Not enough people willing to give us a straight answer. Just accountants and CEO's and Madoffs telling us what they think we want to hear.
Here endeth the lesson.