The Big Lie: Governments Have to Save the Big Banks → Washingtons Blog
The Big Lie: Governments Have to Save the Big Banks - Washingtons Blog

Sunday, November 28, 2010

The Big Lie: Governments Have to Save the Big Banks

Many of the world's top economists and financial experts have said that the too big to fail banks are destroying the world economy, that they must be broken up in order to restore stability, and that small banks can easily pick up the slack and make all of the loans which are needed needs. See this, this and this.

And yet many people still believe the myth that the giant banks have to be saved at all costs.

How could that be?

Well, as Adolph Hitler wrote in Mein Kampf:

All this was inspired by the principle--which is quite true in itself--that in the big lie there is always a certain force of credibility; because the broad masses of a nation are always more easily corrupted in the deeper strata of their emotional nature than consciously or voluntarily; and thus in the primitive simplicity of their minds they more readily fall victims to the big lie than the small lie, since they themselves often tell small lies in little matters but would be ashamed to resort to large-scale falsehoods. It would never come into their heads to fabricate colossal untruths, and they would not believe that others could have the impudence to distort the truth so infamously. Even though the facts which prove this to be so may be brought clearly to their minds, they will still doubt and waver and will continue to think that there may be some other explanation. For the grossly impudent lie always leaves traces behind it, even after it has been nailed down, a fact which is known to all expert liars in this world and to all who conspire together in the art of lying.

Similarly, Hitler's propaganda minister, Joseph Goebbels, wrote:

That is of course rather painful for those involved. One should not as a rule reveal one's secrets, since one does not know if and when one may need them again. The essential English leadership secret does not depend on particular intelligence. Rather, it depends on a remarkably stupid thick-headedness. The English follow the principle that when one lies, one should lie big, and stick to it. They keep up their lies, even at the risk of looking ridiculous.
Science has now helped to explain why the big lie is effective.

As I've previously pointed out in another context:

Psychologists and sociologists show us that people will rationalize what their leaders are doing, even when it makes no sense ....

Sociologists from four major research institutions investigated why so many Americans believed that Saddam Hussein was behind 9/11, years after it became obvious that Iraq had nothing to do with 9/11.

The researchers found, as described in an article in the journal Sociological Inquiry (and re-printed by Newsweek):

  • Many Americans felt an urgent need to seek justification for a war already in progress
  • Rather than search rationally for information that either confirms or disconfirms a particular belief, people actually seek out information that confirms what they already believe.
  • "For the most part people completely ignore contrary information."
  • "The study demonstrates voters' ability to develop elaborate rationalizations based on faulty information"
  • People get deeply attached to their beliefs, and form emotional attachments that get wrapped up in their personal identity and sense of morality, irrespective of the facts of the matter.
  • "We refer to this as 'inferred justification, because for these voters, the sheer fact that we were engaged in war led to a post-hoc search for a justification for that war.
  • "People were basically making up justifications for the fact that we were at war"
  • "They wanted to believe in the link [between 9/11 and Iraq] because it helped them make sense of a current reality. So voters' ability to develop elaborate rationalizations based on faulty information, whether we think that is good or bad for democratic practice, does at least demonstrate an impressive form of creativity.
An article yesterday in Alternet discussing the Sociological Inquiry article helps us to understand that the key to people's active participation in searching for excuses for actions by the big boys is fear:
Subjects were presented during one-on-one interviews with a newspaper clip of this Bush quote: "This administration never said that the 9/11 attacks were orchestrated between Saddam and al-Qaeda."

The Sept. 11 Commission, too, found no such link, the subjects were told.

"Well, I bet they say that the commission didn't have any proof of it," one subject responded, "but I guess we still can have our opinions and feel that way even though they say that."

Reasoned another: "Saddam, I can't judge if he did what he's being accused of, but if Bush thinks he did it, then he did it."

Others declined to engage the information at all. Most curious to the researchers were the respondents who reasoned that Saddam must have been connected to Sept. 11, because why else would the Bush Administration have gone to war in Iraq?

The desire to believe this was more powerful, according to the researchers, than any active campaign to plant the idea.

Such a campaign did exist in the run-up to the war...

He won't credit [politicians spouting misinformation] alone for the phenomenon, though.

"That kind of puts the idea out there, but what people then do with the idea ... " he said. "Our argument is that people aren't just empty vessels. You don't just sort of open up their brains and dump false information in and they regurgitate it. They're actually active processing cognitive agents"...

The alternate explanation raises queasy questions for the rest of society.

"I think we'd all like to believe that when people come across disconfirming evidence, what they tend to do is to update their opinions," said Andrew Perrin, an associate professor at UNC and another author of the study...

"The implications for how democracy works are quite profound, there's no question in my mind about that," Perrin said. "What it means is that we have to think about the emotional states in which citizens find themselves that then lead them to reason and deliberate in particular ways."

Evidence suggests people are more likely to pay attention to facts within certain emotional states and social situations. Some may never change their minds. For others, policy-makers could better identify those states, for example minimizing the fear that often clouds a person's ability to assess facts ...

The Alternet article links to a must-read interview with psychology professor Sheldon Solomon, who explains:

A large body of evidence shows that momentarily [raising fear of death], typically by asking people to think about themselves dying, intensifies people's strivings to protect and bolster aspects of their worldviews, and to bolster their self-esteem. The most common finding is that [fear of death] increases positive reactions to those who share cherished aspects of one's cultural worldview, and negative reactions toward those who violate cherished cultural values or are merely different.

I would argue that the fact that the governments of the world have given trillions to the giant banks has invoked the same mental process - and susceptibility to propaganda - as the war in Iraq.

Specifically, many people assume that because the government has launched a war to prop up the giant banks, it must have a good reason for doing so.

Why else would trillions in taxpayer dollars be thrown at the giant banks? Why else would the government say that saving the big boys is vital?

And I would argue that the fear of another Great Depression (an economic death, if you will) is analogous to the fear of death triggered in many Americans by 9/11.

This creates a regression towards old-fashioned thinking about such things as banks and the financial system, even though the giant banks actually do very little traditional banking these days.

In other words, the big lie appears to be as effective in financial as in military warfare.


  1. "Most curious to the researchers were the respondents who reasoned [...]"

    Researchers do not shed light on anything.

    Researchers are obfuscators, or they would quickly be out of business.

    Researchers only further obfuscate the obvious lie, lending the credibility of their supposed intellectual prowess and pedigree to the inane conception of their forced-inquiry.

    Read the partial sentence from the article -I quote- again.

    "Most curious to the researchers were the respondents who reasoned [...]"

    The assumption premised therein is that anyone really reasons. I don't think so.

    Reason implies logic. And logic is nothing of the sort -it is supposed to be.

    The "researchers" appear puzzled by this, stating -what they have found- is an anomaly to logic.

    They have merely re-discovered the essence of logic.

    We know what logic is supposed to be, but it can be proved -it is not -THAT-.

    Logic is 100% emotional.

    The proof to that is wrapped up in understanding that all new assumptions of truth require an -Ah ha!-moment- -which is just an emotional tumult.

    The assumption of logic ALSO infers the existence of the zeitgeist, which of course is a non-starter in any conscientious search for truth.

    THERE IS NO COLLECTIVE CONSCIOUSNESS. There furthermore is no collective credibility.

    So, there is no point walking around thinking, "Well, I may not have all the details to this argument, but it is true nonetheless, because someone does have it all worked out."

    That's just the common misfiring of the emotional -Ah ha!-moment- that pushes each of us forward in this long slog through our very short lives.

    As it turns out -every-single-one- of our assumptions is laced with holes -big enough to drive a logical semi through.

    These holes are not there -because of any particularly devious method of inspection.

    When we inspect anything, we do so with the assumption -that the reason behind our inspection is to develop some kind of better understanding, leading to a betterment of conditions.

    BUT ALWAYS, our inspection-skills trip us up, obfuscating truth with some confused self-confidence.

    This supposed competence leaves us so deluded in our conceptions we will eventually find we have entered a darkened room where logical-uncovered-manholes -litter the landscape.

    This sort of mindless juggling of concepts by "psychologists and sociologists" as Chuck Berry said, -with no particular place to go- is the devil's work -just like the crowd watching those people be burned to death in the video I recently linked.

    This sort of mindless gathering -whether to burn witches or to consider the latest fad in some discussion- leads to cataclysm.

    Paul Krugman is no different from those hundred or so people we can observe in the video watching the witches be burned. There were experts in that crowd too.

    Does Paul Krugman have any sense of the numbers of people who have committed suicide because of the impoverishing effects of the government's quantitative easing blitzkrieg?

    These experts are entertainers and patent medicine salesmen.

    In ancient Greece the philosophers discovered -those who teach for remunerations have an intolerable bias to their ability.

    Most everyone who committed suicide last year was very poor because they could not make sense out of the obfuscated mess these well-paid experts have made of the economy, society, reality and truth.

    Anyone who claims credibility is to blame.

    Reality is infinitely complex enough, without these rabbits popping out of their holes to tell us how late they are for some very important date -in their- Alice in Wonderland world of delusions about competence.

    It is ALL a big lie. And YOU are all its unwitting victims.

  2. Interesting article, but unfortunately I don't think we will ever know the true consequences of letting these banks fail. Volcker's solution (serperate commercial and investment banking) is a viable option.

    This article... a good outline to what is going on at the banks.

  3. The problem is that the big banks and the government are increasingly becoming one and the same ...

  4. I feel sorry for Lee and all others who still think that Banks are a necessity and a De-facto force in our economic evolution. Lee is not sure what happens if we let banks fail!!.
    Well let be known that Banks are the parasite of nations, they are the blood suckers of humanity.
    The Devilish concept is been in for too long, for the free minds get loose of it. That is the dilemma of humanity. TOO BAD.

  5. I feel sorry for Lee and all others who still think that Banks are a necessity and a De-facto force in our economic evolution. Lee is not sure what happens if we let banks fail!!.
    Well let be known that Banks are the parasite of nations, they are the blood suckers of humanity.
    The Devilish concept is been in for too long, for the free minds get loose of it. That is the dilemma of humanity. TOO BAD.

  6. Authoritarinism is also important here. Fear causes people to rally behind a strong leader, and a significant subset of the population will willingly give that leader unquestioning obedience. Bob Altemeyer is a professor who has studied this for years and has posted a free e-book on the web which is a must-read for anyone who wants to understand today's conservatives--who, except for the libertarians, are more authoritarian personalities than true conservatives.

    There have also been some interesting studies of what happens to those who have power. They become disinhibited, self centered, and overconfident. These two phenomena go a long ways toward explaining our current predicament.


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