Language, Greenberg, and the International Financial Collapse

[Harold Schiffman]

Language, Greenberg, and the International Financial Collapse


For many, many months now, officials in Washington have been telling
us that the government must use taxpayer dollars to rescue huge
financial institutions - like banks and AIG - because, otherwise, the
world's financial system and the global economy will collapse. As a
civilian with no expertise in international finance, I can't claim to
have any evidence that those assertions are false. But I've also
wondered whether they were, in fact, true - or whether anyone really
knew whether they were true or not.

Part of my skepticism comes from language. Whenever our financial
experts and political leaders (from Paulson to Geithner to Barney
Frank to President Obama himself) talk about this issue, they stop
using evidence and arguments and resort to metaphors instead. I
haven't heard anyone say that "if AIG goes under, then X and Y will
happen, which will lead to Z" (Z clearly being unpleasant). Instead
they say that if we don't bail out AIG (or Citigroup or Goldman
Sachs), then the whole system of global finance will "collapse" or
"implode." Or "freeze up" or "disintegrate." Or "grind to a halt."

Now I like metaphors, but metaphors are not arguments - and, as any
good writer knows, metaphors can be ingeniously used to conceal a lack
of evidence or clarity.

That clarity and evidence may be sorely lacking on this issue was
suggested last week when Maurice Greenberg, the founder and long-time
chief of AIG, testified to congress that, in fact, allowing AIG to
fail would not have produced a major international collapse. "There
would have been a ripple, but it wouldn't have been catastrophic,"
Greenberg said. "I don't think it would have been disastrous."

Now Greenberg, of course, is a man with an unusually large number of
axes to grind (he was tossed out as head of the company a few years
ago), and most of his testimony to congress was stunningly
self-serving.

But maybe he's right. Maybe we could have saved $180 billion on AIG
(and billions more on other institutions), and nothing really terrible
would have happened. It's a sobering thought.

http://www.huffingtonpost.com/alex-keyssar/language-greenberg-and-in_b_184043.html

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