The scratching, burning, socially embarrassing financial crisis
It’s not easy to make a room of stone-faced financial wonks erupt in laughter about the looming threat of a worldwide banking crisis, but Nobel Prize-winner Robert Engle pulled it off.
Engle delivered a pre-lunch presentation on systemic risk at the NYU/Moody’s Credit Risk Conference today.
Systemic risk, for those unfamiliar with the lingo, is the risk that the world banking system could run out of enough money to keep functioning. When financial regulators determined which banks were “too big to fail,” they dubbed them SIFIs, or “systemically important financial institutions.”
Engle’s presentation was full of thick, twisted, mathematically dense formulas that relied heavily on unrelieved strings of numbers and Greek letters. The auditorium full of debt experts seemed to follow along, but the subject was dry — until one video cartoon sent the audience into gales of laughter.
Engle closed his talk with a satirical financial video by political cartoonist Mark Fiore. The cartoon, modeled on pharmaceutical ads, purports to sell “ContagionEx” — a drug for STDs, which in this case means “Sovereign Transmitted Debts.” A Monopoly-man investment banker in top hat and watch fob cringes over his nether regions while waiting for relief in the form of austerity.
The video is not new — it may hail from as far back as 2010 — but it was new to much of the audience (and yours truly) . It has particular relevance now that both Spain and Greece are on the economic brink. We suspect the cartoon will continue to be funny as long as Europe struggles with another chronic STD — short-term delusions.
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