Did cocaine use by bankers cause the global financial crisis?

yoyo50

yoyo50

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I've really been drinkin' Muthafucka, I really bee
"Wall Street got drunk" was George W Bush's typically incisive take on the main cause of the emerging financial crisis in July 2008. Two years later the governor of the Bank of England, Mervyn King, explained in his Mansion House speech that "the role of a central bank in monetary policy is to take the punch bowl away just as the party gets going" (something that he admitted had not occurred). But perhaps the wrong intoxicant was being blamed. The controversial former drug tsar David Nutt told the Sunday Times this weekend that cocaine-using bankers with their "culture of excitement and drive and more and more and more ... got us into this terrible mess".

I'm inclined to agree. Cocaine is (I'm reliably informed) a drug that results in intense bouts of over-exuberance as well as a tendency to talk extremely convincingly about stuff you know nothing about. Everyone accepts that a credit bubble occurred in the mid-noughties and that it was a direct result of what the former US Federal Reserve chief Alan Greenspan has referred to as "irrational exuberance". It could also be argued that traders would be better able to sell absurdly complicated financial weapons of mass destruction after taking a confidence-boosting narcotic such as cocaine. Furthermore, surely only cocaine-ravaged buffoons would actually buy billions of dollars worth of mortgage-backed securities when they were so clearly doomed to explode the minute the property boom stalled.

cont. http://www.guardian.co.uk/business/shortcuts/2013/apr/15/cocaine-bankers-global-financial-crisis
 
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It certainly had something to do with it. This is a good DiTM article. I usually frequent The Guardian so "ya beat me to it!".
 
Sounds like a cop out, the culture of greed and excess caused the financial crisis, cocaine would have just been a side dish. The idea that what happened can be blamed on a drug instead of on the selfish actions of the bankers is just a way of diverting blame.
 
Crankinit said:
Sounds like a cop out, the culture of greed and excess caused the financial crisis, cocaine would have just been a side dish. The idea that what happened can be blamed on a drug instead of on the selfish actions of the bankers is just a way of diverting blame.
Click to expand...

good point
 
i would argue cocaine (and heroin) kept our economy from being completely demolished. the government (owned by banksters) is responsible for unbelievable amounts of narco trafficking, no surprise to many (Afghanistan *cough cough*. the profits from the drugs are an untraceable tax free liquid asset that can be funneled back into the economy when and where they want. all that cold hard cash works the same as the gold held in fort knox or whatever treasury hold.

http://www.fromthewilderness.com/free/ww3/index.shtml#drugs
 
Did cocaine use by bankers cause the global financial crisis?

Coked-up bankers caused the credit crunch, according to the former drug tsar David Nutt. One former City worker can well believe it

"Wall Street got drunk" was George W Bush's typically incisive take on the main cause of the emerging financial crisis in July 2008. Two years later the governor of the Bank of England, Mervyn King, explained in his Mansion House speech that "the role of a central bank in monetary policy is to take the punch bowl away just as the party gets going" (something that he admitted had not occurred). But perhaps the wrong intoxicant was being blamed. The controversial former drug tsar David Nutt told the Sunday Times this weekend that cocaine-using bankers with their "culture of excitement and drive and more and more and more ... got us into this terrible mess".

I'm inclined to agree. Cocaine is (I'm reliably informed) a drug that results in intense bouts of over-exuberance as well as a tendency to talk extremely convincingly about stuff you know nothing about. Everyone accepts that a credit bubble occurred in the mid-noughties and that it was a direct result of what the former US Federal Reserve chief Alan Greenspan has referred to as "irrational exuberance". It could also be argued that traders would be better able to sell absurdly complicated financial weapons of mass destruction after taking a confidence-boosting narcotic such as cocaine. Furthermore, surely only cocaine-ravaged buffoons would actually buy billions of dollars worth of mortgage-backed securities when they were so clearly doomed to explode the minute the property boom stalled.

I certainly saw my fair share of sniffly noses and gurning jaws at City bars every Thursday night. I also heard overconfident gibberish being spouted by brash wide-boys throughout my 12-year banking career. There were also lots of stories about some of the big swingers in New York enjoying a line or 10 of an evening. Bernie Madoff's office was apparently known as "the North Pole" such were the gargantuan quantities of "snow" to be found there and most bankers are aware of the published allegations that Jimmy Cayne (former CEO of Bear Stearns) had an anti-acid medication bottle that was filled with cocaine.

Dr Chris Luke, an A&E specialist based at Cork University Hospital, Ireland, who has studied the effects of cocaine on bankers, has stated that "prominent figures in financial and political circles made irrational decisions as a result of megalomania brought on by cocaine usage". He concludes that "people were making insane decisions and thinking they were 110% right … which led to the current chaos."

Greed, selfishness, ignorance and ruthlessness also played their part, of course, but I think it would be foolish not to see the role that the drug played in creating the bubble. Herd mentality, which thrives during times of uncertainty, is certainly much more explicable when you factor in the trembling insecurity and depleted discernment that go hand in hand with a coke habit.

There is, I'm pleased to say, a happy ending to this sorry tale: my ex-colleagues and clients who still work in the Square Mile tell me that many City boys are now too scared to keep snorting the Bolivian marching powder. This may mean bankers are having less fun but, surely, it can only lead to a more restrained and sensible financial system.
 
What a load of shit. Bankers who use cocaine caused the crisis, but surely the stuff didn't jump up their noses uninvited.
 
Correlation does not imply causation. A lot of one-percenters regularly take stimulants to work harder.

Why did the banks supply people credit derivatives tied to mortgages and other risky things?
Because investors were demanding higher yields.
Why were investors demanding higher yields?
Because they saw banks making a lot of money.
Why were banks making lots of money?
Because there was an abundance of available credit.
Why was there an abundance of credit?
Because the Fed lowered interest rates down near 1%
Why did the Fed do that?
Because they wanted to fix the economy after 9/11 and the dot com bubble burst.
...
And so on. It was a chain of events really.

The technological growth of the 80s and 90s made it possible for banks to develop things like Collateralized Debt Obligations (which are very difficult to model). So really it was only a matter of time before the investor's demand for higher yield could me met with financial instruments developed to promise that yield. It all would have worked out fine if housing had not burst its own bubble. Bankers doing coke had nothing to do with the housing crisis or how hard it was to predict.
 
cocaine is not a true narcotic; it is a stimulant

i thought the sale and trade of cocaine internationally is what stopped things from getting even worse? the banks need that drug money to survive.

and they were probably on big pharma stims instead of cocaine.
 
Who the fuck knows if it did or it didnt. It didnt

But have you ever been near the bankers on a friday night in London? Like 20 of them all in suits out, just get ounces of pure stuff between them and get very silly on it, traders and bankers love coke, but causing the problem, no.
 
don't blame wall streets greed on coke.

The financial disaster is a result of actions from the top of the banking industry, not a few lowly traders getting high in manhattan nightclubs.
 
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