The only thing inevitable about the current economic crisis is that once everyone was given enough rope, they would surely hang themselves--and take us along with them. When the Maestro Greenspan gave his feeble excuses before Congress, he expressed his surprise that the institutions did not act in their own interest and police themselves. He expected them to be rational. In Peter L. Bernstein's The Power of Gold: The History of an Obsession, he points out that Gold is an element that is virtually without utility. It is useless, but it is rare and it does catch the eye. It is gold's scarcity coupled with it's allure that gives it iconic stature, its lack of utility is of no consequence. Ok. It's visceral--we like shiny baubles, especially if everyone can't have them.
This is what people value, and institutions are basically groups of people, led by the most ambitious and ruthless, but not necessarily the most reflective--maybe he should have taken an undergraduate psychology course to enlighten him. I thought everyone knew that economics was a behavioral science. In the words of Ben Zoma,
(Who is considered mighty? One who conquers his visceral inclinations Pirkei Avot 4:1)
How have the mighty fallen?