Our leaders have lost touch with reality – just like the banks did | Aditya Chakrabortty
Even as their world came apart, the bankers clung to denial. By August 2007, the flagship hedge fund of Wall Street's most prestigious firm was tanking fast - and what explanation came from the man at Goldman Sachs? "We were seeing things that were 25-standard deviation moves, several days in a row." The bank was getting hit by events that were only meant to happen once every 100,000 years - and they were happening every day of the week. Given a choice between blaming their models or reality, Goldman's bosses held the world at fault.
You know the rest because, a decade later, you and I are still paying for it. How the banks died, the world economy collapsed and most of us got poorer. How the financiers, mainstream economists and regulators were so detached from reality that they swore blind that such a catastrophe was impossible - even while it was under way.
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