An Endless Search for the Greater Fool

There is a very good series running at the moment as part of the BBC World Service’s Documentary Archive on the current subprime mortgage crisis and corresponding financial market instability. I particularly enjoyed this exchange when I heard it on my commute this morning:

“You could package these dud loans and sell them as complex financial instruments that were poorly understood by many of the people who bought them. Indeed it was only, in the main, people who didn’t understand them very well who would buy them.”

“How can that be so when these are some of the most sophisticated people and institutions on the planet?”

“Well, some of them are sophisticated institutions, although what the sophisticated institutions are doing, in the main, is themselves to package and repackage these things and sell them on to less sophisticated institutions. In a sense, there has been an endless search for the greater fool, and what we’re going to learn, you know when this crisis finally settles down, is who the greatest fools are.”

The Documentary Archive podcast contains short (usually around 22 minutes long) documentaries from the BBC. Like a lot of BBC World Service programmes they cover current affairs but go much deeper than the headlines to give you real context. I loved the recent series about reconstructing the cultural heritage of The Balkans. It’s sneaky indirect journalism at its best—it seems like an ‘Arts and Culture’ story but in the course of talking about churches and the ancient streets of Dubrovnik you are exposed to stories of heroism and murder, economics and history, archaeology and urban planning.