introduction he was supposed to make instead of reaching for the political hammer that Abrams now wanted to ram down his throat.
Thinking about Lasker’s criticism of China’s currency regime, Abrams wondered whether Lasker had shorted the market, knowing that forcing the Fed chairman to admit the helplessness of the U.S. in the face of Chinese economic expansion would drive down the exchanges by a couple of percentage points the following day. Abrams had seen others do it before and he considered it to be the niftiest, and scummiest, form of insider trading ever invented.
As he approached the podium, Abrams wondered whether anyone else in the room recalled that Lasker was the inventor of ETIFs, exchange traded index funds, that allowed investors to bet on the movement of the entire market at once instead of just one stock or mutual fund at a time, and recalled Lasker’s onetime slogan: Whoever moves the market, rules the world.
Abrams thanked the president for the introduction, made the obligatory how-many-economists-does-it-take-to-screw-in-a-light-bulb joke, and then moved into the substance of his speech.
“What I want to address today,” Abrams said, “is the fact that the economic models that have guided the central banks of both the U.S. and Europe and the risk assessment analyses of financial institutions throughout the world have failed. They have provided us with a picture of the economy that is simply mistaken. It has been …” Abrams felt like he was raising a sword to strike down and split the society in two, and then swung. “It has been nothing more than the imposition of mathematical fantasy over reality.”
The audience fragmented into groups of nodding and shaking heads, and then coalesced into what seemed to Abrams like bands of guerrilla fighters poised for battle in an academic jungle.
The Nobel Prize winners, who’d built their careers designing those models, had taken up defensive positions among their sycophants. Arms folded across their chests, heads fixed forward like obstinate children refusing to wash their hands before dinner.
Young professors of finance and physics and mathematics sat on the fringes, looking up at Abrams as though waiting for the order to fire.
“All of these laissez-faire models rest on the assumption that there’s an invisible hand that brings the market to equilibrium if left unfettered by government interference. It looks at economic history through the distorted lens of this model, and views the boom and bust cycles of the last hundred years merely as aberrations, when—in fact—they are the norm.”
Abrams thought of Hani Ibrahim, that puzzling little man whose office at MIT was the gravitational center of those rebellious youngsters, and of Michael Hennessy who’d driven him not only out of the country, but into hiding.
“What would the public think if it knew that the entire edifice—the … entire … edifice—of economic theory on which the hopes and dreams of two generations has been built rests on nothing—nothing—but on centuries-old analogies with the way particles of pollen drift around in space and with the way gas distributes itself in a container and with observations of water seeking its natural level.”
An image of a basement filled with putrid water flashed through Abrams’s mind and a wave of nausea wrenched his insides. Maybe Ibrahim was dead, had reached a final place of rest. Maybe Gage’s speculation was right: He’d not simply been deported, but sent somewhere to be tortured. And torture was no more of a science than economics. It was trial and error, and the extreme limit of that kind of error was death.
“Any plumber could’ve explained to the good men—and they’re all men—of economic science that water reaches its natural level in a man-made world only when the plumbing has failed.”
And maybe for all those years Hennessy had been searching for a ghost, a creature that persisted in existence only in his
Thinking about Lasker’s criticism of China’s currency regime, Abrams wondered whether Lasker had shorted the market, knowing that forcing the Fed chairman to admit the helplessness of the U.S. in the face of Chinese economic expansion would drive down the exchanges by a couple of percentage points the following day. Abrams had seen others do it before and he considered it to be the niftiest, and scummiest, form of insider trading ever invented.
As he approached the podium, Abrams wondered whether anyone else in the room recalled that Lasker was the inventor of ETIFs, exchange traded index funds, that allowed investors to bet on the movement of the entire market at once instead of just one stock or mutual fund at a time, and recalled Lasker’s onetime slogan: Whoever moves the market, rules the world.
Abrams thanked the president for the introduction, made the obligatory how-many-economists-does-it-take-to-screw-in-a-light-bulb joke, and then moved into the substance of his speech.
“What I want to address today,” Abrams said, “is the fact that the economic models that have guided the central banks of both the U.S. and Europe and the risk assessment analyses of financial institutions throughout the world have failed. They have provided us with a picture of the economy that is simply mistaken. It has been …” Abrams felt like he was raising a sword to strike down and split the society in two, and then swung. “It has been nothing more than the imposition of mathematical fantasy over reality.”
The audience fragmented into groups of nodding and shaking heads, and then coalesced into what seemed to Abrams like bands of guerrilla fighters poised for battle in an academic jungle.
The Nobel Prize winners, who’d built their careers designing those models, had taken up defensive positions among their sycophants. Arms folded across their chests, heads fixed forward like obstinate children refusing to wash their hands before dinner.
Young professors of finance and physics and mathematics sat on the fringes, looking up at Abrams as though waiting for the order to fire.
“All of these laissez-faire models rest on the assumption that there’s an invisible hand that brings the market to equilibrium if left unfettered by government interference. It looks at economic history through the distorted lens of this model, and views the boom and bust cycles of the last hundred years merely as aberrations, when—in fact—they are the norm.”
Abrams thought of Hani Ibrahim, that puzzling little man whose office at MIT was the gravitational center of those rebellious youngsters, and of Michael Hennessy who’d driven him not only out of the country, but into hiding.
“What would the public think if it knew that the entire edifice—the … entire … edifice—of economic theory on which the hopes and dreams of two generations has been built rests on nothing—nothing—but on centuries-old analogies with the way particles of pollen drift around in space and with the way gas distributes itself in a container and with observations of water seeking its natural level.”
An image of a basement filled with putrid water flashed through Abrams’s mind and a wave of nausea wrenched his insides. Maybe Ibrahim was dead, had reached a final place of rest. Maybe Gage’s speculation was right: He’d not simply been deported, but sent somewhere to be tortured. And torture was no more of a science than economics. It was trial and error, and the extreme limit of that kind of error was death.
“Any plumber could’ve explained to the good men—and they’re all men—of economic science that water reaches its natural level in a man-made world only when the plumbing has failed.”
And maybe for all those years Hennessy had been searching for a ghost, a creature that persisted in existence only in his
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