A potpourri of factoids, commentaries, and anecdotes

Remember Nick Leeson? He was the rogue trader who, in 1995, ran a 233 year old company into the ground with a bit of reckless speculation on the markets. Well, he obviously knows something about financial mismanagement, so naturally the Guardian got him to comment on the current international financial crisis:

The world's financial markets remain at the eye of a perfect economic storm. The architects of this almighty financial sell-off? The banks themselves. The markets are in complete disorder, yet they remain unable to solve the situation themselves, and so go looking for a public sector bailout. Risk management, the buzz word of the financial markets since the collapse of Barings Bank in 1995, is clearly an oxymoron.

One could be forgiven for a bit of eye-rolling for that last sentence, where he conveniently omits his role in the fiasco. However, he does acknowledge his role in the collapse of Barings, and in the process highlights his point about the lack of care in who financial institutions give credit to:

Quite simply, the banks have traded recklessly over the past 10 years and have put everybody's wellbeing at risk. Anybody and everybody could get whatever credit they wanted as recently as three years ago. I returned from Singapore in 1999, responsible for £862m worth of losses that brought down Britain's oldest investment bank, personally liable through an injunction for £100m, and yet within the space of a week had been offered five different credit cards. Ridiculous! Any central bank will tell you that the system exists on the premise of "responsible lending"; but the experiences of the past few years clearly show this is utter rubbish.

Yeah, that's right. A convicted felon, convicted of financial crimes at that, who was a hundred million pounds in debt, was offered credit, apparently without asking for it. And the thing is, the crisis of credit card defaults hasn't even hit in a big way yet. When it does, watch out, because this whole mess will start to hit the fan just as they're cleaning up the subprime mess. And despite what Americans like to think, their Treasury doesn't have infinite resources -- sooner or later China, the EU, many of the OPEC countries, and others will have to wonder if it isn't time to cut their losses and get out of the US dollar as the default reserve currency. Let's just hope that Sarah Palin isn't president when it happens. Remember Martin Sheen's character in The Dead Zone? "The birds are in the air. Hallelujah! Hallelujah!"

Now Americans (at least nominally) have the opportunity to stop such a situation in November (perhaps; I'm not giving Obama a free pass either, but he's less likely to do something crazy like that than McCain, and far less likely than Palin). The question is, even if Diebold allows it, will they? This article raises an unsettling fact about how Joe and Jane Sixpack process information:

The federal Centers for Disease Control and Prevention recently issued a flier to combat myths about the flu vaccine. It recited various commonly held views and labeled them either "true" or "false." Among those identified as false were statements such as "The side effects are worse than the flu" and "Only older people need flu vaccine."

When University of Michigan social psychologist Norbert Schwarz had volunteers read the CDC flier, however, he found that within 30 minutes, older people misremembered 28 percent of the false statements as true. Three days later, they remembered 40 percent of the myths as factual.

Younger people did better at first, but three days later they made as many errors as older people did after 30 minutes. Most troubling was that people of all ages now felt that the source of their false beliefs was the respected CDC.

Unfortunately, what this means is that organizations like FactCheck.org are very double-edged in their effect when they deal with, say, the lies that the Republicans are telling about Obama. They acknowledge this themselves in this article:

A Sept. 4 article in the Post discussed several recent studies that all seemed to point to the same conclusion: Debunking myths can backfire because people tend to remember the myth but forget what the debunker said about it. As Hebrew University psychologist Ruth Mayo explained to the Post, “If you think 9/11 and Iraq, this is your association, this is what comes in your mind. Even if you say it is not true, you will eventually have this connection with Saddam Hussein and 9/11.” That leaves myth busters like us with a quandary: Could we, by exposing political malarkey, just be cementing it in voters’ minds? Are we contributing to the problem we hope to solve?

This is particularly scary. Of course, these organizations have to continue their work, but they also have to be careful how they present their findings. Fortunately, the aforementioned Post article discusses how such things might be handled:

Mayo found that rather than deny a false claim, it is better to make a completely new assertion that makes no reference to the original myth. Rather than say, as Sen. Mary Landrieu (D-La.) recently did during a marathon congressional debate, that "Saddam Hussein did not attack the United States; Osama bin Laden did," Mayo said it would be better to say something like, "Osama bin Laden was the only person responsible for the Sept. 11 attacks" -- and not mention Hussein at all.

Still, it's unsettling, because this handicaps you in trying to present the truth. Furthermore, ignoring the enemy's lies isn't an option either:

So is silence the best way to deal with myths? Unfortunately, the answer to that question also seems to be no.

Another recent study found that when accusations or assertions are met with silence, they are more likely to feel true, said Peter Kim, an organizational psychologist at the University of Southern California. He published his study in the Journal of Applied Psychology.

Myth-busters, in other words, have the odds against them.

Scary.

On a (very) distantly related note, here's another psychological study that came out recently:

People who are easily startled by loud bangs or gruesome pictures are more likely to vote for right-wing policies compared to calmer people who take a more liberal approach to life, according to a psychological study of political beliefs.

The findings support the idea that personality type influences political attitude, which could explain why voting differences appear to be entrenched. "Although political views have been thought to arise largely from individuals' experiences, recent research suggests a possible biological basis. We present evidence that variations in political attitudes correlate with psychological traits," said John Hibbing of the University of Nebraska-Lincoln.

From the Independent. This doesn't fit me very well, because I tend to be a jumpy sort, and I'm certainly not right wing. Maybe I'm an anomaly, or maybe this study is full of shit. It's always good to remember that a lot of psychological studies are garbage, or at least oversimplify their findings (and media that report those findings oversimplify them even more). So maybe, just maybe, the studies about factchecking are inaccurate or incomplete and we can find better ways of bringing out the truth. Let's hope so, anyhow.