It's been creeping up on me, a most unfamiliar - mad, you might say - sense of pity. There's Yvette Cooper being grilled on Newsnight, and I almost catch myself yelling at her interrogators: "Give the poor girl a chance, she's only trying to do her bit to salvage the global economy." Or Alistair Darling getting a grilling on the Today programme about a job which must come close to one of the worst of all time. Or Gordon Brown, whose lugubrious wrinkles deepen by the day: "For God's sake, someone give the man an early night."
Of course I'm mad, but then madness is a term which is getting much overused at present. When Nouriel Roubini, the economist who most accurately predicted our current plight, warned the International Monetary Fund in 2006 of the crisis to come, people thought he was delusional. Tony Blair says he would have been considered mad to propose the kind of financial regulation now accepted as necessary. The point is that for 25 years we have collectively been caught up in a delusion: millions of people have been mad. And the brutal charade for government ministers is that right now they have to perpetuate the illusion that they are not panicking, that they are calmly pursuing a course of action that will be effective. In short, that they know what to do, and that it will work.
But of course they know neither.
In the first phase of the banking crisis last October we resolved one big issue: our banks are too big to be allowed to fail. Now, in the second phase, we are faced with the question of whether our banks are too big to rescue. Iceland's were and it went bust, Ireland could be next - and, after that, could it be the UK? No one knows. Usually when you write those three words, the implication is that someone, actually, does know but they won't tell you. This is a known unknowable, as Donald Rumsfeld might have put it.
The banks are being urged by Brown to come clean on their balance sheets and reveal just how bad their toxic assets are. The market gets jitters at the comment: does Brown not know then? So the City minister, Lord Myners, assures everyone that experts are trawling through the banks to establish the true picture. But that is no easy task: if there is no market for a product, how do you value it? As the LSE-based economist Willem Buiter blogged last week: "No one outside the banks and perhaps no one inside them has a good sense of the true value of what they hold on and off their books." And that's not for want of trying.
Even if the auditors came up with some notional figures, they are likely to be so catastrophic that - just as happened with the Royal Bank of Scotland's biggest ever corporate losses announced last week - it would send more panic waves through the City. The stock market is spooked by what it doesn't know, and likely to be even more spooked by finding it out. Our only option seems to be to pretend that the emperor still has a few clothes on.
"We have involved ourselves in a colossal muddle, having blundered in the control of a delicate machine, the working of which we do not understand." The words are from 1930, not 2009, but John Maynard Keynes's comment is as true today. He attributed the failure to a lack of understanding. Until very recently we thought we had put that right: plenty of clever economists; many of the sharpest minds going into finance; every economic indicator meticulously tracked; information spilling out of every analyst. But we forgot that there is a massive gap between information and understanding. The latter requires judgment, and that depends on moral attributes such as courage and wisdom.
Adair Turner, the chairman of the Financial Services Authority, last week attributed the crisis to "an intellectual failure" that ran through the whole system. But this was not a failure of brainpower; rather it shows how intellect must always be married to morality if it is to prove conducive to the common good. It's not enough to be clever.
John Coates at Cambridge's Judge Business School produced some fascinating analysis last year of testosterone and cortisol among City traders and showed how their abnormally high hormones resulted in increasingly risky, and ultimately stupid, behaviour. The average age of those trading billions of pounds was 26. It's basic stuff: young males take risks, and most societies have always known that and socialised them through the authority of older men (and marriage). But with the advent of yuppies in the late 1980s anyone over 45 on a trading floor was regarded as a loser; we handed over a pivotal role in our "delicate" economy to those only too happy to take huge risks with it.
A cargo cult took hold as the money rolled in, capturing the young turks' bosses, too many politicians, the analysts, the ratings agencies, mortgage brokers, auditors and the millions who avidly absorbed tips from television programmes such as Property Ladder on the new hobby of how to be a property developer.
Each person in the chain thought they were behaving entirely rationally, but they were all contributing to this socking great upside-down pyramid of debt that now threatens to come crashing on our heads.
We were lulled into complacency by the expensive public relations companies and big corporate social responsibility programmes that promoted the nonsense of corporate citizenship. Politicians were wooed and tax coffers filled. This is an abject lesson in how groupthink can take hold of even developed societies that pride themselves on their freedom of thought, debate and lack of deference; even the highly educated can be seduced into the tyranny of a fashionable orthodoxy. A whole culture became so obsessed with making money through gambling that it lost an understanding of the kind of restraining principles needed to ensure stability in an economic system vastly more fragile than that of Keynes's day because of its complexity and globalisation. It was like putting kids at the wheels of Ferraris: how can we be surprised at the monumental pile-up?
The voracious appetite to apportion blame is now gathering pace. Look at the history of the 1930s and such anger is to be expected, but we need to be very wary of indulging it. Philip Stephens, one of the Financial Times's leading columnists, has advocated shooting the bankers. Alongside the bankers he might have to line up a lot of other people who egged them on and sanctioned their antics. It seems odd to imagine that a bloody revolution might be launched from the pink pages. Dead bodies are the oldest form of sacrifice; far harder is to acknowledge that it was a collective systemic failure. Yes, some individuals were greedy, but many were simply behaving in ways that the system encouraged and promoted, and which the rest of us failed to stop.
Vengeance is a satisfying emotion, but it has a disturbing history of straying from its proper target and landing on bystanders. Rather, we need a collective reckoning and large slices of humble pie all round. As Hamlet says: "Use every man after his desert and who shall 'scape whipping?"
Copyright Speakers Corner 2017