Central bankers face the music

It must be difficult being a central banker today.

Having taken much of the blame for the economic mess we're in, bankers are in a bind.

No longer able to busk in the halo-like glory that surrounded them for the last two decades, these heroes of our now bygone Gilded Age face a reckoning that exposes them to ridicule.

First it was Alan Greenspan, the demigod of the Federal Reserve, whose words have long been studied with the reverence once accorded by medieval monks to Aristotle.

When late October he admitted that there was a "flaw" in his assumption of 40 years that banks were best able to protect the interests of their shareholders and that they needed no oversight, it was a strange moment for people even with the smallest sense of reality.

You don't say, they would have been excused to think.

Sir John Gieve, the outgoing deputy governor of the Bank of England, went even further in humbling himself yesterday when he said that current mathematical models were ill-suited to understand our economies and that "putting the banks into the models would be a good place to start."

Ah. It would be, would it.

Sir John also said that, contrary to what he had thought before, a position of "cautious scepticism" regarding the markets should be in order, apparently unaware that this is not the first time their fear and greed led to a crisis.

It is difficult to know what to make of all this, other than to treat it as a fable of human fallacy, of the ability of even the smartest among us to lose themselves in self-delusion, to think common sense no longer applies.

The hysteria of the boom is, of course, over. But there will be others. They will sweep up in them new idols, only to humble them in the end. Best, perhaps, is to watch in wry amusement. And to remember to run for the door when the party really gets going.