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What good is Wall Street?
- SeanDav 16y agoA well written, balanced article. As someone who has spent many years in the banking/investment industries on both the "buy" and "sell" sides I can say that there is no doubt in my mind that banks are an essential part of a healthy economy. I can also say without any doubt that banks have been allowed to go way too far and that it is all about the short-term rewards.
- alexyoung 16y agoWell, the Ferengi make regular pilgrimages to Earth's Wall Street, to them it's a holy site of commerce. That probably brings in a lot of tourism money.
- iwr 16y agoWall Street organizations, in their present form, are functionally bankrupt. Having been bailed out, the clearing of bad debt never happened. This effectively trapped a large amount of capital in their vaults. In addition, the government is doing everything possible to funnel more productive resources into these black holes. The real systemic risk was in throwing good resources after the bad. The "contagion" was other governments being spurred to do the same.
- patrocles 16y agoWhat good is Google? or OkCupid? or any matching service? For those who have nothing to seek, these services are indeed an environmental scourge. ;)
- deleted 16y ago[deleted]
- BSousa 16y agoDidn't really read it all the way through, but for some reason, it is only me that finds it weird that the publish date is November 29, 2010? Is this an error or intentional?
- michael_dorfman 16y agoMagazines (like the New Yorker) are usually dated a bit into the future, so that they look fresh on the news stands. At my local magazine shop, almost of the monthly magazines are already on their December issues, and some of them have been out for a week or two. Have you really never noticed this before?
- alextp 16y agoThe New Yorker predates its issues, as they might theoretically take until Nov 29 to arrive in some people's houses (over here in brazil it takes longer than that, usually). It's an odd practice, but most magazines do it in some way.
- ig1 16y agoSome of this article is well written however the attacks on innovations such as ABS an CDOs is tacky, yes they haven't done well, but that's the nature of innovation. You're always going to have some innovations that do well and other that do badly, the only way you'll find out is through execution. They were both designed to solve practical problems in liquidity and price discovery. Picking through individual failures and saying the whole system is bad on that basis is like saying startups are worthless because WebVan failed.
- chopsueyar 16y agoHell of a place to choose to run 'experiments'. Try that shit in an emerging market, first.
- ig1 16y agoEach market is different. Even between developed markets, what might work in London might not work in New York or Tokyo. Sure you can block all innovation, but you need to accept you'll block out the good as well as the bad. And that comes at the cost of economic growth.
- jfoutz 16y agoIt's a wildly unpopular idea here, but i think a progressive tax really encourages innovation. A zillion small scale trades with little to no tax consequences encourage people really explore the space. Effective strategies grow till efficiency is overcome by tax friction. "To big to fail" is limited by the structure of the system, rather than regulation.
- palewery 16y agoI wonder if it would be called innovation if we called these 'Products' what they really are. CDO='insurance on loans', Synthetic CDOS = 'making bets on other people's loans' When Las Vegas casinos come up with new ways to gamble is it called innovation?
- 16y ago
- eml 16y ago... At Goldman, it has been reported, nearly a thousand employees received bonuses of at least a million dollars in 2009. Not surprisingly, Wall Street has become the preferred destination for the bright young people who used to want to start up their own companies, work for NASA, or join the Peace Corps. At Harvard this spring, about a third of the seniors with secure jobs were heading to work in finance. Ben Friedman, a professor of economics at Harvard, recently wrote an article lamenting “the direction of such a large fraction of our most-skilled, best-educated, and most highly motivated young citizens to the financial sector.” Read more http://www.newyorker.com/reporting/2010/11/29/101129fa_fact_cassidy#ixzz1612hb0Zy http://www.newyorker.com/reporting/2010/11/29/101129fa_fact_... - The unintended consequences of the Federal Reserve system of monetary distortion.
- chopsueyar 16y agoIt's gotten Michael Douglas at least 2 paying gigs.
- dpatru 16y agoThe real problem is not that firms took innovated and took risks, it's that no one seems to have been held responsible. All the "failed" banks, investment houses, and businesses should have been allowed to fail. They should have been liquidated to pay their creditors and their assets allowed to be bought out by firms that acted responsibly. Instead, the irresponsible were/are bailed out, and their managers are allowed to continue operating. The lesson is: Take risks. You will pocket profits right away and bailouts will cover any downside.
- asmithmd1 16y agoexactly. The money quote: “In most industries, when people are paid too much their firms go bankrupt, and they are no longer paid too much,” he told me. “The exception is when people are paid too much and their firms don’t go broke. That is the finance industry.”
- eljaco 16y agoI'd like to make an amendment: Take risks. You will pocket profits right away and bailout will cover any downside as long as you can make enough people think you are too important to fail.
- SkyMarshal 16y agoI was going to say something similar: Take huge frikkin risks that can sink the world if they fail. You'll make billions and bailouts will cover any downside.
- anamax 16y agoAnother way to get bailed out is to make sure that folks who have the power to do a bail out think that keeping you alive will benefit them. You can do that with political support.
- Symmetry 16y agoI think a second big factor in this is that people tend to suffer from scope insensitivity, so it feels much nicer to win $5 ten times and then lose $100 once than it feels to lose $5 ten times and win $100 once.