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This still begs the question. Risk is about unexpected loss of investment, which means at its core it's about the moral and physical consequences of losing mone
by A12-B 6y ago
This still begs the question. Risk is about unexpected loss of investment, which means at its core it's about the moral and physical consequences of losing money. If the consequences of risk are not actually felt, materially, by financiers, but are felt, materially, by people who partake in the deal, why aren't those ordinary people hedged accordingly? If you want to argue economics, it's clear all this does is allow banks to take on riskier and riskier deals at no consequence. The student loan crisis is an example of that.
- SpicyLemonZest 6y agoAgain, it really has nothing to do with morality or just deserts. Risk management is just a valuable thing that banks produce. They take risky deals, and manage those deals to try and make sure that nobody has to materially feel the risk. Sometimes they fail, and they're rightly criticized for that, but more often they succeed. The student loan crisis is a good example of where people's misunderstandings of finance lead them astray. There's a pervasive idea that the crisis is related to banks making it irresponsibly easy to get a loan. But since 2010, the vast majority of new student loans have come directly from the Department of Education, generally with lower prices than private lenders offer.
- A12-B 6y agoWho said anything about 'morality'? The evidence of disaster of letting people with excess wealth make loans they don't suffer consequences for is everywhere. To be a reductionist and say 'risk management is just x, what's the problem?' is lazy. Oh, and I was talking about the government, not banks. They caused the student loan crisis. It doesn't matter though, since my point is about any entity with excess wealth. I don't care about banks in particular.