4 ms·

Ballsy. I sorta agree with #1. "Too big to fail" is too big. Doubly awesome, "too big to fail" is also counter to standard issue investing advice: diversify

Ballsy. I sorta agree with #1. "Too big to fail" is too big. Doubly awesome, "too big to fail" is also counter to standard issue investing advice: diversify your portfolio. "Too big to fail" really means "poorly diversified portfolio". But #2 risks throwing out the baby with the bath water. No doubt that some people prospered solely at the expense of the taxpayer, but it's also likely that some of the people who prospered were competent folks who were just at the right place at the right time. Removing them, even if they did prosper,might remove the best folks to right the banks.

giardini 15y ago
Well, honestly, I've toned my feelings down a bit in my post. My first thoughts were of mass Wall Street hangings, burnings at the stake and branding surviving executives/technocrats/economists on their foreheads with the letter "E" ("Its the Economy, Stupid!"). There are potentially at least 3 problems with employees involved: negligence, crookedness, and competence. I want to expand on the last of these, "competence", since, unlike the other 2 problems, I do not believe that it can be corrected. The financial industry has failed to absorb the lessons of the last 100 years concerning financial instruments. Taleb's "Black Swan" addresses this failure as does Fox's "The Myth of the Rational Market". Those executives/economists/technocrats unfamiliar with the ideas in those works should be removed forever from the industry. That means most of them. Why? Because they are ineducable - their entire training is based on defunct financial models. The finance industry must be rebuilt from the bottom up with more robust models. But I don't expect such real reform (of either sort: the burnings or the education). Instead I expect the same damn thing, another financial meltdown, to happen yet again within the next decade. Perhaps then some crazed financial Savanarola will be able to arouse the crowds to a passionate frenzy over the trillions lost. Maybe then heads will fall and true change will take place.

giardini 15y ago

Well, honestly, I've toned my feelings down a bit in my post. My first thoughts were of mass Wall Street hangings, burnings at the stake and branding surviving executives/technocrats/economists on their foreheads with the letter "E" ("Its the Economy, Stupid!"). There are potentially at least 3 problems with employees involved: negligence, crookedness, and competence. I want to expand on the last of these, "competence", since, unlike the other 2 problems, I do not believe that it can be corrected. The financial industry has failed to absorb the lessons of the last 100 years concerning financial instruments. Taleb's "Black Swan" addresses this failure as does Fox's "The Myth of the Rational Market". Those executives/economists/technocrats unfamiliar with the ideas in those works should be removed forever from the industry. That means most of them. Why? Because they are ineducable - their entire training is based on defunct financial models. The finance industry must be rebuilt from the bottom up with more robust models. But I don't expect such real reform (of either sort: the burnings or the education). Instead I expect the same damn thing, another financial meltdown, to happen yet again within the next decade. Perhaps then some crazed financial Savanarola will be able to arouse the crowds to a passionate frenzy over the trillions lost. Maybe then heads will fall and true change will take place.