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Matt Levine about this on today's Money Stuff: "I know this is bad but I find something aesthetically beautiful about it. If you have a pot of money [pensions]
by triceratops 4y ago
Matt Levine about this on today's Money Stuff:
"I know this is bad but I find something aesthetically beautiful about it. If you have a pot of money [pensions] that is immune to bank runs, over time, modern finance will find a way to make it vulnerable to bank runs. That is an emergent property of modern finance. No one sits down and says “let’s make pension funds vulnerable to bank runs!” Finance, as an abstract entity, just sort of does that on its own."
- boomboomsubban 4y agoSurely nobody in the world of finance has been making money off of these pensions becoming vulnerable to bank runs. And even if there were someone profiting, they wouldn't have done so by choice, it just happened.
- thfuran 4y agoIt's an inevitable consequence of Madoff's Third Law of Finance. There's just no getting around it.
- ISL 4y agoFrom my read of Levine's explanation, it was really the promise of a greater pension outcome for a given amount of contribution. Whether the contribution was smaller or the outcome larger is kinda immaterial -- the managers were chasing yield.
- kasey_junk 4y agoAnd also accounting rules not really being well factored for the pension use case.
- mejutoco 4y agoI am not an expert but if someone managing a pension fund makes it less underfunded by using some of these instruments/techniques they might get a bonus for good performance, don't they? Or am I misunderstanding something.
- iTradeWarez 4y ago"aesthetically beautiful" Jesus these people are sick
- hedora 4y agoI assumed it was meant in a "mushroom clouds are pretty" sort of way.
- steve_adams_86 4y agoYes, like a war machine is impressive and fascinating in its systems and parts, while the external effects are horrifying and appalling.
- implements 4y agoPerhaps in a “Life finds a way” sense, too.