.. says the ex-Enron advisor. He knows what's he talking about.
Consider the hypothetical example of a money manager who leverages up his clients’ money with lots of debt, then invests the bulked-up total in high-yielding but risky assets, such as dubious mortgage-backed securities. For a while — say, as long as a housing bubble continues to inflate — he (it’s almost always a he) will make big profits and receive big bonuses. Then, when the bubble bursts and his investments turn into toxic waste, his investors will lose big — but he’ll keep those bonuses.
You don't say. Ah, for the good ole days of Don Corleone.
Saturday, December 20, 2008
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Meanwhile, how much has our nation’s future been damaged by the magnetic pull of quick personal wealth, which for years has drawn many of our best and brightest young people into investment banking, at the expense of science, public service and just about everything else?
Good question. The answer is -- a lot.
Vico always knew what to do with these critters.
Spengler goes full-hog Spenglerian:
Nothing in the market mechanism, however, can distinguish between pornography and art, medicine and recreational drugs, development and suburban sprawl, or, for that matter, family formation and addictive consumption. The modern marketplace arose during the 16th and 17th centuries through demand for silk, spices, rum and tobacco, and destroyed most of the population of South America and perhaps a third of the population of West Africa. In the process, the West learned to form joint-stock companies, write insurance, trade options, and establish central banks. All of these contributed mightily to its economic development later, despite their checkered origins. If moral rot has taken hold of a society, the market mechanism will take it to hell faster and more efficiently than any of the alternatives.
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