Few would argue that our economic system is in need of an overhaul, what with income and wealth inequality beyond levels thought possible in an enlightened world, national debts and mortgage defaults at bursting points, corporate lobbyists and tax evasion realigning the needs of everyday workers, and a near global financial meltdown that almost destroyed the world banking system still steaming. But one wonders how anything can change when governments refuse to reign in the big boys playing games with the economy. A once-staid banking industry (with its 3-6-3 rule: borrow at 3%, lend at 6%, on the golf course by 3 pm) has been transformed into a high-stakes poker game, what Scott Patterson called in his sobering book The Quants about math wizards and markets, “hot-rod hedge funds fuelled by leverage, derivatives and young traders willing to risk it all to make their fortunes.” Prior to the near meltdown, the quants were given free rein to make money any way possible, trading CDOs and CMOs (over-the-counter supposedly correlated sliced-up debt products meant to securitize risk) and CDSs (arbitraged insurance that plays long and short positions at the same time), all without regulation. In fact, regulation was discouraged.
Posted on: Tue, 04 Mar 2014 03:32:42 +0000
Trending Topics
Recently Viewed Topics
© 2015