I wonder - after Challenger and Columbia, did anyone claim that fewer smart people should go work at NASA?
The financial industry, through lobbying, the federal reserve system, and the revolving door between it and the government, have created institutions that have such a high barrier to entry, that they face no real competition. We cannot create a competitor to Bank of America. We have to trust the Bank of America's competition with Goldman Sachs, Wells Fargo and Citibank will be enough to see the banks make smart bets, charge lower fees, take a smaller cut, and demand fewer bailouts when they screw up. The problem is we've seen them do none of these things. This implies the financial instituions are essentially working in trust, blocking new entrants, and marching lock-step to continue making massive profits.
The fact that the largest bonuses in Wall St. history occurred just after the financial bailout will always serve as the most obnoxious proof of the deceit of the industry as it exists in its current structure.
The problem was caused by an imbalance between the intelligence of the people building sophisticated and dangerous ways to use leverage and the people policing them, so unless these grads are going to work for the government ... the problem is just building on its self and will certainly re-occur as the government stays one step behind the geniuses Goldman Sachs et all hires to create money for them
I wonder - after Challenger and Columbia, did anyone claim that fewer smart people should go work at NASA?
This is a bad analogy because the Space program is not a for-profit exercise, the motivations are entirely different.
NASA laid all these guys off, what were they supposed to do, flip burgers and drive taxis? No jobs in research or academia. HFT is one of the very few industries that pays mathematians and physicists commensurate with their skills.
From what I have seen, there is something fundamentally wrong in the finance sector - and I don't think it has much to do with morality. It has more to do with the fact that they have so much money that they can afford to do things in very stupid ways. Retail is e.g. most likely far more sophisticated in their usage of IT than the big investment banks. Banks are full of custom systems that are 10 times less efficient at solving problems that have become commodities everywhere else. The fact that they have so much money working the way they work suggests that some rent positions are at play.
Changing this would require a cultural shift that is not likely to happen if they take people from a similar cultural background IMO.
Of course, the real problem is our deficits. We can't pay for them any longer. The Fed is buying 91% of all long term government debt now. So they have to keep rates low or the US Government will become insolvent. Keeping rates low causes a huge surge in liquidity. And if you a reduction in slack in the real economy, zooooom there goes a bubble somewhere.