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The financial system - it's completely fucked, isn't it?
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Edited Feb 16, 2009, 15:14
Re: The financial system - it's completely fucked, isn't it?
Feb 16, 2009, 14:59
Exactly that's the nub of it, growth over stability. Its pretty much a capitalist maxim that if you don't grow you die (Edit : Stability = Growth). Risk management is the key, but if auditors are lying to you about the risk of a given product then you may as well be putting your economy on the roulette wheel.

I worked on the design of Deutsche Morgan Grenfell's Risk Management system (big data warehouse with analysis tools). It is accepted that crashes happen, anyone who says otherwise is lying. Its a perfect storm in that the wholesale credit market is fucked at the same time that the commodities market was being gamed to the point of being meaningless. A lot of what happened I have absolutely no doubt was predicted, I know what kind of simulations are run, and to some reasonable degree how risk is actually calculated. All said, if someone lies about a products risk (which is what happened by performing mathematical gymnastics to reflect a lower risk than the reality) then there is no way you can fix it, BUT that is part of the simulations they run, they do regularly run worst case scenarios.

I honestly cannot see anyway the market can be kick started without creating wholly seperated markets, protectionism (but at a financial product and trade level rather than at a national level) and well, destroying the fundamentals of capitalism, free trade, and investors rights. None of this makes me sad, it puts a grin on my face to be frank. However, like Bear, I fear the massive civil unrest we're all heading towards. We are imo at the edge of the largest social transition humanity has been through since mercantilism arrived.
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Re: The financial system - it's completely fucked, isn't it? (Moon Cat)		 Replies:
Didn't take long... (TheBear)
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