Stop wasting time: Build wealth on Wall Street
Build wealth the way the pros on Wall Street do. Oh, you thought that the "good old day's were over"? Think again.
Today (September 14th) is the anniversary of the collapse of Lehman Brothers. It's gotten a fair amount of press. If you remember, the stock market dropped 500 points the next day and we all dropped into the belly of the financial crisis that stunned many, disturbed us all.
You may be surprised to learn that things are just humming along again. You'd think things might have changed a bit since last year's crisis, but you'd be thinking wrong. It seems it's still "business as usual."
Business as usual means that Wall Street's managed to save its bacon. Bonuses are flowing again. An article in the 9/12 NY Times put it this way:
What you just read describes something known as "moral hazard." Some naive people thought that some sort of lesson would have been learned by the recent crisis. I'm not so sure the answer would have been all the increased regulation that you heard talked about - and which, by the way, hasn't happened - but I would have thought that the moral hazard would have ended - at least for a time.
Moral hazard would end if there were no bailouts. It would end if the Fed were not expected to step up to the plate and save the "too big to fail" banks - or other businesses now (think "GM").
In fact, wouldn't you think that the Fed and the government would have made it clear that if you take big risks and lose - well, you lose.
But I guess not. It looks like the "powers that be" prevailed in the end. The game goes on.
Sure Lehman died. But many if not most of the top guys, with the exception of the CEO Richard Fuld, have found new jobs. They're back to the business of making money. And who can blame them. That's why they went to Wall Street in the first place.
Nicholas Nassim Taleb, who's written two best-selling books on risk and who worked as a trader on Wall Street before striking out on his own as both a successful writer and an even more successful partner in a big hedge fund, said, “I don’t know anyone on Wall Street who goes to work every day thinking of anything but how to increase their bonus...”
But in the same breath, Mr. Taleb warns that the system has grown riskier since last fall - riskier! The extensive government support that began after Lehman collapsed will lead investors to assume that governments will always prevent major banks from collapsing.
See how this puts us right back where we were before the crash and crisis - maybe even in a worse spot?
Simon Johnson, former head of the International Monetary Fund, now a professor at MIT said, “They will run up big risks, they will fail again, they will hit us for a big check,” he predicted.
Nice work if you can get it.
Oh, and if you're thinking that the problem is "free-market capitalism," think again. This isn't free-market capitalism at work. I don't know what you call it - crony capitalism, corporatism - but it doesn't really matter. Some people will make out like bandits while the rest of us pay for their mistakes - at least until something really changes.
Today (September 14th) is the anniversary of the collapse of Lehman Brothers. It's gotten a fair amount of press. If you remember, the stock market dropped 500 points the next day and we all dropped into the belly of the financial crisis that stunned many, disturbed us all.
You may be surprised to learn that things are just humming along again. You'd think things might have changed a bit since last year's crisis, but you'd be thinking wrong. It seems it's still "business as usual."
Business as usual means that Wall Street's managed to save its bacon. Bonuses are flowing again. An article in the 9/12 NY Times put it this way:
"So investors will lend money to the financial industry on easy terms. In turn, financial institutions will use that cheap money to make risky loans and trades. The banks will keep the profits when their bets pay off, while taxpayers will swallow the losses when the bets go bad and threaten the system."
What you just read describes something known as "moral hazard." Some naive people thought that some sort of lesson would have been learned by the recent crisis. I'm not so sure the answer would have been all the increased regulation that you heard talked about - and which, by the way, hasn't happened - but I would have thought that the moral hazard would have ended - at least for a time.
Moral hazard would end if there were no bailouts. It would end if the Fed were not expected to step up to the plate and save the "too big to fail" banks - or other businesses now (think "GM").
In fact, wouldn't you think that the Fed and the government would have made it clear that if you take big risks and lose - well, you lose.
But I guess not. It looks like the "powers that be" prevailed in the end. The game goes on.
Sure Lehman died. But many if not most of the top guys, with the exception of the CEO Richard Fuld, have found new jobs. They're back to the business of making money. And who can blame them. That's why they went to Wall Street in the first place.
Nicholas Nassim Taleb, who's written two best-selling books on risk and who worked as a trader on Wall Street before striking out on his own as both a successful writer and an even more successful partner in a big hedge fund, said, “I don’t know anyone on Wall Street who goes to work every day thinking of anything but how to increase their bonus...”
But in the same breath, Mr. Taleb warns that the system has grown riskier since last fall - riskier! The extensive government support that began after Lehman collapsed will lead investors to assume that governments will always prevent major banks from collapsing.
See how this puts us right back where we were before the crash and crisis - maybe even in a worse spot?
Simon Johnson, former head of the International Monetary Fund, now a professor at MIT said, “They will run up big risks, they will fail again, they will hit us for a big check,” he predicted.
Nice work if you can get it.
Oh, and if you're thinking that the problem is "free-market capitalism," think again. This isn't free-market capitalism at work. I don't know what you call it - crony capitalism, corporatism - but it doesn't really matter. Some people will make out like bandits while the rest of us pay for their mistakes - at least until something really changes.
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