global financial crash yay!
- Thread starter haji
- Start date
Burning time - and money
Not looking good - if you are one of the formerly 'Big Three'.
Instead, looking past their due date, ripe for burning ...
http://www.nytimes.com/2008/12/05/business/05auto.html?hp
Not looking good - if you are one of the formerly 'Big Three'.
Instead, looking past their due date, ripe for burning ...
http://www.nytimes.com/2008/12/05/business/05auto.html?hp
jambo
slip inside my schlafsack
I guess the idea of the VAT cut is that 'stimulating' spending on expensive (and often imported) non-essential goods is more important than doing something to more immediately help with the rising prices of little luxuries like food, energy and children's clothes.
vimothy
yurp
I still think they will get bailed-out, if only because to be seen to bail-out feckless financiers while leaving joe six-pack the auto-worker out in the cold isn't good.
vimothy
yurp
Maybe that post is more appropriate to this thread. In any case I'm just reading an intriguing, possibly not unfair, 'blame-the-business-schools' kind of article that's very germane to one of the themes emerging from An Engine, Not a Camera:
I won't bore anyone with the details of the equation (not that it's particularly difficult), but needless to say that the use of the Black-Scholes-Merton option pricing theory by market participants is an example of theory influencing practice, of hard 'performativity' ('performative' describes an utterance that is simultaneously enacted by being uttered, such as 'I swear'), or in McKenzie's terminology, Barnesian performativity. There is a clear feedback loop between theory, the procedural, surface knowledge (if that's what it is) imparted in business schools, and the market itself. Maybe this is another bubble that blew up. Maybe in the future in finance there will be less maths and more uncertainty. All the physicists will have to get new jobs, not making CDOs. (My Dad was telling me recently that all his astrophysics PhDs are having to find new jobs -- GS don't want them any more)! It's impossible not to think of Nassim Nicholas Taleb at this point. I suppose what I'm wondering is, ahem, how will the financial crisis affect financial theory, and, in turn, how will this affect real market structures?
(See also this article, which blames it all on the quants).
vimothy
yurp
Revealing study of 'America's educational elite' here, which shows that in 2007 58% of male Harvard graduates went into finance or consulting, at what must be a massive opportunity cost in terms of human capital wasted on bubble career-paths since thrown into uncertainty due to the rebalancing of the global economy.
hmm what will they do next though, bright minds need something to do.
vimothy
yurp
nomadthethird
more issues than Time mag
Yeah this is really a problem, some of the ivy leagues are making a point of accepting kids who go ED with a planned film major so they can balance this out. Right now medical schools are encouraging non-science majors to apply, because no one is going to medical school anymore (and those who do are ignoring the most needed specialities for the most lucrative ones--e.g. plastic surgery). I'm going to quickly get a second BA in biochemistry so I can get into the best med school possible though. I've already found a couple places I can do it for free.
I should've applied to Harvard my SAT scores are higher than their median.
Isn't this weird, though, from the paper:
My guess would be that the reason why doctors, PhDs, and lawyers don't take time off for family reasons is because they don't have that kind of luxury. When you're a doctor you have serious obligations to patients and you could be massively sued and lose your license if you kill or injure someone because your kid needed a ride to soccer practice. A lawyer who's trying to make partner definitely won't if s/he doesn't put in massive amounts of overtime (often for no extra pay). PhDs don't need to take time off because they already have a ton of time off.
Last edited:
jambo
slip inside my schlafsack
How simply awful that a bunch of jumped-up business school muppets should find their youthful dreams of a life of carefree exploitation and cynical middle-manning scuppered by the reality that they are in fact worse than useless. The masses are no doubt crying into their gruel.
'opportunity cost / human capital / bubble career-paths / rebalancing'
Wait, are you actually serious?
vimothy
yurp
One cost of the bubble(s) is wasted resources. Disagree? Surely not. One of those resources wasted is people. Sadly, it wasn't only 58% of male MBAs (another bubble, no doubt) quoted in that paper, but 58% of male graduates full stop. For further anecdotal evidence, consider this: at work I'd say 50% of the student interview sample (maths A level students making the transition from sixth form to HEI) want to go into investment banking. These are smart, technically minded kids. Obviously, not smart enough to have figured out that they missed the boat, and thank god, because it's sitting in the middle of the sea taking on a lot of water, but smart enough to be usefully employed in, er, non-useless, non-bubble professions, not, you know, making toxic financial instruments.
If the good engineers stop making crappy structred credit and start making stuff that doesn't blow the financial system up, wouldn't the masses be a lot happier? Wouldn't you?
If the good engineers stop making crappy structred credit and start making stuff that doesn't blow the financial system up, wouldn't the masses be a lot happier? Wouldn't you?
jambo
slip inside my schlafsack
Yep, can only see this as a good thing. Therefore not wasted human capital.
It's been apparent for quit some time, for some. But I guess these will be mostly kids going along with what they've been taught.vimothy said:
What was the boat called, the good ship Mindless Opportunist Exploitation of the Unsustainable Greed System?
nomadthethird
more issues than Time mag
I think it's a huge waste of human capital to have a bunch of MBAs who won't be able to find a job that's worth the cost of their education floating around urban areas when there are impoverished districts where there aren't enough GPs around in most communities to help prevent minor, entirely treatable illnesses from spreading like wildfire. ERs are stretched to the limit. Hospitals are understaffed. To the point where nurse practitioners are getting paid HUGE sign on bonuses and such just to get them to hospitals where they're needed.
And that's just one profession that desperately needs human capital more than finance needs human capital.
And that's just one profession that desperately needs human capital more than finance needs human capital.
Last edited:
They haven't missed the boat. In fact, if they've just done their A-levels, they've probably timed it perfectly!
There's going to be a short-term drop-off in demand for technical skills in finance, but only in a few areas - and only temporarily. I wouldn't trust anyone who argues that, long-term, financial markets are going to become less complex.
nomadthethird
more issues than Time mag
vimothy
yurp
Collier on the financial crisis:
http://www.guardian.co.uk/commentisfree/2008/dec/11/bonus-africa-comment
http://www.guardian.co.uk/commentisfree/2008/dec/11/bonus-africa-comment
I just don't see it having a long-term impact. The kind of products that banks sell are going to be simpler for quite some time, but the markets themselves - and the trading strategies that banks employ - aren't going to suddenly become navigable via simple arithmetic. I don't buy Taleb's argument that quants are to blame for the crisis or that the way forward is for banks to dispense with those skills.
I'd give it two years, tops, before banks are hiring the same number of quants that they were in 05 and 06.
vimothy
yurp
Who would want to argue anything long-term about financial markets?
But really, it's got nothing to do with complexity, as far as I can see. I'm sure that astrophysics hasn't gotten any less complicated -- but then that isn't why PhD students have been abandoning it to go and model bond spreads for Goldman Sachs.
I can't see demand for labour in the financial sector not being affected by the end of a massive credit cycle. Disregarding complexity -- do you really think that a couple of years from now it will be back to easy-credit/business as usual and everyone will be making tons of money again? Think of this: a bubble by definition misallocates capital. But you suggest that there was no misallocation of human capital, and that after we've finished saving the financial sector from itself, demand for labour will return to its credit-cycle peak. There will be no end to the age of leverage. There will be the same high returns. No one will complain about conflicts of interest or public servants reaping massive rewards. I don't buy it.
Will everyone really still want to be an investment banker? In the UK, for instance, financial sector growth far outpaced all other sectors over the last ten years. I don't see reversion to that ten year mean. Since the financial sector has socialised the losses and generally abandoned all pretence of fiduciary duty and long-term investing to focus on volume and short-term speculation, I personally hope that it will not continue to privatise the gains. As far as I'm concerned, politically, the current level of growth cannot continue. If it does, it will be at the expense of the rest of society and merely prolong the eventual readjustment, when the bubble in financial services eventually does burst. But I don't think it will. How can it? I'm not talking about complexity, I'm talking about volume, business model, leverage, appetite for risk, regulation, returns, etc, etc. The world has changed.
Is that really his argument?