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Non-Tech : Derivatives: Darth Vader's Revenge
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To: James C. Mc Gowan who wrote (146)9/24/1998 8:27:00 AM
From: Worswick  Read Replies (3) of 2794
 
James I don't think it is fair to call bankers "pirates". It is most unfair in fact.

The bankers involved in all these transactions were and are on the cutting edge of financial modling. Their "mistakes" are like the first people who tested the first supersonic airplanes. A lot of them died.

...I don't for a minute think of the aricraft pioneers as pirates. Similarly, I don't think any banker would.... with knowledge aforethought... go out to bankrupt his bank, or hedge fund. The derivative world simply got ahead of itself... without understanding that they were dealing with a 20th century bureacratic international banking structure.... with 21st instruments (eg. computers).

It is almost impossible to blame the 1980's bankers on the Latin American melt down when the American banks took it upon themselves to recycle the world's petrodollars and stood behind this recycling with their own bank's capital.

Coming back to the point. Both bankers and hedge fund managers live or die by their preformance. In our capitalist system we have created millionaires and people who sleep in refrigerator boxes. There are no old age homes for failed hedge fund managers: the failed hedge fund manager will be lucky if he has a single friend who will let him sleep on their couch.... after the crash and the burn. Their women leave them, their "friends"; it is a long way up and a long way down.

... to characterize these people as pirates is unfair. They are the adventurers of our period. The great explorers.

Americans just don't like failure. While these people were successful did I hear a single word about "pirates"?

...in the 70's I knew some of the Wall Street fallen heroes. Boy. These guys life was over.

Maybe what many of these people are learning is that it is a long way up and a long way down. Maybe at the end here afte this all works out we will all learn something here about national hubris.

In the meantime I understand your anger and frustration and this is only the beginning. I only caution you about demonizing specific individuals when it is the system that created this problem. This is a systemic problem, not a national or individual problem. The whole world embraced the "success" of these products. Now we will all pay the price.

Afterall who bought these things. The answer: Everyone.

With best wishes --

Clark
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