Saturday, January 02, 2010

Greed did not lead to well-being

["Investors should be skeptical of history-based models. Constructed by a nerdy-sounding priesthood using esoteric terms such as beta, gamma, sigma and the like, these models tend to look impressive. Too often, though, investors forget to examine the assumptions behind the symbols. Our advice: Beware of geeks bearing formulas."]
[Also blissfully ignored, he wrote, were the perils of relying on mathematical models devised without worst-case situations in mind. Too often, he wrote, Americans have been enamoured of "a nerdy-sounding priesthood, using esoteric terms such as beta, gamma, sigma and the like".
Some scepticism about these models is overdue, he added. "Our advice: beware of geeks bearing formulas." Home » Business » Article
David Segal, New York March 1, 2009 New York Times all 1,584 news articles  1:15 PM]
[by Gavin Kennedy
Joseph Stiglitz (an Economics Nobel laureate and university professor at Columbia University. Author of: "Globalization and Its Discontents” and “The Roaring Nineties. His latest book, Freefall, will be published in January ) writes (31 December) in China Daily HERE: and HERE 
“Harsh lessons we may need to learn again”
“The best that can be said for 2009 is that it could have been worse, that we pulled back from the precipice on which we seemed to be perched in late 2008, and that 2010 will almost surely be better for most countries around the world. The world has also learned some valuable lessons, though at great cost both to current and future prosperity - costs that were unnecessarily high given that we should already have learned them.
The first lesson is that markets are not self-correcting. Indeed, without adequate regulation, they are prone to excess. In 2009, we again saw why Adam Smith's invisible hand often appeared invisible: it is not there. The bankers' pursuit of self-interest (greed) did not lead to the well-being of society; it did not even serve their shareholders and bondholders well. It certainly did not serve homeowners who are losing their homes, workers who have lost their jobs, retirees who have seen their retirement funds vanish, or taxpayers who paid hundreds of billions of dollars to bail out the banks”.]
2010 arrives after plenty of lessons learnt, and mankind, hopefully, will march with more mature steps. [TNM]

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