Apologia Pro Vita Sua

[...]for two decades now, the United States has seen the ballooning of the financial sector; that sector's capture of the regulatory system; ceaseless stimulus whenever the economy has wavered; taxpayer-funded bailouts of large corporations; crony capitalism; private profits and socialized loss...

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Bibliographic Details
Published in:The Journal of derivatives 2012-10, Vol.20 (1), p.35-37
Main Author: Derman, Emanuel
Format: Article
Language:English
Subjects:
Capitalism
Decision making
Engineering
Financial services
Lucas, Edward
Mailer, Norman
Online Access:Get full text
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Summary:[...]for two decades now, the United States has seen the ballooning of the financial sector; that sector's capture of the regulatory system; ceaseless stimulus whenever the economy has wavered; taxpayer-funded bailouts of large corporations; crony capitalism; private profits and socialized losses; the poor and weak as redeemers of the rich and powerful; companies that shorted stock for a living being legally protected from the shorting of their own stock; compromised rating agencies; and government policies that tried to cure insolvency by branding it as illiquidity. By using variables such as volatility and liquidity that are crude but quantitative proxies for complex human behaviors, financial models attempt to describe the ripples on a vast and ill-understood sea of ephemeral human passions. In this article, whose Latin title translates as "a defense of one's life," Derman reflects on the moral dimensions of the derivatives business-in particular, the practice of financial engineering, which creates the models that drive the markets.
ISSN:1074-1240
2168-8524
DOI:10.3905/jod.2012.20.1.035