Rich Ulrich wrote:
>
[snip]
>
> The two guys who won a Nobel in economics (for figuring out the price
> of Discounting, I think) needed a billion-dollar bailout of their
> company. Apparently the way to stay rich is to have the government
> take up the slack.
>
> (There's one traditional distinction between the parties in U.S.
> politics -- "Big-money" regularly buys or rents the support of the
> Democratic party, whereas the Republican party is a wholly owned
> subsidiary.)
>
> --
> Rich Ulrich, [EMAIL PROTECTED]
> http://www.pitt.edu/~wpilib/index.html
When discussion drifts into politics, it is hard to
keep it to the scientific standards. Emotions rules and
overwhelms. I am afraid, the quote can serve as
example.
An easy-to-read, but serious and (as I can see)
reliable account of the Long-Term Capital Management
debacle (by David Shirreff) can be found at the
following site:
http://risk.ifci.ch/146480.htm
As you can see from the document and after some
thought:
- the shareholders of the fund did not "stay rich", at
least concerning this investment;
- the management reputation was very seriously stained,
probably irreparable, and in this respect the bailout
was not much better than bankruptcy;
- somewhat stained was the very concept of statistical
(econometric) models in business/finances. And it was
just: it is dangerous to over rely on models.
- the fund was bailed out by huge international banks,
the taxpayer money were not used;
- the government role was more of "spiritual
authority", "competency" and "initiative" than of a
"power";
- the party/politics did not played any serious role.
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