I'm posting this because it's the clearest explanation I've ever read of why we are in the economic mess we are in and how we could prevent such a mess from happening again in the future.
It's by Semyon Dukach, one of the members of the now-legendary MIT Blackjack Team that was brought to public attention first in books and then in the recent film "21." About him and the team and their exploits: http://en.wikipedia.org/wiki/Semyon_Dukach His explanation of the financial crisis: http://semyon.com/crisis.html Shemp will *hate* his suggestion at the end: ban money management by people who earn a commission on it. But it really makes sense, and it's the only suggestion I have heard so far from *anyone* as to how to stop this mess from happening again in a few years. If there are money managers, place them on a salary, with no percentage of the profits. In Canada (as I understand it), a similar situ- ation exists with lawyers -- they work on a fee basis, and cannot receive a percentage of the winnings in a lawsuit. As a result, in Can- ada there have never been multi-million dollar lawsuits brought by ambulance chasers who are working "on spec," betting on a percentage of the profits if they win. I suspect that this MIT guy is correct, and a similar requirement for fund managers would prevent the kind of irresistible "appeal to greed" that exists today. Besides, think of all those completely useless and morally bankrupt fund managers who would be looking for a job as used-car salesmen or as something else that still pays a commission. That thought alone warms the heart. :-)
