A Quote by Alan Greenspan
It seems superfluous to constrain trading in some of the newer derivatives and other innovative financial contracts of the past decade. The worst have failed; investors no longer fund them and are not likely to in the future.
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From the 1990s onward, the financial sector created a vast array of instruments designed to separate investors from their money, financial derivatives of an ever-increasing level of complexity. At some point, this complexity reached a point where even the creators of the derivatives themselves didn't understand them.
By far the most significant event in finance during the past decade has been the extraordinary development and expansion of financial derivatives.
There no longer can be any doubt that the creation of the first index mutual fund was the most successful innovation - especially for investors - in modern financial history.
One measure for promoting both stability and fairness across financial market segments is a small sales tax on all financial transactions - what has come to be known as a Robin Hood Tax. This tax would raise the costs of short-term speculative trading and therefore discourage speculation. At the same time, the tax will not discourage "patient" investors who intend to hold their assets for longer time periods, since, unlike the speculators, they will be trading infrequently.
Life can be lived at a remove. You trade in futures, and then you trade in derivatives of futures. Banks make more money trading derivatives than they do trading actual commodities.
Assuming that the future is like the past, you can outperform 80 percent of your fellow investors over the next several decades by investing in an index fund-and doing nothing else. But acquire the discipline to do something even better: become a long-term index fund investor.
Money never seems to be interested in strengthening regulatory agencies, for example, but always in subverting them, in making them miss the danger signs in coal mines and in derivatives trading and in deep-sea oil wells.
The use of a growing array of derivatives and the related application of more-sophisticated approaches to measuring and managing risk are key factors underpinning the greater resilience of our largest financial institutions... Derivatives have permitted the unbundling of financial risks.
Wall Street is littered with clever plans to use financial instruments to change behavior - carbon trading, for example. Some have changed the world, and others failed miserably.
Anyone interested in the past, present, or future of banking and financial crises should read The Bankers' New Clothes. Admati and Hellwig provide a forceful and accessible analysis of the recent financial crisis and offer proposals to prevent future financial failures. While controversial, these proposals--whether you agree or disagree with them--will force you to think through the problems and solutions.
My hope is that design thinking becomes an innovative discipline and not just the trend of the decade. As a nation and globally, we have some of the biggest problems to solve we have ever faced. We need innovative ways to solve our problems and communicating the solutions will be paramount. Original thinking, complex problem solving, and collaboration are all important skills for our future.
Taking stock of 'Operation Iraqi Freedom' a decade later, the Financial Times concluded that the US won the war, Iran won the peace, and Turkey won the contracts. I can only agree.
We need a federal government commission to study the way our financial services system is working - I believe it is working badly - and we also need more educated investors. There are good long term low-priced mutual funds - my favorite is a total stock market index fund - and bad short term highly priced mutual funds. If investors would get themselves educated, and invest in the former - taking their money out of the latter - we would see some automatic improvements in the system, and see them fairly quickly.
Inappropriate macro economic policies in some economies, characterised by [a] low savings rate and high consumption [and] failure of financial supervision and regulation to keep up with innovation which allowed financial derivatives to spread.
New England is demanding newer, cleaner, and more innovative energy sources - energy sources that create jobs here in New England. We should also demand newer, cleaner, and more innovative transmission methods.
The government - the ultimate short-term-oriented player - cannot withstand much pain in the economy or the financial markets. Bailouts and rescues are likely to occur, though not with sufficient predictability for investors to comfortably take advantage. The government will take enormous risks in such interventions, especially if the expenses can be conveniently deferred to the future. Some of the price-tag is in the form of back- stops and guarantees, whose cost is almost impossible to determine.
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