Gustavo Ballvé on December 6th, 2010
Banks, Food for thought, Home, Industries, Signal or Noise

Long article called “What good is Wall Street?” in the New Yorker magazine rediscovers the wheel: most often the incentives in Wall Street are not aligned with “society’s goals”, whatever that means in any particular point in time. He then uses this “discovery” to argue that Wall Street may not add value to the economy as a whole, while quoting and interviewing a group of “experts” and “teachers”. To be fair, he does talk to the CEOs of Morgan Stanley, Citigroup and Evercore. Our take: you can question every single one of the article’s assumptions, but ultimately you can even agree with some of them (as we do) or all of them – and still not reach the same conclusion that “Wall Street adds little or no value”. As an aside about the credit boom and bust, it’s a disservice to assign all of the “blame” to Wall Street when the incentives of most market agents – banks, homeowners, governments, consumers – were just as aligned with “taking risk”/ “increasing leverage”. Ignoring personal responsibility is a waste of valuable lessons that the crisis can teach us.

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