Assignment econometrics
Study Guide into the Fear, Greed, Fraud, Hubris and Massive Self-Delusion of the Financial Crisis of 2008-2010 by JMP (draft Aug 1, 2010) based upon
TOO BIG TO FAIL author: Andrew Ross Sorkin (NYTimes)
The Big Short author: Michael Lewis (Liar’s Poker)
13 Bankers: The Wall Street Takeover and the Next Financial Meltdown authors: Simon Johnson (MIT & IMF) & James Kwak
CRISIS ECONOMICS: A Crash Course in the Future of Finance authors: Nouriel Roubini (NYU-Stern) & Stephen Mihm (NYTimes)
The Story of Icarus = Pushing it until you break it
After decades and generations of extraordinary success and the greatest periods of the wealth creation ever, over-Optimism, Avarice and Greed fed the feelings of Invincibility and Invulnerability leading to Hubris enamored of advanced mathematical models, coupled with Massive Fraud & Self-Delusion, taking what were good ideas past their breaking points and pushing them until they virtually broke the whole global financial system.
Who could have known? &
Was this catastrophic financial crisis really so impossible to foresee?
Worshiping the False Gods and Beliefs (Efficient Markets Hypothesis, Option Pricing Model, the Normal Distribution) that Market Prices are Always Right (Whether it is right or wrong, The Market is The Market and You cannot trade with computer models), The Fallacy (misleading and erroneous beliefs) of Self-Regulating Markets that both are Self-Adjusting and in a state of Equilibrium (balance & stability) (reflecting back to Adam Smith’s Invisible Hand in the Wealth of Nations published in 1776),
Using the Fallacy that the Market is Always Right, that the Free Market will Always Produce fundamentally correct Asset Prices, that the Financial Markets Can and Should be left to their Own Devices; all used as the intellectual justification for unrestrained laissez faire deregulation over nearly a 40 year period from the early 1970’s to
TOO BIG TO FAIL author: Andrew Ross Sorkin (NYTimes)
The Big Short author: Michael Lewis (Liar’s Poker)
13 Bankers: The Wall Street Takeover and the Next Financial Meltdown authors: Simon Johnson (MIT & IMF) & James Kwak
CRISIS ECONOMICS: A Crash Course in the Future of Finance authors: Nouriel Roubini (NYU-Stern) & Stephen Mihm (NYTimes)
The Story of Icarus = Pushing it until you break it
After decades and generations of extraordinary success and the greatest periods of the wealth creation ever, over-Optimism, Avarice and Greed fed the feelings of Invincibility and Invulnerability leading to Hubris enamored of advanced mathematical models, coupled with Massive Fraud & Self-Delusion, taking what were good ideas past their breaking points and pushing them until they virtually broke the whole global financial system.
Who could have known? &
Was this catastrophic financial crisis really so impossible to foresee?
Worshiping the False Gods and Beliefs (Efficient Markets Hypothesis, Option Pricing Model, the Normal Distribution) that Market Prices are Always Right (Whether it is right or wrong, The Market is The Market and You cannot trade with computer models), The Fallacy (misleading and erroneous beliefs) of Self-Regulating Markets that both are Self-Adjusting and in a state of Equilibrium (balance & stability) (reflecting back to Adam Smith’s Invisible Hand in the Wealth of Nations published in 1776),
Using the Fallacy that the Market is Always Right, that the Free Market will Always Produce fundamentally correct Asset Prices, that the Financial Markets Can and Should be left to their Own Devices; all used as the intellectual justification for unrestrained laissez faire deregulation over nearly a 40 year period from the early 1970’s to
References: 3. ^ "Contact Us." Morgan Stanley. Retrieved on August 28, 2009. 4 5. ^ THOMAS Jr, LANDON (April 21, 2005). "Morgan Stanley Exodus Continues as 8 Traders Leave". New York Times Online Edition of April 21, 2005. http://www.nytimes.com/2005/04/21/business/21wall.html. Retrieved 2008-03-22. 6 13. ^ "Morgan Stanley to Advise U.S. on Fannie and Freddie". Louise Story, The New York Times. August 6, 2008. http://www.nytimes.com/2008/08/06/business/06morgan.html?ref=business. Retrieved 2008-08-11. 14 15. ^ Wall Street in crisis: Last banks standing give up investment bank status, The Guardian, September 22, 2008 16 25. ^ FINRA News Release Chernow, Ron (Copyright 1990) The House of Morgan Hibbard, J. (17 January 2005). Morgan Stanley: No stars—and lots of top tech IPOs. In BusinessWeek, 56 – 58. John Mack Elected Chairman and CEO of Morgan Stanley Partnoy, Frank. F.I.A.S.C.O. - NY: Penguin Books, 1997. http://registeredrep.com/mag/finance_trouble_house_purcell/index.html Trouble In The House That Purcell Built? Apr 1, 2004 12:00 PM, By Joan Warner