Wall Street Is Losing the Best and Brightest

From WSJ.

Not long ago, Wall Street attracted many of the smartest people in America—brilliant economists and mathematicians, but also the nation's most promising college graduates. Not anymore. Five years after the financial crisis, evidence suggests that students have lost their enthusiasm for beginning careers in finance.

I think this is a natural development toward a right direction.

Hedge Fund Manager’s Farewell

A pretty good reflection of a hedge fund manager.

"....Although Mr. Barsky has clearly gotten rich, he was surprisingly clear-eyed about the societal imbalances of hedge fund mania. The industry, he told me, “was part of this huge trend towards the celebration of wealth. Hedge fund managers overearned. It just became too easy. There has been a massive misallocation of human resources. I have so many smart guys here who were making seven figures. And I think it is a fair question to ask: what would they have been doing in 1948 — going into the foreign service? If Obama does anything, the best thing he could do is change a generation’s values.”
He continued: “I have a friend whose son is a senior at Princeton. She said all his friends want to work for Goldman Sachs.” He added, “We have an overground railroad to finance. It is not the best way for a society to be run.”..........."

The Reflection of Goldman Sachs CEO

By Lloyd Blankfein.

Fannie, Freddie Set to Pay $210 Million in Retention Bonuses

My goodness! When will this end? Fannie and Freddie stock prices are traded around $0.7 and they are talking about retention bonus to keep the talent?! Where will they go? It is good enough for them to have a job right now.
Aagain I think this is very very bad corporate governance!!

The Financial Crisis: An Inside View

From Phillip Swagel.

Market-Based Regulation

Oliver Hart and Luigi Zingales propose this market-based regulation on large banks.
In addition to all these financial system overhauls, I propose an easy market-based regulation to prevent "too big to fail." We could impose "too big to fail" tax on banks based on the size of their assets.

A Programmer's Confession

How I helped build the bomb that blew up Wall Street by Michael Osinski.
Quite an interesting story.

AIG Bonus

Here is the interesting news of the reaction of AIG $165 million bonus.
Of course these AIG leaders will not take a deep bow and then commit suicide.
I think 100% tax on the 2008 bonuses paid by those firms who accepted government money is a very good idea.

The Formula That Killed Wall Street

A very good article about Gaussian copula function by David X. Li and its impact on financial meltdown. Li's paper is here.
Is it another reason to blame China for the financial crisis?

Interview with Simon Johnson

PBS Bill Moyers interviews with Simon Johnson, MIT professor.
I agree with his suggestions, one of which is the anti-trust law on big banks.

Outrageous?

President Barack Obama believes the multi-billion dollar bonuses that Wall Street banks awarded themselves for 2008 are "outrageous." Read here.

I have two questions. First is that how dare they are. Second is how could the government let this happan again. If you read WSJ everyday, you could exactly know they are doing it. On the one hand, we have greedy private sectors; on the other hand, we have a sleepy government. And the financial crisis in September didn't change this nature.

Updated: Another angry man about Wall Street.
My third question: Do you trust Wall Street now?

A Letter to New Treasury Secretary

Luigi Zingales wrote a letter to new Treasury Secretary Geithner.

The Future of Banking Industry

It will go back to a normal (boring) industry said NYT.

The Future of Hedge Funds

Unhinged eedge funds from NYT.

John Taylor on Financial Crisis

A friend of mine forwarded this insightful paper from John Taylor. One of the conclusion that the paper suggests is that the loosen monetary policies in the US and Europe are the main cause of the financial crisis. The evidence looks persuasive.
Other related works could be found in the working group of Hoover institution.

Fed Intervention: Managing Moral Hazard in Financial Crises

Here by Fed Dallas.

Nobel Economists Offer First Aid for Global Economy

SPIEGEL asked five previous winners of the Nobel Prize for economics to provide their own advice for what world leaders should do.
Even the Godfather of free market - Robert Lucas also calls for a overhaul of financial regulation.

And finally I see Wall Street firms make a smart, correct, and self-regulated move. See Goldman Sachs and UBS.

Hedge Fund Testimony

Congress grilled five of the country's top hedge-fund managers.
It is a 2-hour testimony.

Short Video about Financial Crisis

Nice done and neat video to introduce the current banking problem.

Messy Fannie Mae

Charles Duhigg had an in-depth report on the mess of Fannie Mae. For example, one paragraph says:

Whenever competitors asked Congress to rein in the company, lawmakers were
besieged with letters and phone calls from angry constituents, some orchestrated
by Fannie itself. One automated phone call warned voters: “Your congressman is
trying to make mortgages more expensive. Ask him why he opposes the American
dream of home ownership.”