Le Grand Bank Fraud
Monday, January 28, 2008
Daniel Gross, a business columnist at Slate and Newsweek magazine, breaks down the Societe Generale bank scandle. At a loss of $7.1 Billion, its the single biggest fraud ever precipitated by a single trader.
Comments [5]
Free markets are the best way to ensure the gradual building of the world's wealth. But untrammeled, unregulated financial markets risk jeopardizing all the good that free markets & enterprise bring about by destabilizing the financial system - which is vital for getting money from savers to investors in an optimal way (as every financial panic & crisis in the past 300 years has demonstrated). Government regulation (informed by a knowledge how markets work well or badly) is the only way to save capilism from it's frequent bouts of irrational exhuberance & subsequent panic pessimisms. 3 cheers for markets AND government!!!
Oh yes, and further, where we are urged to abandon the limited security of the social security system as well for the joy of everyman a Warren Buffet!!!
Brian - please ask him whether this guy could be a scapegoat for SocGen itself screwing up.
How does this affect our economy? Is it in any way similar to the sub-prime mortgage debacle and it's effect on the the world economy?
The financial system becomes increasingly more complex & opaque, so that 'informed' investment becomes a near impossibility for the average investor, let alone the average non-investing 'Joe or Jane' (and indeed now EVEN for the very sophisticated heads of the world's biggest banks!!!)....and we are increasingly shifting from the old defined benefit pension system where one's employer managed one's investment assets to the new & improved defined contribution pension system where every one of us is expected to get into the pits with the finance rocket scientists. What's wrong with that picture???
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