"If you really want to know why the financial system almost collapsed in autumn 2008 - I can articulate why in one sentence."
I heard this from a man who was sitting at a distance of three or four chairs away from me in a little crowded bar in the city center, where I waited for another. "I must buy you a drink to hear it?" - I asked.
"Of course not," he said. "I am able to pay for their drinks. My $ 401,000 in a safe and sound. I went to the market 8 or 10 years ago, when I saw what was happening. "
He really looked like a man who can pay for their drinks in front of him at the bar, was a dry martini. It is well preserved: a gray-haired man, about the retirement age, wearing the same clothes he wore to the Ivy League campus in the late 50th or early 60's: tweed jacket, gray pants, a blue, button-down shirt, and Club tie, which, as it seemed from a distance, was decorated with a tiny Brussels sprouts.
"Well," - I said - "speak."
"The financial system almost collapsed," - he said - "because they are smart guys started to work on Wall Street." He took a sip martinis, and stared at the number of bottles behind the bar, as if a conversation was over. "But whether these are smart guys are the main reason?" - I asked.
He looked at me as a teacher of mathematics, looking at the student who, despite all the heroic efforts of teachers, was unable to learn the most basic principles of long division. "You are either much younger than it looks, or you have a bad memory," - he said. "One of the speakers at the 25th annual meeting said that according to his observations of the pupils, their earnings are inversely proportional to performance during training, such data were partly due to the fact that each one of the worst third-class performance to become a millionaire Wall Street.
I was thinking about his own band in college, about the same age. The best student was appointed a judge of the Federal Court of Appeals, with a very modest salary by the standards of Wall Street. Many students with such an impressive achievers become professors. I tried to imagine the future titans of Wall Street, dozing in the rear ranks during the "trivial things", such as geology, better known as "shake-up for the country bumpkin."
"It really sounds more or less true" - I said.
"Of course, this is true," he said. "Do not get me wrong: the guys in the worst third of the class, who went to work on Wall Street, had many excellent qualities. Most of them were very pleasant people. They created a good impression, and we now understand that, if judged by the standards, which appeared later, they were not really hungry, they just wanted a nice house in Greenwich, and, perhaps, a sailboat. Many of them were from families that have always worked on Wall Street and so they were accustomed to a good home in Greenwich. They do not feel the need to increase the total business, as they could earn the money needed for the second ocean yacht.
"So what happened?"
"I'll tell you what happened. Smart guys have to come to Wall Street. "
"Why?"
"I thought you never ask," he said, making a gesture eyebrows experienced bartender that he began to mix a new batch martini.
"Two things happened. First: the amount of money that can be done on Wall Street by hedge funds and stock investments, was simply shocking. At the same time, the college has become so expensive that even people from the intelligent, affluent families were forced to incur huge debts. So even smart kids went to Wall Street, perhaps trying to convince myself that a few years they will have enough money in order to be able to work professors, lawyers or anyone else, whoever they wanted to work most . That this is the essence of the stories on the percentage of graduates of Harvard University, who planned to go to work in the financial industry, or go to business school so that they could then work in it, and the geniuses at the Massachusetts Institute of Technology (MIT) and Caltech Institute (Caltech), instead of going to Master's in physics, also went to Wall Street in order to seek arbitration. "
"But you still have not told me exactly how this led to the financial crisis."
"Have you ever heard the word" derivatives "?" He asked. "You think our guys could invent, say, credit default swaps? Come on you! They could not cope with mathematics. "
"Why do I think that there is one more step in this scenario?" - I asked.
"Because he is. When the smart guys started their business, things that did not even exist at first, who ran the firms in which they worked? Our guys! The very worst third in the class! People who do not have the slightest idea of what a credit default swap. They all knew that they become fabulously wealthy and they enjoyed it immensely. These easy money ate their sense of proportion. "
"So it is the presence of smart guys on Wall Street led to the collapse."
"You got it," he said. "It took some time, but you got it."
The theory sounds too simple to be true, but skhodu I did not find flaws in it. I caught myself thinking about bankruptcy, if intently and think about the chaos that could sow the horde of smart guys in other industries. I saw these industries, which fall one after another, superintelligence. "I think I need a drink," I said.
He nodded at my glass and took another one of those gestures eyebrow bartender. "Please, let me entertain you," - he said.
I heard this from a man who was sitting at a distance of three or four chairs away from me in a little crowded bar in the city center, where I waited for another. "I must buy you a drink to hear it?" - I asked.
"Of course not," he said. "I am able to pay for their drinks. My $ 401,000 in a safe and sound. I went to the market 8 or 10 years ago, when I saw what was happening. "
He really looked like a man who can pay for their drinks in front of him at the bar, was a dry martini. It is well preserved: a gray-haired man, about the retirement age, wearing the same clothes he wore to the Ivy League campus in the late 50th or early 60's: tweed jacket, gray pants, a blue, button-down shirt, and Club tie, which, as it seemed from a distance, was decorated with a tiny Brussels sprouts.
"Well," - I said - "speak."
"The financial system almost collapsed," - he said - "because they are smart guys started to work on Wall Street." He took a sip martinis, and stared at the number of bottles behind the bar, as if a conversation was over. "But whether these are smart guys are the main reason?" - I asked.
He looked at me as a teacher of mathematics, looking at the student who, despite all the heroic efforts of teachers, was unable to learn the most basic principles of long division. "You are either much younger than it looks, or you have a bad memory," - he said. "One of the speakers at the 25th annual meeting said that according to his observations of the pupils, their earnings are inversely proportional to performance during training, such data were partly due to the fact that each one of the worst third-class performance to become a millionaire Wall Street.
I was thinking about his own band in college, about the same age. The best student was appointed a judge of the Federal Court of Appeals, with a very modest salary by the standards of Wall Street. Many students with such an impressive achievers become professors. I tried to imagine the future titans of Wall Street, dozing in the rear ranks during the "trivial things", such as geology, better known as "shake-up for the country bumpkin."
"It really sounds more or less true" - I said.
"Of course, this is true," he said. "Do not get me wrong: the guys in the worst third of the class, who went to work on Wall Street, had many excellent qualities. Most of them were very pleasant people. They created a good impression, and we now understand that, if judged by the standards, which appeared later, they were not really hungry, they just wanted a nice house in Greenwich, and, perhaps, a sailboat. Many of them were from families that have always worked on Wall Street and so they were accustomed to a good home in Greenwich. They do not feel the need to increase the total business, as they could earn the money needed for the second ocean yacht.
"So what happened?"
"I'll tell you what happened. Smart guys have to come to Wall Street. "
"Why?"
"I thought you never ask," he said, making a gesture eyebrows experienced bartender that he began to mix a new batch martini.
"Two things happened. First: the amount of money that can be done on Wall Street by hedge funds and stock investments, was simply shocking. At the same time, the college has become so expensive that even people from the intelligent, affluent families were forced to incur huge debts. So even smart kids went to Wall Street, perhaps trying to convince myself that a few years they will have enough money in order to be able to work professors, lawyers or anyone else, whoever they wanted to work most . That this is the essence of the stories on the percentage of graduates of Harvard University, who planned to go to work in the financial industry, or go to business school so that they could then work in it, and the geniuses at the Massachusetts Institute of Technology (MIT) and Caltech Institute (Caltech), instead of going to Master's in physics, also went to Wall Street in order to seek arbitration. "
"But you still have not told me exactly how this led to the financial crisis."
"Have you ever heard the word" derivatives "?" He asked. "You think our guys could invent, say, credit default swaps? Come on you! They could not cope with mathematics. "
"Why do I think that there is one more step in this scenario?" - I asked.
"Because he is. When the smart guys started their business, things that did not even exist at first, who ran the firms in which they worked? Our guys! The very worst third in the class! People who do not have the slightest idea of what a credit default swap. They all knew that they become fabulously wealthy and they enjoyed it immensely. These easy money ate their sense of proportion. "
"So it is the presence of smart guys on Wall Street led to the collapse."
"You got it," he said. "It took some time, but you got it."
The theory sounds too simple to be true, but skhodu I did not find flaws in it. I caught myself thinking about bankruptcy, if intently and think about the chaos that could sow the horde of smart guys in other industries. I saw these industries, which fall one after another, superintelligence. "I think I need a drink," I said.
He nodded at my glass and took another one of those gestures eyebrow bartender. "Please, let me entertain you," - he said.
The New York Times
October 13
October 13
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