I’m currently reading Michael Lewis’ Boomerang, discussing how banks and governments got themselves into trouble in the oughts. One passage succinctly said something I have long believed:
“The global financial system may exist to bring borrowers and lenders together, but, over the past few decades, it has become something else, too; a tool for maximizing the number of encounters between the strong and the weak, so that the one might exploit the other. … [I]nvestment banks devise deeply unfair, diabolically complicated bets, and then … scour the world for some idiot who will take the other side of those bets.”
That pretty concisely sums up how I feel about a lot of what I hear about high level finance - although I admit my incredible ignorance of the subject. It very frequently impresses me that entities are trying to maximize their gains, while shifting the risk of losses onto someone else. It doesn’t get any more blatant than the bankers in 08 who admitted they were selling “shit.”
Why is the industry not regulated more strictly? Why do governments allow entities to get “too big to fail”, and then why do governments bail them out?
Yeah, I know I should take some finance courses. But I was hoping some of you smarter than I could point me in the direction of some resources. Gotta admit - even a book like this, which is written for a general audience, pretty much makes my head spin.