1. Eduardo Porter has an excellent Op-Ed in the New York Times comparing the evolution of huge bonuses for bankers to the evolution of excess blubber on bull elephant seals--good for the individual seal (bank) but bad for the species (financial sector.) I couldn't agree more.
2. The collaboration between This American Life and NPR news that brought us the excellent show about the mortgage meltdown are back again with the clearest explanation I've heard to date on how our banking system is screwed.
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I'm a little less enthused by Porter's analogy. In his, the fat seal gets laid and then eaten, in ours, the fat banker walks away with fuck you money many times over. The problem with the financial industry is failure is rewarded with a signing bonus big enough to retire on, and the only measure of risk is how long they can delay deploying their golden parachutes.
ReplyDeleteBut note that in his analogy, the seals are compared to the financial companies that were awarding the bonuses to attract "talent." The individual bankers might be compared to the seals' predators, taking advantage of the war of escalation.
ReplyDeleteYour overall point is well-taken of course. Evolutionary systems only work if the incentives are right, and in the financial system they couldn't be more wrong. They screw up and everyone else pays.