Risk and its rewards. Disjointed thoughts on a Friday Morning

I have been following the recent comments by Treasury Secretary Henry Paulson on the recent subprime loan crisis with great interest. He has stated that in future, he will implement regulations which will prevent the occurrence of a similar investment banking crisis.

The sympathetic tone taken by the writers of various NYT and WP articles dealing with fate of the employees of Bear Stearns made me smirk a bit:

'Awww those poor bankers'

But then I stopped and thought: 'really, that could be me right there. I know people who work at Bear Stearns and really, they aren't bad people.'

This got me thinking about why society tends to channel people who are very hardworking, intelligent and motivated into investment banking.

I currently work in an adjunct function to the financial industry and I would say that most people that I have encountered work rather frantically. To quote Jon Candy's character Barf from the Mel Brooks' 'Spaceballs', the reason financial services professionals work so hard "isn't for a lotta money, it's for a SHITLOAD of money". Financial services is an industry where people work as hard as possible and try to find all edges possible in order to maximize their take of the overall resources.

If Paulson really carries out his plan to throw further regulation into the mix, a fair amount of the edge that certain players in the game possess will be negated, thereby make the game unprofitable.

To me, it seems as though the cart has been put before the horse. Changing the rules of the game doesn't really change the fact that everyone is playing. As long as the prizes are the same, people will want to play, and will always work hard to win, at times bending the rules.

From an economic standpoint as long as society in the US rewards greed, things won't change. I hate talking about human nature but really it is obvious that the goals of a person without any spiritual motivation are just to maximize resources and reproduce. Aunque el mono se vesta de seda, el mono se queda...

As to which jobs should ideally receive the maximum reward, i would prefer that jobs competing against nature, or creating things which are useful, rather than jobs which involve competition against other people, should receive the highest amount of benefit. In such a society, firefighters, policeman, doctors, engineers and artists would make more than bankers and lawyers.

However it seems that in many ways there are two axes to this graph. On one hand, we have the level of benefit to society- this axis determines the level of desire that an overall society should have for individuals performing a certain job.

Firefighters, for example, are very beneficial- on the other hand, while performing the work of a firefighter is physically strenuous and dangerous, it is not mentally taxing. Being a banker is marginally beneficial to society, but the work is exhausting, and hence highly lucrative.

The level of reward and also the level of difficulty channel people with various disparate talents into various fields of work...

Granted, I like making bling (and the nice steaks, trips to Japan, and assorted stuff I can use my money to buy) as much as the next guy, but it would seem that in a macro sense, the work that I am doing, while it is beneficial to ME, is not necessarily particularly beneficial to everybody...

significant news of the day

The news of Taiwan's reversal of its previous ban on Taiwanese banks' investment in the mainland as well as the possibility of making it easier for mainlanders to buy property in Taiwan and for Taiwanese companies to bring mainland workers over sprung out at me as being rather significant for ever so many reasons.

Points of thought:

1) This would seem to indicate a further step towards reunification and a step closer to the end for Taiwanese independence supporters. On the one hand reunification has the possibility of doing many good things for the economy of Taiwan. On the other hand, freedom is a hefty price to pay for a bigger payday. One country, two systems has proven beneficial for a certain portion of residents in HK, but the SAR has experienced strong economic polarization as well.

2) Exposure to Taiwan living may benefit mainland workers.

3) Investment offrun from the mainland property bubble would also be good for the Taiwanese real estate market?

Bjork, Subprime Loan Crisis

I attended the Bjork concert at the Shanghai International Gymnastics center on Sunday night.

The concert was pretty enjoyable overall, and as far as I could see, most concertgoers enjoyed themselves.

Apparently, at the end of the concert Bjork sang the words "Free Tibet" three times. A video is here: http://www.youtube.com/watch?v=ZEUFCK1qBMI The comments make entertaining reading, but I marked a good portion of them as spam for being flamebait.

Bjork's singing is quite incomprehensible, and I don't think that many people could understand what she was saying until afterwards...

This morning I spent 30 minutes this morning watching a very funny slide presentation on the subprime loan crisis, complete with stick figures and swears. Who knew that lawyers could be this funny?