The destructive power of financial markets

[bigbadwolf]

Interesting article in Der Spiegel:

In Woolley's experience, the idea that financial markets are efficient is erroneous. "All players in the financial markets behave rationally from their own perspective, but the outcome of this process can be disastrous for mankind," he says.

Woolley, 71, still wears a pinstriped suit, tie and white shirt, but now he works in a small office stuffed to the gills with academic studies at the renowned London School of Economics. Woolley donated 4 million pounds (€3.5 million) to the elite university and funded its Paul Woolley Centre for the Study of Capital Market Dysfunctionality.

His goal is to prove how dangerous the financial markets are. "It's like a tumor that keeps growing," he says. According to Woolley, there is no justification for the fact that this industry brings in more than 40 percent of all US corporate profits and pays the highest salaries in good years, while in bad years it is bailed out by taxpayers.

... Woolley believes that this regulation is insufficient. He is calling for a strict ban on high-frequency trading, which, in his view, has no social value whatsoever.

 

[Lyosha]

Meh. Honestly, this is not that outlandish and unimaginable. Markets will be markets. If everyone was rational and knew the value of everything, there would be no market.

I don't know about you, but I'm not going into finance to make vaccines and save endangered species. My intent in taking on positions that will appreciate. And there are two sides to every trade. And sometimes I'm on the "wrong" side.

 

[IlyaKEightSix]

The old man needs to stand aside. His time is past.

 

[Lyosha]

That's not very nice. He's not incorrect. And those who do not learn from history will inevitably relive it.

 

[myampol]

That's not very nice. He's not incorrect. And those who do not learn from history will inevitably relive it.

The actual quote is "Those who cannot remember the past are condemned to repeat it."
-- George Santayana, The Life of Reason (1905), vol.1, ch.12, pg.284

Santayana's full paragraph is:

Progress, far from consisting in change, depends on retentiveness. When change is absolute there remains no being to improve and no direction is set for possible improvement: and when experience is not retained, as among savages, infancy is perpetual. Those who cannot remember the past are condemned to repeat it. In the first stage of life the mind is frivolous and easily distracted, it misses progress by failing in consecutiveness and persistence. This is the condition of children and barbarians, in which instinct has learned nothing from experience.

 

[bigbadwolf]

The actual quote is "Those who cannot remember the past are condemned to repeat it."
-- George Santayana, The Life of Reason (1905), vol.1, ch.12, pg.284

Santayana's full paragraph is:
...

It's a famous saying but I've never seen it in its context (nor have I ever read Santayana).

 

[myampol]

It's a famous saying but I've never seen it in its context (nor have I ever read Santayana).

For our purposes, one could say that this would be applicable to the Exponential and Geometric distributions...