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U.S. politics and society
Its true in a way but the reason wall street collapsed was because the smart guys were just not as smart as they themselves, or other people thought them to be. Their smarts were also domain specific, some one should have told them that.
The problem is not that the people cooking them up were "TOO SMART" it was that they simply didn't care about the long term consequences and just let their greed get ahead of their "smarts".
^Nopes. Its a common misconception, that investment bankers didn't care about long term consequences of their decisions. Employees above a certain level in the organizational hierarchy in investment banking have considerable amount of money in stock options that vest years after they leave office. To say that they didn't care about such hefty rewards tied up with the future of the firm is simply ludicrous.Its that they did not realize or understand the long term consequences of the decision that they took. I would recommend the Epicurean dealmaker's rather lengthy but non-technical treatise on what went wrong. http://epicureandealmaker.blogspot.com/2009/09/nature-red-in-tooth-and-claw-part-i.html
@Ali "they didn't care about such hefty rewards tied up with the future of the firm is simply ludicrous."Obviously, the smarties on the wall street cared too much for the rewards and that's why...The problem was that these smart people didn't ask enough smart questions. It sort of goes back to Warren Buffett, who doesn't invest in things he doesn't understand. Credit default swaps are not hard to understand. But if you're the head of Lehman Bros. and you have $600 billion in assets at stake, you certainly better start asking questions about investment models that purportedly can't lose.And, if you don't understand the answers -- and don't care that you don't understand -- then real problem ARISES .
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