bostonbubble.com

Boston ITer · Guest

http://finance.yahoo.com/expert/article/economist/167581

Once again, another so-called expert, in hindsight, talks about students entering finance/consulting as a misallocation of human resources.

GenXer · Joined: 20 Feb 2009 Posts: 703

Many 'smart' people are practicing what amounts to financial malpractice. They are good at getting paid, but they are not worried about being correct (in medicine they'd lose their license). So because this is a 'victimless' crime, nobody (or almost nobody) is prosecuted. They didn't break any laws, but they made us lose trillions of dollars. This was proposed by Nassim Taleb several years ago before all of these crashes took place. The problem is, there is a 'consensus' which is self-perpetuating, and banks keep paying these people to churn out model after model based on the same biased assumptions as before with minor tweaks. Look at these people as shamans in service of a pagan god or something like that - all they are doing is generating junk science while getting paid, and they manage to convince the whole world that they know what they are doing (except in 'rare' circumstances, when everybody loses everything quickly).

GenXer · Joined: 20 Feb 2009 Posts: 703

http://finance.yahoo.com/career-work/article/107145/From-Ordering-Steak-and-Lobster-to-Serving-It

Boston ITer · Guest

Yeah, I saw the yahoo article on the floor trader.

I think one of the reasons why I see him as being different from let's say the former idealistic mechanical engineer turned quant, is that this fellow was an authentic boiler room upstart. If he weren't in trading, he'd be driving trucks or running restaurants but now, is dealing with getting the boot and is probably a bit leery of leaving the field which gave him his panache in life to his other blue collar friends and relatives.

The former engineer, however, was probably offered a low paying starting salary at a Shaw's or Aspen Tech, with little or no chance of advancement w/o an MBA so what happened was that a recruiter for XYZ Capital showed up, saw that his senior project won *a prize*, and told him that if he could work on scalping volatilities, that he'd get $60K+ plus P/L (if the team's work made money) so the choice was obvious, a real paying job with easy six figure potential or slaving it out over designs where the dept head gets all the credit and meager 0-3% raises per annum.

GenXer · Joined: 20 Feb 2009 Posts: 703

Now think about all those people without a job who have these expensive houses...on which they 'hope' to break even. How long can they maintain that? Probably not for long. He's hoping to get his old job back I'm sure, but it won't happen. Its a matter of time before more people are laid off...unemployment rate is still climbing steadily, so no recovery in sight. We'll see recovery when you have a positive rate month after month, and even then, when you have say 15% unemployment, it makes no difference if you add 20k jobs a month (vs. now we are losing 600k a month). We lost 563k in April, which is 0.4% increase - at this rate we'll hit 15% in a year or so.

balor123 · Joined: 08 Mar 2008 Posts: 1204

Boston ITer · Guest

john p · Joined: 10 Mar 2006 Posts: 1820

This sort of reminds me of the Quint speech about how he was on the USS Indianapolis, the ship that delivered the nuclear bomb and how the boat was shot at and sunk and more than half the crew got eaten by sharks...

http://www.youtube.com/watch?v=5nrvMNf-HEg

That generation of IT guys delivered us the Internet... Now you have your Quint stories to tell.

Boston ITer · Guest

balor123 · Joined: 08 Mar 2008 Posts: 1204

john p · Joined: 10 Mar 2006 Posts: 1820

I think when an industry has a social network component, it tends to have more political power. With the Internet, I think you'll find more technical societies forming. Sometimes you're meeting the online personality versus the person you'd see face to face.

I think one of the good things about this down cycle is the realization that money is important, but it forces you to think about life without having much of it. I just went to a friend's father's wake last night and they had this laptop with the photographs scrolling along. It was nice to see that the guy had an amazing life and seeing him smiling with his grandkids on his lap and enjoying good times with his buddies. In the end, that's all that matters, we're all going to die so if we lose our house because the Sh%&*)$ hit the fan, so what. As long as we have a chance to meet the right person and have good friends and family that's what matters. I guess I hit my threshold of feeling stressed and now I'm like F-it.

I think the human capital that is wasted is the guy that didn't follow his vocation and had his priorities misaligned..

balor123 · Joined: 08 Mar 2008 Posts: 1204

My opinion is that you only need enough money. For some, and I think many Americans, there is never enough (it becomes particularly bad when they don't even try to spend money efficiently much less having set a high bar). When I graduated I wasn't making an enormous amount but I didn't care because I could afford the things that I wanted. Times have changed though as my needs have changed and it has become apparent that everything is unaffordable here: housing, schools, daycare, babysitters, food, healthcare, transportation, etc. The Northeast, New England in particular, is just so unwelcoming, this board excluded of course Smile

Usually businesses and governments compete for bringing the most efficient service to their clients. They compete here as well but not on efficiency of services but rather non-competitiveness of them, allowing them to deliver the least efficient services possible. If you are part of them problem, then I guess that's good for you but if you are an exporter you get taken advantage of.

My wife was going crazy with the newborn and thankfully we were able to bargain our way into an affordable option that, though we feel we got a great deal, is STILL 30% more expensive than virtually anyway else in the country. We were shocked to learn that babysitters in this zipcode (Waltham) cost 10% more than where my inlaws live, the most affluent part of Philadelphia. Having been to several significantly poor parts of the world, I recognize that things are pretty good for me though. Relative to my peers I'm also doing well I suppose, thanks largely in part to some fantastic parents. But I've also been all over the US and realize how much easier life is for most Americans than those of us in Boston, particularly those who relocated here after 2002 (those who bought their houses in Lincoln or Bookline in 1998 and 2002 are a lot better off though their daycare is just as expensive as mine).

Anyway, back on topic. What will is take for the financial industry to have a few bad years like the rest of the economy? Some years business is good for tech companies other years it is bad. As an architect, I'm sure that you've seen the same. But for investment bankers, lawyers, and healthcare workers (service workers in general), can you envision a scenario where they are, as a whole, forced to radically adjust their numbers and compensation that doesn't involved the financial destruction of the US (that is, another Great Depression)? I can't. It almost seems like the service sector is holding the economy hostage. Either we give them what they want or they'll take us all down.

Boston ITer · Guest