Market/Investor Disconnect

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Keynes's picture
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Joined: 02/27/2009

As Bradley was mentioning in his AIG Witch Hunt thread, I too have been struck by the perception of "Wall Street Fat Cats."  I thought the Cramer/Stewart interview was an interesting representation.  People seem to have painted that the Wall Street crew knew that this new paradigm of high leverage couldn't work.  In retrospect that seems easy to say, but I think it's unfair to imply that they were simply milking the American investor of their money in a scheme they knew couldn't work.  I could be wrong, but in my experience I think most of these people really did believe that they had discovered a "new paradigm" that was going to lead to greater wealth for everyone.  Was that naive?  Of course.  But I don't think they were as evil as they are being painted.  Irresponsible and foolish?  In many cases.  But I ultimately think that the implication that Stewart and others make that they're essentially "bad guys" is a bit overblown.  Moreover there is a trend to start blaming "traders" for all the ills of the markets.  I think people need to understand the important liquidity that those people bring to the markets before they start throwing stones at them.  Did Wall Street do a horrible job?  Yes.  We're they all a bunch of Bernie Madoffs trying to get theirs at the expense of their investors?  I don't think so.