|Four years ago I was largely frozen with respect to financial sophistication.
It seemed to me then that 2008-9 had demonstrated that our modern
sophisticated financial systems had created enormous macroeconomic risks, but
it also seemed to me then that in a world short of risk-bearing capacity with
an outsized equity premium virtually anything that induced people to commit
their money to long-term risky investments by creating either the reality or
the illusion that finance could, in John Maynard Keynes's words, "defeat
the dark forces of time and ignorance which envelop our future".
But the events and economic research of the past years have demonstrated...I should have read a little further in Keynes, to "when the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done".
When we look back at something that happened in the past, it is much easier to see how something could have been done differently or prevented --- usually because
we have more of the facts and a better understanding after the event, hence the term "hindsight is 20/20".
Today the banks are bigger than ever, and still "too big fail" --- but even with hindsight, the Attorney General Eric Holder believes that the bankers are still "too big to jail".