This is an old lecture delivered by Salih Neftci at the New School on credit risk and the crisis. (Click the tab labeled “Play Full Program” to see the entire lecture.) It’s still a very useful presentation when looking back at what triggered this mess.
I took all of Salih’s courses in econometrics, macroeconomics, finance, and financial engineering at the CUNY GC. Excellent instructor. Nice man. Funny jokes. Full disclosure: He once wrote a great letter of recommendation for me that got me a finance professorship. So, I’m very grateful to him.
In a class, I once asked him point blank: “If you are so smart, how come you are into finance and making bucks? How come you’re not into politics, trying to change the world for good?” That rattled him a bit. He babbled about how some women in his family, including his mother, had all been into politics at great cost. He then said that politics only rarely improves on things. He then stopped himself, unhappy with his own answers, and continued the class.
That is a propos of this passage in Krugman’s latest column:
Meanwhile, how much has our nation’s future been damaged by the magnetic pull of quick personal wealth, which for years has drawn many of our best and brightest young people into investment banking, at the expense of science, public service and just about everything else?
I agree with Paul Krugman. What a waste of our society’s dearest resources!