Will the charge of Goldman Sachs by SEC change the future of our economy?
Or is this just a lesson from the past. Will it happen again? I think it could as the younger generation learning about Quant does not really care about the past. They are just as greedy and high risk takers as in the past of the 2000s. Everyone will always try to cheat the system and regulators. With how the complexity of derivative and related product, it is quite easy to bury and repackage toxic asset products. As long as it goes up, people will always buy it without the rationale; you would think those would learn from the past of the 2007 financial crunch.
The other scary thought is will this charge by the Security Exchange commission to Goldman Sachs erode the confidence in the stock market’s exchange run over the last few months? If you at the dip of 125 on the New York Stock Exchange, 121 on NIKKEI, and 43 on the STOXX 50. Yikes! That is a bit of a hit since the run of the markets. Again, could this start the decline of a new correction or even crash on the markets?
Face it, the confidence has been slapped in the face. What do you think took down a number of banks in 2007 and 2008? I personally feel it was the bankruptcies of banks like Lehman Brothers, takeover of Bear Stearns and Merrill Lynch. As people did not trust the banks, the LIBOR dipped as banks did not trust other banks so the credit market froze. This in the end resulted in the credit market freezing which lead to a very scary situation that would have the results of 1930’s depression look like happy times. It is quite possible that this Goldman Sachs charge could have started something over again?
– See more at: http://quantlabs.net/blog/2010/05/will-the-charge-of-goldman-sachs-by-sec-change-the-future-of-our-economy-2/#sthash.y2Ru4sH3.dpuf