While CDO, CDS, are getting all hatred adjective like Toxic Assets, Weapon of Mass Destruction and Uranium 237 and so forth. It is worthwile to revisit what we thought of the same financial innovation 15 years back.
To start with we gave fancy name "Financial Engineering". Following is excerpt from leading weekly magzine coverstory in year 98-99 ( Don't remember exactly but it was Business Week )
It goes like this :
"Financial engineer don't wear lab coats. They don't experiment on rats or perform gas chromatography. Their raw material - money is'nt as jazzy as physict or biologist investigate. But the innovation they produce will contribute just as much to economic growth.
May be more, in fact. Because without science of finace, all other sciences are just a bunch of neat concepts. Ideas begins to contribute to human betterment when they're financed by venture capital, stock offering, loans, or buyouts.
The finance revolution in the past 25 years rivals the one that gave us the microchips. Look at changes, morgage loans are cheaper because financier have found a way to repackage they can be resold. The new finance will master money computer has master data and Biotechnology has began to master DNA. With the new theoreticle tools, financial engineer can break down any new investment in to it's components, then synthesize from them something more saleable : not just mortgage backed securities but also strips, swaps, swaption - the list goes on.
The entire economy benefits when financial rocket scientist create products that simultaneously meet the needs of supply capital and who use it. "
Amazing what was thought that time, spirit was similar to 19th century scientific invention. Then scientist went out to challenge existence god and faith in it, now fincial engineer went out to challenge economic cycles and asociated greed and fear. Results are subject to multiple interpretation and vociferous debate.
But the fact remains all these inventions contributed to our betterment. Only thing which skewed is greed of players themself. Players diverted from very objective of collective betterment of mankind. Chemical Engineer diverted we saw holocaust, physicist diverted we saw Hirosima / Nagasaki, Banker diverted we saw credit crisis (2008). Same innovation can be put to far better use to improve lending process of MFI, same innovation can be used to create Infrastructure, Same innovation can be used to provide growth capital to enterprenuer.
Last but not least : in current enviornment when banker is talked in the same vein with second hand car salesman, his ability to contribute to economy has not changed. In fact his competence to diognise and taking risk is required more now than ever. All what needs to change is some social conciousness and little bit sensitivity. And have some what more hope that world can be bettered by honest and competent efforts.
Let me end with the very well known quote of Abraham Lincoln " People see things which are and ask why, I see things which never was and say why not " Let's try to see future no economic indicator is predicting and with enough conviction say "Why Not".
To start with we gave fancy name "Financial Engineering". Following is excerpt from leading weekly magzine coverstory in year 98-99 ( Don't remember exactly but it was Business Week )
It goes like this :
"Financial engineer don't wear lab coats. They don't experiment on rats or perform gas chromatography. Their raw material - money is'nt as jazzy as physict or biologist investigate. But the innovation they produce will contribute just as much to economic growth.
May be more, in fact. Because without science of finace, all other sciences are just a bunch of neat concepts. Ideas begins to contribute to human betterment when they're financed by venture capital, stock offering, loans, or buyouts.
The finance revolution in the past 25 years rivals the one that gave us the microchips. Look at changes, morgage loans are cheaper because financier have found a way to repackage they can be resold. The new finance will master money computer has master data and Biotechnology has began to master DNA. With the new theoreticle tools, financial engineer can break down any new investment in to it's components, then synthesize from them something more saleable : not just mortgage backed securities but also strips, swaps, swaption - the list goes on.
The entire economy benefits when financial rocket scientist create products that simultaneously meet the needs of supply capital and who use it. "
Amazing what was thought that time, spirit was similar to 19th century scientific invention. Then scientist went out to challenge existence god and faith in it, now fincial engineer went out to challenge economic cycles and asociated greed and fear. Results are subject to multiple interpretation and vociferous debate.
But the fact remains all these inventions contributed to our betterment. Only thing which skewed is greed of players themself. Players diverted from very objective of collective betterment of mankind. Chemical Engineer diverted we saw holocaust, physicist diverted we saw Hirosima / Nagasaki, Banker diverted we saw credit crisis (2008). Same innovation can be put to far better use to improve lending process of MFI, same innovation can be used to create Infrastructure, Same innovation can be used to provide growth capital to enterprenuer.
Last but not least : in current enviornment when banker is talked in the same vein with second hand car salesman, his ability to contribute to economy has not changed. In fact his competence to diognise and taking risk is required more now than ever. All what needs to change is some social conciousness and little bit sensitivity. And have some what more hope that world can be bettered by honest and competent efforts.
Let me end with the very well known quote of Abraham Lincoln " People see things which are and ask why, I see things which never was and say why not " Let's try to see future no economic indicator is predicting and with enough conviction say "Why Not".
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