When Wall Street hurts the poor, it hurts itself
Wednesday, August 22nd, 2007
My friend and colleague Eric Baum is one of the few ambitiously moral people in this universe. Where for others caveat emptor is the watchword, Baum here notes that Wall Street’s recent failure to embrace the categorical imperative has meant inflicting an unforseen wound on itself.
Blowback
By Eric Baum
The Central Intelligence Agency has a term called ‘blowback’ to describe the unintended consequences of hostile actions. In financial jargon there is no term to describe such quid-pro-quo sequences, but the subprime debacle may prompt financial analysts to coin one (ed: payback?).
Hedge funds and other money managers that cater to institutional investors are running for cover amidst a credit meltdown that is now demolishing equity prices. Financial insiders know the sequence of events that produced multi-billion-dollar losses at hedge funds managed by Bear Stearns and Goldman Sachs. These insiders now expect more damage in the weeks to come.
