Could you express this in less technical language, Doug, or as representing a more general tendency? Is it comparable to buying options -- betting on someone else's bet? Or is it a case of reckless greed -- the lure of profit competing with a rational calculation of risk? The thing described seems self-defeating this way -- capitalist financial managers second-guessing themselves -- which does not seem part of a "core of the capitalist process."
Bob W
--- Doug Henwood <dhenwood at panix.com> wrote:
> One of the roots of the recent financial market
> turmoil is that Wall
> Street financed a lot of long-term mortgage lending
> by borrowing
> short-term in the commercial paper market; that
> meant that they had
> to refinance every few weeks to support a loan with
> a term of
> decades. Thanks to a Google alert on myself, I just
> learned that a
> blogger quoted me in Wall Street quoting Joseph
> Schumpeter: "It is
> one of the most characteristic features of the
> financial side of
> capitalist evolution so to 'mobilize' all, even the
> longest,
> maturities as to make any committment to a promise
> of future balances
> amenable to being in turn financed by any sort of
> funds and
> especially by funds available for a short time, even
> overnight, only.
> This is not mere technique. This is part of the core
> of the
> capitalist process." A nice antidote to all those
> who think that all
> this stuff is new.
>
> Doug
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