Can someone explain to me why anyone listens to Larry Summers anymore?
Also – side note – everything they teach you in finance class at Harvard Business School has now been proven once and for all to be false. CAPM, efficient markets, diversification, the importance of financial innovation (derivatives etc), deregulation, etc. The only diversification that matters is institutional (to avoid counterparty risks and Ponzi schemes). When things go down everything becomes correlated. Banks were regulated after the great depression for a reason. Good hedge funds actually did better overall that the market in past years and during the crash last year. The only people who should be allowed to use derivatives are people who are actually hedging for fundamental economic reasons. Short sellers don’t make the world a better place (ask anyone who trades financial stocks at a good hedge fund). Most private equity funds don’t create economic value – they just arbitraged cheap debt and should now go away.
The good news is now engineers will go back to doing productive things again and New York City will become affordable for non-bankers again.