Henry Blodget in a recent article for the The Atlantic Magazine offers a very plausible explanation for why Wall Street seems to get itself into trouble often. He should know, because he was an Wall Street insider during the dot-com bubble.
His argument, for all their Ivy League degrees and financial acumen, deep down all Wall Streets are human beings who carry all the same emotions as any human being, acting in their own self interest.
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That’s especially true for the professionals on Wall Street, who’ve come in for more criticism than anyone in recent months, and understandably so. It was Wall Street, after all, that chose not only to feed the housing bubble, but ultimately to bet so heavily on it as to put the entire financial system at risk. How did the experts who are paid to obsess about the direction of the market—allegedly the most financially sophisticated among us—get it so badly wrong? The answer is that the typical financial professional is a lot more like our hypothetical home buyer than anyone on Wall Street would care to admit. Given the intersection of experience, uncertainty, and self-interest within the finance industry, it should be no surprise that Wall Street blew it—or that it will do so again.
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Read the complete article Wall Steet Blow Up
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