From Terrence McNally
The Huffington Post
August 5, 2009 Ukiah Valley, Mendocino, North California
Q and A with Michael Lewis (Part 2): I recently interviewed Liar’s Poker author Michael Lewis. After talking about his new book, Home Game: An Accidental Guide to Fatherhood, we discussed the financial meltdown and the bailout. This is Part 2 of some excerpts. You can hear the full podcast at terrencemcnally.net.
In Part 1, we talked about how the rules of the game were “totally screwed up” – for individual traders, firms, and ratings agencies. In Part 2, we look at some implications for American society at large.
TM: In 1970 only about 5% of men graduating from Harvard went into finance. By 1990, 15%, and by the class of 2007, 20% of the men and 10% of the women planned to go into investment banking.
ML: And half of the other ones applied, they just didn’t get jobs. This is a radical misallocation of human talent. You can say it’s faith in the free markets, but it’s caused by the huge growth of a culture of financial manipulation.
TM: For years people have been saying that the U.S. was shifting from a manufacturing to a service economy. I suspect people thought of services as fast food, IT, health care, maybe lawyers. I don’t think many really saw the huge role played by the financial sector.
ML: That’s right. And let me draw an analogy. With the sub-prime mortgage racket generating lots of fees, the people within each big Wall Street firm who create that business acquire enormous power. So when the business gets decreasingly sane, when the loans get shakier and shakier, and the leverage gets bigger and bigger, they’re the ones who say we’ve got to keep doing this. Even though people not directly implicated in the business might have said, “No, it’s time to stop.”
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