It was on 18th May, 1986 when then-successful arb Ivan Boesky gave the commencement address at the University of California's Berkeley business school. Boesky famously told his audience that 'I think greed is healthy. You can be greedy and still feel good about yourself'.
Just a few months later, Boesky was mired in an insider trading scandal, which led to jail-time in Southern California's Lompoc Federal Prison facility. 22 years later, financial markets professionals have finally learned (the hard way) that greed is not good, and that, in the end, nothing good can come from it.
170,000 financial markets professionals have now lost their jobs since September 2007, and another 170,000 are likely to go the same way before the current financial and economic crisis has played out. The demise of two Bear Stearns hedge funds in August last year was followed by the collapse of the firm, the bankruptcy of Lehman Brothers, the bailout of Citi and the takeover of Merrill Lynch. Goldman Sachs and Morgan Stanley were forced to become bank holding companies to gain access to the Fed's discount window, and up to two-thirds of hedge funds around the world look likely to fail or be going out of business.
All this, of course, is down to greed - greedy traders, encouraged by greedy executives, who recklessly chased bigger profits, bigger bonuses and greater fame. And the final ignominy has got to be the sorry tale of Bernard Madoff, the much-respected financier who has strode our industry like a colossus for almost 30 years. His financial empire is now thought to have been built on sand, and greedy investors, chasing unbelievable returns, are said to have lost up to $50bn in an alleged 'ponzi scheme'.
Our industry is said to be changing, as investment banks and hedge funds search for new business models and alternative revenue streams. The old ways have become discredited - leverage is dead, bigger is no longer better and greed clearly never did anyone any good.
'The problem is that greed did do some people a LOT of good - it's just that those people are in a tiny minority, not the millions who lost their jobs or their life savings'.
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