China Sums Up US Financial Innovation: "Smart Kids Picking People's Pockets Is Not Very Good"

Last edited Tue Oct 9, 2012, 12:26 AM - Edit history (4)

China Sums Up US Financial Innovation: "Smart Kids Picking People's Pockets Is Not Very Good"

Submitted by Tyler Durden at ZeroHedge

http://www.zerohedge.com/news/2012-10-08/china-sums-us-financial-innovation-smart-kids-picking-peoples-pockets-not-very-good

"SNIP...................................................

When fringe-blogs highlight the reality of the US banking system and its financial engineering as nothing but overly complex three-card-Monte, it can be shrugged off; but when the head of China's sovereign wealth fund (yes the same one that will bail the world out) notes that the JPMorgan loss highlights a system that has become too complex, perhaps some should listen. As Bloomberg BusinessWeek reports, Gao Xiqing of CIC stated that "I think we do need to slow down a little bit instead of rushing up to all these fancy derivatives." The fact that the 'whale' loss was not a rogue trader but a systemic decision gone wrong on weak risk management of an overly-complex position was "the single most revealing thing" to Gao as he expressed concern about a society in which "all the best engineers are engineering financial products." Summing up the entire ethos of US financial innovation he concluded: "You have all the smartest kids to design these products, the only purpose of which is to get money out of other people’s pockets, that is not very good."

..................................................SNIP"