Comments on: What is wrong with US capitalism? Las Vegas-style gambling in the banking sector has outstripped the Silicon Valley tech sector. http://www.paulallen.net/what-is-wrong-with-us-capitalism-las-vegas-style-gambling-in-the-banking-sector-has-outstripped-the-silicon-valley-tech-sector/ Internet Entrepreneur Sat, 06 Mar 2010 07:29:25 -0800 http://wordpress.org/?v=2.8.6 hourly 1 By: Ray Chipman http://www.paulallen.net/what-is-wrong-with-us-capitalism-las-vegas-style-gambling-in-the-banking-sector-has-outstripped-the-silicon-valley-tech-sector/comment-page-1/#comment-2835 Ray Chipman Tue, 27 Oct 2009 17:52:19 +0000 http://www.paulallen.net/?p=1265#comment-2835 Agreed. We need to elect officials that understand these issues. When are you going to run? Agreed. We need to elect officials that understand these issues. When are you going to run?

]]> By: Cary Snowden http://www.paulallen.net/what-is-wrong-with-us-capitalism-las-vegas-style-gambling-in-the-banking-sector-has-outstripped-the-silicon-valley-tech-sector/comment-page-1/#comment-2610 Cary Snowden Tue, 01 Sep 2009 02:38:58 +0000 http://www.paulallen.net/?p=1265#comment-2610 One simple mechanism could have solved this entire problem, and it has to do with the 'risk'. Banks know they have a social parachute, and therefore the risk is mitigated. Take TARP out of the picture and you have a substantial learning moment for bankers, and a painful refresh. Throw TARP in (as we have) and you don't teach anyone the lesson, and as you have expertly pointed out; the banks continue piling it on because there is much profit to be made without any of the risk. Greed is good because it motivates achievers to produce, excel, and innovate. But the inherent risk in any of these ventures mitigates the excess. Remove the risk, and excess will run wild. TARP has removed the risk, and we should be bracing for the next slight breeze when all these cards come down on us again. One simple mechanism could have solved this entire problem, and it has to do with the ‘risk’. Banks know they have a social parachute, and therefore the risk is mitigated. Take TARP out of the picture and you have a substantial learning moment for bankers, and a painful refresh. Throw TARP in (as we have) and you don’t teach anyone the lesson, and as you have expertly pointed out; the banks continue piling it on because there is much profit to be made without any of the risk.

Greed is good because it motivates achievers to produce, excel, and innovate. But the inherent risk in any of these ventures mitigates the excess. Remove the risk, and excess will run wild. TARP has removed the risk, and we should be bracing for the next slight breeze when all these cards come down on us again.

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