Infectious Greed How Deceit and Risk Corrupted the Financial Markets

FromInfectious Greed: By 2002, the closing bell of the New York Stock Exchange was barely relevant, as securities traded 24 hours a day, around the world. The largest markets were private, and didn't involve regulated exchanges at all. Financial derivatives were as prevalent as stocks and bonds, and nearly as many assets and liabilities were off balance sheets as on. Companies' reported earnings were a fiction, and financial reports were chock full of disclosures that would shock the average investor if she ever even glanced at them, not that anyoneincluding financial journalists and analystsever did. Trading volatilities were sky high, with historically unrelated markets moving in lock step, increasing the risk of systemic collapse. In just a few years, regulators had lost what limited control they had over market intermediaries, market intermediaries had lost what limited control they had over corporate managers, and corporate managers had lost what limited control they had over employees. This loss-of-control daisy chain had led to exponential risk-taking at many companies, largely hidden from public view. Simply put, the appearance of control in financial markets was a fiction.Partnoy, Frank is the author of 'Infectious Greed How Deceit and Risk Corrupted the Financial Markets', published 2003 under ISBN 9780805072679 and ISBN 0805072675.