Smart Guys

In a book review article on the financial crash by economist Simon Johnson, we find this:

...the person who completely nailed our current predicament is Calvin Trillin—who recently related in the New York Times a conversation he purportedly had with an experienced Wall Street type in a bar. “The financial system nearly collapsed,” [the Wall Street man] said, “because smart guys had started working on Wall Street.”

“But weren’t there smart guys on Wall Street in the first place?” I asked.

“Did you ever hear the word ‘derivatives’?” he said. “Do you think our guys [the lower third of a college class, who—Trillin argues—were the typical people who went to Wall Street a quarter of a century ago] could have invented, say, credit default swaps? Give me a break! They couldn’t have done the math.”

“When the smart guys started this business of securitizing things that didn’t even exist in the first place, who was running the firms they worked for? Our guys! The lower third of the class! Guys who didn’t have the foggiest notion of what a credit default swap was. All our guys knew was that they were getting disgustingly rich, and they had gotten to like that. All of that easy money had eaten away at their sense of enoughness.”

Trillin reflects: “I found myself contemplating the sort of havoc a horde of smart guys could wreak in other industries. I saw those industries falling one by one, done in by superior intelligence. ‘I think I need a drink,’ I said.”