(Way out of date, but what the heck.)

A very funny blog from a friend, but too much cliche and too far from truth (as if I know it).

I-bankers are not the cause of the current crisis, nor are they getting the most part of the “undeserved” bonuses, or have they ever been. At least if you define “i-banker” in the traditional and strict sense.

I-bankers mostly do IPOs and other security issurance, and deals (merger and aquisition). They do get outrageous commision, but that’s only one sea in the vast financial oceans.

Senior execs, traders, and quants are the driving force of the industry, and they get the lion share of compensation.

Now even people from Rwanda know that the current global economy crisis roots from mortgage-backed securities. But that’s just one manifest of the massive and inherent problems of derivatives modeling and trading.

The now defunct i-banks used to have most of their business in traditional i-banking and as broker/dealer, which is to help clients (institutional and individual investors) trade. Then they discovered the amazing power of computers and mathematicians, and started to use their own money (proprietary trading) and clients’ money (asset management) to trade securities, based on ever complicating models.

Goldman Sachs (and earlier killers like Salomon) made a killing. Everybody followed suit. They have to keep finding new things to trade, as arbitrage disappears and profit margin thins in established markets as they become well-known and level playing fields, and dinosaur banks move in.

Then climates changes and extinction comes.

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