I was reading a newspaper the other day and came about an article regarding how a bank has lost money because they did not expect the recession to hit so hard. In other words they made some wrong bets. It is so mind boggling to me to read these kinds of things. I can understand a layman caught up in this recession since they don’t have the time or the analytical knowhow to judge what is going on in the market. But I still refuse to believe that the financial institutions with all their big economic departments and all the highly educated employees can’t see the crisis coming.
What I get is that when the going was good everybody was praising how their financial wizards are making tons of money for them but along the way these so called wizards lost track of what they were supposed to do-making intelligent and informed decisions and they made some risky bets which they knew (as I believe so) were not great for their employees but they did it anyway and end up costing the whole economy a bunch (okay billions or trillions of dollars) in losses. And now the big economists are still scratching their heads of what did hit the economy and all their financial models have come to naught.