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Wednesday, December 21, 2005

Problems in Wall Street are visible yet difficult to understand

Eliot Spitzer has been doing great service to us, but he can do so because he himself has been an investor and he understands how bankers and fund managers work and make money. He also understands how to communicate with them. While you believe that he has been helping out everyone in the society, you have to spend a fair amount of time and put effort to understand what he does. One of problems that he has been tackling is misallocation and redistribution of capital, but it is not something that you can understand easily (I tried to point out one of problems a couple of days ago, but I am not so sure if I was able to articulate my point). The point is that kind of problems that Eliot Spitzer has been tackling are very serious problems and they affect everyone in the society, but they are also problems that you cannot easily identify (it is not like murder or rape which you immediately recognize its problem and its crime without any analysis). This is probably one of bigger problems today, not lack of transparency in criminal justice, but great difficulty to observe the transparency and understand underlining problems. Problems in Wall Street are visible yet difficult to understand, while these problems affect everyone in the society. Unless, if not the majority, a fair number of people in U.S., understand these problems, it is difficult to solve these problems in the society, and to make a fair number of people in U.S. understand these problems is a great challenge.

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