In less than a year, many of the pillars of the American economy have crumbled. It feels a bit like 2001, but much worse. When the tech bubble burst, you felt kind of dumb for having believed in it at all. "Pets.com? Web Van? Who could have ever thought those companies would succeed?"
This is much different. Many of the titans of the American system have either vanished or been drastically altered- AIG, GM, Citibank, Lehman Brothers, Merrill Lynch, etc. When Enron and WorldCom imploded, it was a question of how those rotten companies avoided detection. Now, people are questioning whether or not the entire system might collapse.
One thing that must change is how we reward people in the finance industry. Finance companies should be devoted to raising capital and then providing it to companies that can utilize the capital for expansion. Financiers should be compensated in a way that matches is commensurate with their success in allocating capital. Frankly, I'm not sure what the heck we have been rewarding in recent years.
Is the system rotten? Have we done enough to fix it?
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