The Death Knell for Reckless Speculation? Has the Financial Industry's Heyday Come and Gone?

CallMeASeeker: " The finance industry is just begin to sober up after a Caligulasque orgy of speculation on everything from gold, mortages and food. The euphoria was at its peak in 2007 and then like all orgies it had to end. The ensuing chaos skewed the real world economy with massive price inflation driven by speculation on oil, wheat, corn, rice and metal futures. Speculation and hoarding always tend to shadow each other and are further incensed by market forces and psychology. Cost Cutting, profit motive, price gouging and cartelization drive up prices even without any change in the supply-demand fundamentals of commodities." Update April 29, 08 : FT.COM - Fed considers Regulation of Credit and Asset Markets - Is this officially the beginning of the end of wild fluctuation in the global economy.?..maybe not but its a damn good start for a otherwise typically reticent Federal Reserve.
From: TheWallStreetJournal April 28, 2008: by Justin Lahart
"The role of finance in the economy is going to come down significantly in the coming years," says Carlos Asilis, chief investment officer at Glovista Investments, a New Jersey money manager. "From a societal standpoint, we got carried away with finance." Finance was lifted by deregulation, globalization and technological innovation. Combined, these forces allowed capital to flow far more freely around the globe, brought flexibility to the economy and made finance lucrative.
The creation of securities backed by mortgages and other loans and other innovations made it easier for financial firms to spread risk, and thus they became more willing to lend to households to fuel spending.
In the 2000s, finance went into overdrive, creating an alphabet soup of derivatives that, it turned out, didn't have the risk-reducing properties they were supposed to have. Mr. Philippon compares some to "sheep with fifth legs -- something you would see in a zoo and wonder what Nature was thinking."