Some Letters to the Editor
The article Rethinking the Goals of Finance: Lessons from the Amherst Arbitrage proved controversial. Below are a couple emailed responses Political Animal recieved on the topic:
I particularly enjoyed the case example of Amherst Holdings versus the banks. Indeed, the use of financial derivatives was a superbly brilliant strategy by Amherst to protect itself against financial loss and importantly provided a social good to the community whereby none of the homeowners lost their houses.
That said, this essay should have ended in the second paragraph with the authors’ assertion that “there is nothing inherently problematic with finance……financial practices are troubling because of their execution, not because finance is itself problematic.” As with many things in life, including finance, poor execution can typically lead to unfortunate and unintended outcomes. For example, owning a car is considered a valuable and useful asset, but poor execution (reckless driving) may very well lead to catastrophic consequences.