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From Paul Volcker, during a Q&A at the Future of Finance Initiative:
A few years ago I happened to be at a conference of business people, not financial people [...] and I found myself sitting next to one of the inventors of financial engineering. I didn't know him, but I knew who he was and that he had won a Nobel Prize, and I nudged him and asked what all the financial engineering does for the economy and what it does for productivity.
Much to my surprise, he leaned over and whispered in my ear that it does nothing — and this was from a leader in the world of financial engineering. I asked him what it did do, and he said that it moves around the rents in the financial system — and besides, it's a lot of intellectual fun.
It's funny, but for all the talk that this subject has received, I've really heard no one seriously contest this point.1 The inventors of modern financial engineering, far from defending their handiwork, instead seem to be intent on keeping their heads down and hoping that, in the end, Congress loses the desire to do anything serious to stop them. It's probably a pretty good strategy.
1Of course, I might have missed something. Has anyone made a serious, thorough defense of modern financial engineering anywhere?