Did it all just get too complicated? And if so, how do we deal with it?
It’s the economy, but this isn’t stupid. Quite the opposite when two Nobel laureates—Robert Merton, MIT PhD ’70, and Institute Professor Emeritus Robert Solow—argued different approaches to making sure what happened to the U.S. financial markets in 2008 doesn’t happen again.
Dean Emeritus and Howard W. Johnson Professor of Management Richard Schmalensee moderated the talk, held this afternoon at MIT Sloan’s Building the Future event.
“Who in the room thinks that if Goldman Sachs hit a rock, a hypothetical rock — I’m not saying they have, I’m not saying they will — today, who here thinks they would be allowed to fail, like Lehman Brothers did, unimpeded by any government bailout, starting Monday morning? Can Goldman Sachs fail?”
“I’ve asked this question around the country and only one person has ever raised his hand. It was in New York. He had a big short position in Goldman stock. That’s New York.