Financial Engineering and Crises

The speaker discusses their intermediate stance on financial engineering, using an analogy with the aviation industry to highlight the need for scrutiny and change. They explore historical financial crises, such as Japan's and the tech bubble, noting that these were not solely due to financial engineering. The discussion extends to Fannie Mae and Freddie Mac, emphasizing the risks of government guarantees. The speaker concludes by advocating for a balanced approach to financial engineering, recognizing its importance while calling for necessary changes to prevent future crises.

What analogy does the speaker use to describe the need for a paradigm shift in financial engineering?

• The medical industry

• The education system

• The aviation industry

• The technology sector

According to the speaker, what is a common misconception about financial crises?

• They are always linked to technological advancements

• They are solely due to financial engineering

• They are caused by government policies

• They are inevitable and cannot be prevented

Which country's financial crisis is mentioned as an example of a crisis without financial engineering?

• United States

• Germany

• Japan

• China

What does the speaker suggest about the relationship between financial engineering and modernity?

• Financial engineering is a modern invention

• Financial engineering is the sole cause of modern crises

• Modernity has no impact on financial crises

• They are unrelated

What financial entities are discussed in relation to government guarantees?

• JP Morgan and Chase

• Fannie Mae and Freddie Mac

• Bank of America and Wells Fargo

• Goldman Sachs and Morgan Stanley

What financial instrument is mentioned in relation to government guarantees?

• Futures contract

• Put option

• Call option

• Swap agreement

What does the speaker suggest about the role of financial engineers?

• They should be the sole decision-makers

• They should focus solely on derivatives

• Their role is insignificant

• Their work is too important to be left only to them

What historical factors does the speaker mention as causes of financial crises?

• Political instability

• Greed and fear

• Natural disasters

• Technological advancements

What does the speaker imply about the need for oversight in financial engineering?

• It is unnecessary

• It should be left to financial engineers

• It should be reduced

• It requires broader oversight

What is the speaker's stance on the importance of financial engineering?

• It is irrelevant

• It is too important to ignore

• It should be abolished

• It is overrated