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According to the Collins English Dictionary 10th Edition fraud can be defined as: "deceit, trickery, sharp practice, or breach of confidence, perpetrated for profit or to gain some unfair or dishonest advantage".[1] In the broadest sense, a fraud is an intentional deception made for personal gain or to damage another individual; the related adjective is fraudulent. The specific legal definition varies by legal jurisdiction. Fraud is a crime, and also a civil law violation. Defrauding people or entities of money or valuables is a common purpose of fraud, but there have also been fraudulent "discoveries", e.g. in science, to gain prestige rather than immediate monetary gain
*As defined in Wikipedia

Tuesday, August 10, 2010

Goldman Sachs & The Road to Serfdom

In this post, we have a former Goldman quant having his come-to-Jesus moment (although many in the comments section question that). Still, a very enjoyable read.

The road to serfdom

I joined Goldman Sachs in 2005, after five flailing years in a physics Ph.D. program at Berkeley.

The average salary at Goldman Sachs in 2005 was $521,000, and that’s counting each and every trader, salesperson, investment banker, secretary, mail boy, shoe shine, and window cleaner on the payroll. In 2006, it was more like $633,000.

In the summer of 2005, I took one look at my offer letter and the Goldman Sachs logo above it, another look at my sordid grad student pad, and I got on a plane to New York within the week. I packed my copy of Liar’s Poker for reference.


There were other characters in this drama. The sales guys were complete tools, with a total IQ, summing over all of them, still safely in the double digits. The traders were crafty and quick-witted, but technically unsophisticated and with the attention span of an ADHD kid hopped up on meth and Jolly Ranchers. And the quants (strategists in Goldman speak)? Mostly failed scientists (like me) who had sold out to the man and suddenly found themselves, after making it through two years of graduate quantum mechanics, with a bat-wielding gorilla peering over their shoulder (that would be the trader) asking them where their risk report was.


Giving sophisticated models and fast computers to traders is like giving handguns and tequila to teenage boys. Only complete mayhem can result (and as we saw recently, complete mayhem did result) . The quants were there to make sure the guns were loaded, but also to make sure the traders didn’t shoot themselves in the foot.

Not that we were terribly appreciated. In fact, we were basically the trader’s little bitches, and any quant who’s honest with himself realizes that. In time, we quants developed knee callouses from genuflecting to service the traders, on whose profits our livelihoods depended.


Read the rest here

One of our anonymous commentators sent us a link to a story about "Once-homeless veteran's company hires, trains ex-warriors". They need YOUR help. Here's a link to the story and here's a link on how you can help.

I have offered them my nearly new industrial sewing machine (value:$1,000) and contributed some cash as well. It would be great if some of our readers would give these guys a hand up. They did their part in helping our country in the best way they knew how and it's only fair we should do the same for them.


JR said...

Too bad the "serf" from Goldman Sachs wasn't a whistle blower with something important to say. The workplace doesn't sound suitable for anyone except greedy bet makers.

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