Trading in the "Fever of Boom"
Letter to the Editor

Sir, Many thanks for John Kay's excellent column "Our banks are beyond the control of mere mortals" (July 8). He is so right that it is not a matter of stupidity or incompetence. As Walter Bagehot said, it is "the ablest and cleverest the most" who in the fever of the boom "trade far above their means".

I believe the explanation is at bottom simple: leverage. No one, no matter how able or clever, can run an organisation taking serious risks that is also leveraged up to 20 or 30 or more times equity, without crashing from time to time.

There is just too little margin for the inevitable errors and unpleasant surprises in a dangerous and uncertain world.

Alex J. Pollock is a resident fellow at AEI.

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Alex J.
Pollock

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Monday, October 27, 2014 | 10:00 a.m. – 11:30 a.m.
State income taxes and the Supreme Court: Maryland Comptroller v. Wynne

Please join AEI for a panel discussion exploring these and other questions about this crucial case.

Tuesday, October 28, 2014 | 9:30 a.m. – 12:15 p.m.
For richer, for poorer: How family structures economic success in America

Join Lerman, Wilcox, and a group of distinguished scholars and commentators for the release of Lerman and Wilcox’s report, which examines the relationships among and policy implications of marriage, family structure, and economic success in America.

Tuesday, October 28, 2014 | 5:30 p.m. – 7:00 p.m.
The 7 deadly virtues: 18 conservative writers on why the virtuous life is funny as hell

Please join AEI for a book forum moderated by Last and featuring five of these leading conservative voices. By the time the forum is over, attendees may be on their way to discovering an entirely different — and better — moral universe.

Thursday, October 30, 2014 | 2:00 p.m. – 3:00 p.m.
A nuclear deal with Iran? Weighing the possibilities

Join us, as experts discuss their predictions for whether the United States will strike a nuclear deal with Iran ahead of the November 24 deadline, and the repercussions of the possible outcomes.

Thursday, October 30, 2014 | 5:00 p.m. – 6:15 p.m.
The forgotten depression — 1921: The crash that cured itself

Please join Author James Grant and AEI senior economists for a discussion about Grant's book, "The Forgotten Depression: 1921: The Crash That Cured Itself" (Simon & Schuster, 2014).

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