Wall Street has its purpose in free markets, just as eels, carp, suckerfish and other bottom feeders have their purpose.
There is still plenty of opportunity to stare intently at the scoreboard and sift through the meat on an ailing carcass. But when our economies are over-run with parasitism it is very hard to imagine many risk taking individuals excited about putting any more of their own future skin in this game.
The analysis you describe, I think, is what Wall Street was once about. It was necessary to actually research real folks playing the game out on the field, building a business, creating value, under a model where performance on the field would lead to a reaction in the market which would define a play. This new game is like focusing only on the scoreboards in a stadium with multiple scoreboards.
The teams are leaving the field, and the fans are getting bored. But the high fives in a handful of the skyboxes are going full speed ahead.
LTCM / MIT 'quant' magic telling marks with money that they have successfully calculated away risk, and are promising ridiculous returns on investments. Folks at the peak of the Miracle Clinton Economies seeking ridiculous guaranteed levels of returns get caught short when reality smacks the scammers up the side of the head. Oooops. All those 'non-modelable' terms in their model taht were simply ignored because they couldn't be modeled, reared their ugly head and the universe, as it is, declared the non-repeal of finite risk.
OK, so pension fund managers, teacher fund managers, all kinds of people chasing miracle returns at the peak of the Miracle Clinto Economies are about to take a 3.5 billion dollar bath. Heads will be placed on pikes...which is what happens in free market capitalism when necessary discipline erupts.
If folks can't take a 3.5 billion haircut at the peak of booming economies, then ... when can they take a haircut?
And..here is where it is born. Some risk shedding schmucks run to their crony fraternity brothers at the NY Fed and convince their fellow carcass-carving weasels that this potential 3.5 billion dollar hit represents 'systemic risk' that will bring 'the whole system down' ... at the peak of the Miracle Clinton Economies?
And so, the NY Fed must implicitly backstop guarantee the crazy-assed plays made at LTCM, so that all those poor pension funds and teachers funds don't take a hit.
With unlimited FED backing, LTCM 'works' its way out of its mess, and the 'catastrophe' of this 'once in a hundred year event' is averted... and the precedent of moral hazard is now firmly entrenched in our 'free markets', thanks to a cozy crony based melding of Wall Street with the guns of government.
Wall Street, by way of relationships once forged on Prospect Street, can count on the virtually unlimited shed risk guarantees of K-Street, and risk shed onto unwilling taxpayers becomes the new norm.
It doesn't take a hundred years for the next financial crisis; it takes ten, and the nation would have -killed- for a 'systematic crisis' that could have been averted with only 3.5 billion in taxpayer backstop. The cost to the taxpayers in this next round of shed risk tribal thievery is in the trillions, and we are living int he shell of something that once was, sustained today by endgame anecdotes of carcass-carving.
Our financial services weasels, colluding between Wall Street and government, have broken the engines of intelligent risk management that once was free market capitalism, permanently, until the current corporatist system fails(as it will)and blows away, and with it, takes along whatever was left of free market capitalism in this nation, long gone.