Emanuel Derman's Blog: A speech by Leo Melamed, reproduced here with his permission

Emanuel Derman's Blog: A speech by Leo Melamed, reproduced here with his permission: "Financial Innovation Conference Vanderbilt University October 16, 2008 Nashville

The Law of Selective Gravity By Leo Melamed

The first course:

"There is no way to sugar coat it: Current economic conditions have the earmarks not only of a severe U.S. recession but—dare I say it—the potential of a global depression. That is about as dire as it can get. However, for me, as tragic and ominous as that prospect may be, it does not represent the worst consequence of today’s global economic conditions. I fear in The Law of Selective Gravity—a cousin of one of Murphy’s Laws—which postulates that “An object will fall so far as to do the most damage.”"

and for dessert:

"I am lamenting that U.S. government officials were in such a state of panic that they abandoned market solutions in favor of Third-World sorcery like blaming speculators and banning short-selling. I am lamenting the fact that all the world’s capitalists have turned to the government for salvation. I am lamenting the fact that federally inspired rescue operations were so quick to surrender the fundamental free market principle that mistakes by the private sector must be borne by the people who made them. As Thomas Donlan of Barron’s remarked “The U.S. and Europe are racing down the trail marked by such economic leaders as Mexico, Argentina and Russia.”"

Jeff Peterson (my department chair) was at this conference and had mentioned what a great speech it was. Through MoneyScience I found it today...Thanks to Moneyscience and Emmanuel at Wilmott.

Update 10/29/08: video of the speech is available here.