Don't believe the model, revisited: "I will not accept the Nuremberg excuse"

Readers who are old enough to remember when Paul Volcker was the Federal Reserve Board chairman will probably also know he is still held in high regard. He is credited with stopping the run-away inflation that gripped the country in the late 1970s and early 1980s. Volker recently made a speech in which he mentioned the financial engineering that was the subject of one of my recent editorials. I thought his comments were interesting so I am reproducing those portion of his comments here:

One of the saddest days of my life was when my grandson – and he's a particularly brilliant grandson – went to college. He was good at mathematics. And after he had been at college for a year or two I asked him what he wanted to do when he grew up. He said, "I want to be a financial engineer." My heart sank. Why was he going to waste his life on this profession.

A year or so ago, my daughter had seen something in the paper, some disparaging remarks I had made about financial engineering. She sent it to my grandson, who normally didn't communicate with me very much. He sent me an email, "Grandpa, don't blame it on us! We were just following the orders we were getting from our bosses." The only thing I could do was send him back an email, "I will not accept the Nuremberg excuse."