I read a very good NY Times article “We Try Harder (but What’s the Point?)” about the difference between business and finance.
The current economic crisis is a financial problem brought on by poorly conceived financial instruments. The underlying businesses of the economy are reasonably sound businesses except in categories such as banking (banks), finance (B/D, investment banks), and home building.
A more stable financial system will lead to a more stable business cycle. The current system needs massive overhaul to prevent financial instruments from ruining businesses and the lives of most people.
My favorite quotes:
The Journal warned, “If a buyout or acquisition deal doesn’t materialize for Avis, stock and bond investors will have to focus on the fundamentals of its car-rental business.”
Modern capitalism has two parts: there’s business, and there’s finance. Business is renting you a car at the airport. Finance is something else.
