financial engineering
"Financial engineering is like hydroengineering. Riverbeds have to be widened and dredged to permit the fast flow of money to its lesser tributaries."
"Jobless, Moneyless, and Free: Prospects for a New Social Order"
In many cases, regulators simply can't keep up with the innovation arms race. Both non-banking lending and mortgage derivatives, for example, developed faster than regulators could police or even evaluate. Financial engineering is like blood doping in professional cycling: the innovators are always one step ahead of techniques for detection."
"I was attending a wedding a week ago up in New York, and everyone there seemed to be investment bankers except myself. And we were sitting around a table having dinner and talking about what I should say to this group about financial engineering, and basically the bottom line was that all that's being done in financial engineering is taking the things you're already familiar with and repackaging them in ways that might make more sense for your investment objectives. At the same time, there is a downside to it that they discussed, which we'll get to. So if you think of the analogy that was used by Smith & Smithson - that financial engineering is like taking a box of Legos -you all have these building block pieces, and by selecting appropriate boxes and assembling them in creative ways, a financial engineer can create structured securities that meet the particular needs of investors. And the financial engineer structures range from pretty to pretty ugly. The ugliest ones can be unloaded if their yield is high enough. And of course, you usually unload them to an insurance company. You have the residual tranche which is the stuff that is really out there and very difficult to price, but there's always someone who will take it if it has a high enough yield."
From:
"2000 CONFERENCE OF CONSULTING ACTUARIES ANNUAL MEETING"
"The Newspeak for this young field is "Financial engineering". So called is a new department at Princeton, and numerous less-illustrious but equally half-baked programs of study. "Engineering", with its long tradition and professional strictures for grappling with the exigencies of unforgiving matter and its cold equations, redolent of cantilevered bridges and steam engines, bespeaks solidity, exactly what this field lacks. "Financial engineering" is like developing a theoretical model for the design of bridges (in weightless conditions, since gravity introduces unnecessary complications), so that vast structures were being constructed, and explained away when towers and bridges collapsed as merely confirming the model, because we discovered that the builders skimped on the materials, and anyway, there must have been a misunderstanding, since we never really meant the structure to be built on Earth "
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