Leverage

Sometimes others see our problems more clearly than we do. From the German Physical Society, Science 24 Apr 09, Vol 324, p452, “Leverage, the Root of all our Turmoil”
“During the 90s, physicists flocked to Wall Street and other financial hubs, eager to turn their analytical skills and phenomenological mindset to the problem of making a killing. --- they’ve turned now to explain why markets crash. --- leverage.”
But is that all there is to it? Cause and effect in economic systems and human systems too are like, peeling away layers of an onion. The longer you look and the deeper you probe the more layers of reality seem to emerge.
There is no doubt that the imagination and convoluted leveraging of unregulated investment products lead us to our present economic disaster, but why physicists? Surely their statistical formulas of probability and risk helped rationalize the issuance of highly leveraged products, but why now and why physicists? Why not mathematicians and statisticians or the brokers themselves? What happened to regulation?
Department heads of respected physics departments decry the departure of graduates and post docs, dropping physics in favor of high paying jobs in finance. Yet, these department heads need look no further than the massive student loans accumulated by these young talented students. Furthermore, the physicists are the aggressive and creative minds of the mathematics world, the general surgeons if you will, in contrast to a passive internist -- drawing an analogy. It is not hard to understand the burden these bright young men and women feel anticipating the reality of entering the real world and making enough income to support them, and possibly a family while paying off accumulated student loans into the 6 digits, indentured labor for life on a teacher’s salary.
Privatizing education, well not exactly -- some are still public institutions – relieves legislators of the onerous task of providing adequate funding for institutions of higher learning. Shifting the burden onto the users of the system, frees the legislature from budgeting challenges, but places the burden un- affordably on parents and on not yet enfranchised young students with little or no concept of the consequences when entering college.
Dependence on a high percentage of foreign students, willing and able to pay an outrageously high tuition, may be another consequence of shifting the burden of higher education onto the user. The consequences of that action may not have played out yet. An unintended consequence may emerge along the lines of nuclear proliferation or in highly advanced highly competitive, partially subsidized automobiles from rapidly evolving Asian Countries.
The point is: we take away a graduate’s incentive to pursue his or her passion, the incentive to work towards the common good and indeed the sense of humanity -- by forcing the need for them to make a killing just to pay back their student loans.
How is leverage greater than 1:1 any different from Madoff’s Ponzi Scheme?