On the concept of being compensated for taking risk, how is risk defined ? Seems to me risk would mean doing something that has a 50/50 chance or less of succeeding. So, if all the rich were taking socalled risks in lending money, then overall the majority of rich people would lose their money and no longer be rich. But I believe most rich people remain rich, that is they don't lose their money in these socalled risks they take. So, we can look back and say that in fact they were not risking their money. Therefore, they should not be compensated , because they didn't really take risks.
A special case of this, perhaps not typical is Long Term Capital Management hedgefund. It was not risking its money because the U.S. government acted as a surety when the money was lost, that is the risk came home to roost. But if the US government acted as surety, then LTCM was not risking its money, and therefore should not have been compensated for any risk. Charles
