Just reading an interesting article on the Economist’s website on the past and present of investment banking. Selected quotes:

AT LEAST since 1823, when Byron’s Don Juan described “Jew Rothschild, and his fellow Christian Baring” as the “true Lords of Europe”, investment bankers have inspired awe, envy and, rightly or wrongly, a measure of disdain.

…another group has overtaken the investment banks in the excess stakes: their money-spinning clients in the private-equity and hedge-fund industries. Already they throw the biggest parties, do the boldest deals and launch the most celebrated initial public offerings. The IPO of part of Blackstone, a private-equity group, might well raise more money than Goldman Sachs’s did…

Brokerage used to be described as a haulage business, lugging money, as a member of the Rothschild dynasty once put it, “from point A, where it is, to point B, where it is needed”. … But any haulage firm would be flabbergasted by the trading profits and returns on equity seen in investment banking in recent years, especially among Wall Street’s big “bulge-bracket” firms.

I would be interested in any responses. Have the investment banks been a force for good or bad over the last century in particular and are they likely to be supplanted any time soon and, if so, by what? Are hedge funds the pioneers of the group going to

supplant them?