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For the Love of Money

nytimes.com

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Re: For the Love of Money

#11

Post by [deleted] »

ItendToDisagree wrote: post #6
benched wrote: post #3

Earlier quoted context omitted.

I agree. In fact, the article seemed disingenuous to me from the first sentence. As if he's trying too hard to hit a 'can you believe my lack of perspective' note. But I don't see it. Sure, if you have millions, your personal material needs are taken care of many times over, and you're very fortunate. But the difference between 5 and 100 million is very real. There are plenty of significant things you can do with 100…

I think his overarching point is that these people (by and large) do NOT do anything 'significant' with their millions. They don't even participate in a part of society that is useful beyond making ridiculous amounts of money. That was why I believe he highlights that he has started speaking to the less fortunate and trying to 'make a difference' towards the end of the article. Edit: Not to say this guy still doesn't…

[deleted]

Re: For the Love of Money

#12

Post by gfodor »

ItendToDisagree wrote: post #10
philosophus wrote: post #7

Earlier quoted context omitted.

If it is "worthless to the society at large" then why do people pay for it? Are they insane? It's popular to beat up on the financial industry, but they do actually do something: finance loans. Without them, good luck getting a mortgage, car loan, or a loan to start a business.

You're seriously attempting to imply that there were no loans/lending of money before 1993 (when the derivatives markets became a 'thing')? Or are you just talking about the financial sector in general (and even so there were loans long before that.) Wall St. does not exist so people can get loans to purchase houses/cars... You may be missing some points about loans vs trading here...

You're seriously attempting to imply that there is no value provided by a highly liquid and efficient derivatives market?

I'm not going to say these people are earning an amount commensurate to the value they provide to society, but pretending that they are just running a casino is equally naive.

Re: For the Love of Money

#13

Post by jaredsohn »

ItendToDisagree wrote: post #10
philosophus wrote: post #7

Earlier quoted context omitted.

If it is "worthless to the society at large" then why do people pay for it? Are they insane? It's popular to beat up on the financial industry, but they do actually do something: finance loans. Without them, good luck getting a mortgage, car loan, or a loan to start a business.

You're seriously attempting to imply that there were no loans/lending of money before 1993 (when the derivatives markets became a 'thing')? Or are you just talking about the financial sector in general (and even so there were loans long before that.) Wall St. does not exist so people can get loans to purchase houses/cars... You may be missing some points about loans vs trading here...

Derivatives help determine prices, moves risk to those who want it, increase trade volume, control speculation, and create educated predictions for others to observe.

http://en.wikipedia.org/wiki/Derivative_(finance)#Economic_f...

Re: For the Love of Money

#14

Post by ItendToDisagree »

gfodor wrote: post #12
ItendToDisagree wrote: post #10

Earlier quoted context omitted.

You're seriously attempting to imply that there were no loans/lending of money before 1993 (when the derivatives markets became a 'thing')? Or are you just talking about the financial sector in general (and even so there were loans long before that.) Wall St. does not exist so people can get loans to purchase houses/cars... You may be missing some points about loans vs trading here...

You're seriously attempting to imply that there is no value provided by a highly liquid and efficient derivatives market? I'm not going to say these people are earning an amount commensurate to the value they provide to society, but pretending that they are just running a casino is equally naive.

I would say they provide little to no value to the average person no. Please clarify what they provide to society at large (meaning most people and not just large portfolios or predatory credit companies)?

Greater security and insulation against bad investments? (which to be clear the vast majority of people do not have enough money to make in the first place.)

Seems a lot like playing odds at a Casino, to use your example, to me.

And your edit is valid they do not provide the value (though there may be some, if little) that their millions of dollars in bonuses/salary would imply.

Re: For the Love of Money

#15

Post by ItendToDisagree »

jaredsohn wrote: post #13
ItendToDisagree wrote: post #10

Earlier quoted context omitted.

You're seriously attempting to imply that there were no loans/lending of money before 1993 (when the derivatives markets became a 'thing')? Or are you just talking about the financial sector in general (and even so there were loans long before that.) Wall St. does not exist so people can get loans to purchase houses/cars... You may be missing some points about loans vs trading here...

Derivatives help determine prices, moves risk to those who want it, increase trade volume, control speculation, and create educated predictions for others to observe. http://en.wikipedia.org/wiki/Derivative_(finance)#Economic_f...

Exactly, they do not provide loans, or determine availability of said loans (beyond insulating risk allowing an institution to make more risky investments which as we've seen can be a catastrophic practice).

I would venture that none of these things benefit the 'average' person. Not saying its a bad thing, but the great amount of money dumped into this area of the economy, does not equate to their usefulness to society.

Edit: Actually the next section in the link you provided shows exactly how they can be a great detriment to economic stability including the recent AIG fiasco.

the use of derivatives to conceal credit risk from third parties while protecting derivative counterparties contributed to the financial crisis of 2008 in the United States.

Re: For the Love of Money

#16

Post by tkiley »

I was a derivatives trader, and it occurred to me the world would hardly change at all if credit derivatives ceased to exist. Not so nurse practitioners.

Is this statement (from the article) true?

I'm under the impression that financial innovations throughout history have generally spurred capital investment. Innovations like fractional-reserve lending have made bankers&investors wealthy, but also spurred spending on infrastructure in a way that could be a win-win for society as a whole.

If today's financial wizards went away, would we feel a surprising amount of ripple impact, or would they really just not matter?

Re: For the Love of Money

#17

Post by pbhjpbhj »

michaelochurch wrote: post #8

I've worked in finance. There are all types. Sure, there are asshole alpha traders who whine about $2 million bonuses. Those guys are pretty uncommon, they're disliked even in spite of their P&L, and no one helps them when they get unlucky. There are also people who don't think or live very differently from respectable professors-- except who have $12 million in their bank account instead of $12. There some pathologi…

Class in the UK is not solely about money. You can be upper class and living in a homeless hostel, doesn't happen much but possible. You can be working class and be a multi-millionaire. It's about heritage and social [inter]actions as much as it's about money.

Class doesn't really feature in how much "better" you're perceived to be either. Some Lords are highly benevolent, clued in and useful members of society that treat their privilege as a blessing rather than a right; others are completely obsessed with themselves or disregard those without similar means. Similar contrasts can be found at other points in the spectrum of class.

Re: For the Love of Money

#18

Post by [deleted] »

ItendToDisagree wrote: post #10
philosophus wrote: post #7

Earlier quoted context omitted.

If it is "worthless to the society at large" then why do people pay for it? Are they insane? It's popular to beat up on the financial industry, but they do actually do something: finance loans. Without them, good luck getting a mortgage, car loan, or a loan to start a business.

You're seriously attempting to imply that there were no loans/lending of money before 1993 (when the derivatives markets became a 'thing')? Or are you just talking about the financial sector in general (and even so there were loans long before that.) Wall St. does not exist so people can get loans to purchase houses/cars... You may be missing some points about loans vs trading here...

[deleted]

Re: For the Love of Money

#19

Post by munchbunny »

tkiley wrote: post #16

I was a derivatives trader, and it occurred to me the world would hardly change at all if credit derivatives ceased to exist. Not so nurse practitioners. Is this statement (from the article) true? I'm under the impression that financial innovations throughout history have generally spurred capital investment. Innovations like fractional-reserve lending have made bankers&investors wealthy, but also spurred spending on…

Yes, those innovations are critical, but those central concepts and the legal mechanisms that make them possible have very little to do with what much of Wall Street does, which is inventing financial devices and arbitraging the everloving crap out of them.

I think the point of "the world goes on without Wall Street" is that banks and stock markets will still provide speculative capital to expensive ventures whether or not high frequency trading is around, and agriculture will still grow and sell food whether or not hedge funds are buying and selling futures.

Re: For the Love of Money

#20

Post by ItendToDisagree »

tkiley wrote: post #16

I was a derivatives trader, and it occurred to me the world would hardly change at all if credit derivatives ceased to exist. Not so nurse practitioners. Is this statement (from the article) true? I'm under the impression that financial innovations throughout history have generally spurred capital investment. Innovations like fractional-reserve lending have made bankers&investors wealthy, but also spurred spending on…

It is debatable if derivatives do more harm than good. Just look at the 2008 financial crisis...

From Jaredsohn's link further in the thread: http://en.wikipedia.org/wiki/Derivative_(finance)#Economic_f....

In the context of a 2010 examination of the ICE Trust, an industry self-regulatory body, Gary Gensler, the chairman of the Commodity Futures Trading Commission which regulates most derivatives, was quoted saying that the derivatives marketplace as it functions now "adds up to higher costs to all Americans."

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