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The Financial Sector Is the Greatest Parasite in Human History

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Re: The Financial Sector Is the Greatest Parasite in Human History

#51

Post by marcosdumay »

quanticle wrote: post #47

The problem isn't the financial industry. Or, rather, the financial industry is only a special-case of the problem. The problem is middle-men. Specifically, it's the fact the Internet has made a certain class of people, whose job it was to take money from people and give it to people who need money (in exchange for a cut) obsolete. The financial industry is the man-in-the-middle between lenders and borrowers. The rec…

It's funny how the Internet only become widespread about 20 years ago, yet we need people like you remembering us how it was like before.

It's amazing how fast we changed, and how fast we got used to it.

Re: The Financial Sector Is the Greatest Parasite in Human History

#52

Post by avaku »

Thanks HN! Although, there is an element of overcompensation in finance, as well as a lot of overconfident people with more testosterone than knowledge, it still does provide hell of a lot of services. I'm happy to see that the HN crowd doesn't really "just believe" whatever is said in that article. True, I agree the management fees are high. However, the argument about HFT is basically "kitchen level" of someone who doesn't know a thing about it and just read some blogs and watched something on TV. HFT firms get paid for providing liquidity in the market. How exact that happens is actually easy to understand, but not many people bother. All these stories about front running "fair investors" are almost a complete fake (there was some issue about flash trading but that has gone away now).

Re: The Financial Sector Is the Greatest Parasite in Human History

#53

Post by SaltySailor »

quanticle wrote: post #47

The problem isn't the financial industry. Or, rather, the financial industry is only a special-case of the problem. The problem is middle-men. Specifically, it's the fact the Internet has made a certain class of people, whose job it was to take money from people and give it to people who need money (in exchange for a cut) obsolete. The financial industry is the man-in-the-middle between lenders and borrowers. The rec…

I'm guessing you didn't spend more than 30 seconds skimming the article.

Re: The Financial Sector Is the Greatest Parasite in Human History

#54

Post by ergoproxy »

princeb wrote: post #44
drblast wrote: post #29

Earlier quoted context omitted.

You can provide a service that is a net loss overall, but still a benefit to a few. It's the tragedy of the commons. Let's make it simple and say there are two villages. Some people in village A decide to start raiding crops from village B, because they find they can steal crops more easily than growing them, so stealing is a net benefit to village A. Village B, noticing the theft, decides to start paying some farmer…

Banks bear risk. when you want to borrow, they lend. when companies raise capital, they put the issuance on their balance sheets first. when banks make markets, they hold inventory with no ready buyer/seller. we pay them so that we avoid having to take on that risk. in your scenario, what if Dave is buying the house to move to a new city to take a job paying twice what he was making before? if the bank never stepped…

> Banks bear risk.

TBTF banks don't bear any risk. In 2008-9, they socialized their risk, forcing US taxpayers to bail them out, after making too many bad bets.

Re: The Financial Sector Is the Greatest Parasite in Human History

#55

Post by SaltySailor »

drblast wrote: post #29
refurb wrote: post #7

The financial sector provides no services? What? If I want to sell my company, the banks sure as hell provide a service. They provide a valuation, put together a pitch book, shop the company around and close the deal. How is that not a service?

You can provide a service that is a net loss overall, but still a benefit to a few. It's the tragedy of the commons. Let's make it simple and say there are two villages. Some people in village A decide to start raiding crops from village B, because they find they can steal crops more easily than growing them, so stealing is a net benefit to village A. Village B, noticing the theft, decides to start paying some farmer…

Great response, unfortunately HN is probably full of people who benefit from these financial parasites in one way or another so you are probably going to get a lot of crap for your post.

Re: The Financial Sector Is the Greatest Parasite in Human History

#56

Post by cheshireoctopus »

brc wrote: post #32
adventured wrote: post #8

Earlier quoted context omitted.

It's a populist call to arms. You'll be seeing a lot more of it over the next few years, expanding ever more loudly toward the rich, wall street, bankers, and corporations, with calls for much higher tax levels and minimum wage. The Fed's asset bubble-based fake recovery did absolutely nothing for the bottom 50%, but has vastly increased the wealth of the top 10%, the future social consequences of that are obvious.

Indeed. If you take a populist rant like this, and replace keywords like '1%', 'rich', 'banker' with words like 'Jew','Semitic' and 'Zionists' - you start to get an appreciation for how ugly these latest movements really are through the lens of history. Do I mean that some of the public policy choices of the last decade are beyond criticism? No, definitely not. 'Too big to fail' is a terrible phrase because it calcif…

You may want to consider re-reading this article as you seem to be misinterpreting it. The author:

a) is a wealth manager b) is not advocating a populist eat-the-rich" revolution c) doesn't use the keywords "1%", "rich", or "banker" as you imply (I fail to see why you want to bring Judaism into this?) d) does not imply "if you're rich you're a parasite and should be stripped of your property's wealth"

Here, for your convenience, is the author's thesis:

"A bloated and out-of-control financial sector does not add any value to society. Society benefits when the financial sector is kept as small as possible."

The author is ranting on the size of financial institutions, not the rich. Hope this clarifies things for you.

Re: The Financial Sector Is the Greatest Parasite in Human History

#57

Post by fsk »

gruseom wrote: post #43
Eleutheria wrote: post #39

“The few who understand the system will either be so interested in its profits or be so dependent upon its favours that there will be no opposition from that class, while on the other hand, the great body of people, mentally incapable of comprehending the tremendous advantage that capital derives from the system, will bear its burdens without complaint, and perhaps without even suspecting that the system is inimical…

Fake, according to http://en.wikiquote.org/wiki/Conspiracy .

Even if it is a fake quote, the point it makes is true.

Re: The Financial Sector Is the Greatest Parasite in Human History

#58

Post by brc »

cheshireoctopus wrote: post #56
brc wrote: post #32

Earlier quoted context omitted.

Indeed. If you take a populist rant like this, and replace keywords like '1%', 'rich', 'banker' with words like 'Jew','Semitic' and 'Zionists' - you start to get an appreciation for how ugly these latest movements really are through the lens of history. Do I mean that some of the public policy choices of the last decade are beyond criticism? No, definitely not. 'Too big to fail' is a terrible phrase because it calcif…

You may want to consider re-reading this article as you seem to be misinterpreting it. The author: a) is a wealth manager b) is not advocating a populist eat-the-rich" revolution c) doesn't use the keywords "1%", "rich", or "banker" as you imply (I fail to see why you want to bring Judaism into this?) d) does not imply "if you're rich you're a parasite and should be stripped of your property's wealth" Here, for your…

My reply was to the parent and a general comment, not specifically referring to the article.

Re: The Financial Sector Is the Greatest Parasite in Human History

#59

Post by logfromblammo »

mediaman wrote: post #45
drblast wrote: post #29

Earlier quoted context omitted.

You can provide a service that is a net loss overall, but still a benefit to a few. It's the tragedy of the commons. Let's make it simple and say there are two villages. Some people in village A decide to start raiding crops from village B, because they find they can steal crops more easily than growing them, so stealing is a net benefit to village A. Village B, noticing the theft, decides to start paying some farmer…

What is unjust or inefficient about your example with purchasing the house? Should Dave not be allowed to borrow money to own a house? Should only the wealthy, with sufficient cash reserves, be permitted to buy a house, without financing? If you don't value the house as much as Dave -- on a net present value of the future payments you have to make to own it -- why should you have it, instead of Dave? Should real esta…

The prices of things are not what they are worth, but what the market will bear.

The 30 year mortgage allows a rich man to outbid you on the home that you want to buy to live in, a property that he has no personal interest in, so that you can pay interest on the money you only had to borrow so that it could not be loaned to someone else, such that they could afford to pay more than you. That money pumped into the market only serves to raise prices. Houses are built larger and more expensively than they otherwise would be because the buyers are able to pay more.

If there were no mortgage loans available, the market would be producing a greater number of cheaper homes for sale, and a greater number of rental homes for investors, with more economic separation between those markets. The rich man outbidding you for property would have to actually assume ownership of it, and would shoulder some risk of carrying vacant rental units. Venturing into property-owner-land as a rentals investor would evoke a nasty NIMBY response.

Believe me when I say that it is possible for every person in America to own their own home, even with just a single minimum wage job for the whole household. But it isn't bloody likely, thanks to mortgage lending, zoning laws, and building and occupancy codes that completely eliminate entire classes of low-cost housing as either unprofitable for developers or outright illegal.

This same phenomenon is now occurring in higher education, wherein loans inflate the price, the product remains essentially the same, and the buyer is saddled with an enormous burden of debt. Debt is a trap laid by the wily for the foolish. But it persists because the practice nestles snugly into a Nash equilibrium. The practice is not at an absolute maximum, but neither player alone can improve his position by making a different move.

The only way for the erstwhile borrower to win is to form a cartel able to punish anyone who takes a loan to pay for a good or service too scarce to supply everyone in the cartel. In other words, non-rich folks win by regulating the hell out of lending, to reduce the number and amount of loans available.

Re: The Financial Sector Is the Greatest Parasite in Human History

#60

Post by arg01 »

rdl wrote: post #37
jfoutz wrote: post #31

Earlier quoted context omitted.

Easy tiger. The point was not all military spending is a waste.

Useful side effects for sure, but even if you took away the direct non-financial costs of the military (non-zero chance of nuclear armageddon...), I think there are things we as a species could work on which would produce the same kind of competitive, focused effort. The "space race" accomplished a lot, and consumer IT tech (say, mobile phones) has progressed even faster than military tech (outside maybe an existenti…

I don't disagree with your wider point that their are other useful motivators out there but it's worth noting that the space race was militarily motivated. Sputnik flying overhead effectively showed the soviets had/would have the ability to drop bombs anywhere in the world. Even the space shuttle was influenced in design by militaristic influence.
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