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The Financial Sector Is the Greatest Parasite in Human History

neweconomicperspectives.org

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

#61

Post by ac29 »

ergoproxy wrote: post #54
princeb wrote: post #44

Earlier quoted context omitted.

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.

Yes, though taxpayers have now received back more than was given out: http://projects.propublica.org/bailout/

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

#62

Post by xarball »

marcosdumay wrote: post #51
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.

We need people like you.

What a parasite! Should we pay him?

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

#63

Post by logfromblammo »

protomyth wrote: post #33
Turing_Machine wrote: post #17

Earlier quoted context omitted.

"The military has been worse historically surely?" Ask Ukraine about the consequences of getting rid of your military.

"Military costs too much until you get invaded" is a common thread throughout history.

Recent history has shown that nigh-universal private ownership of small arms is, if not an absolute deterrent to invasion, a great multiplier for the costs of an occupation. A rifle behind every blade of grass and 96 nuclear warheads in every submarine would seem to be as much as you need to prevent an overt invasion.

Projecting your power into other countries, on the other hand--that will cost you quite a lot more.

Switzerland seems to have a decent anti-invasion model. Arm everyone able to lift a rifle and make almost your entire country into a giant fortress, and you won't get invaded until well after your neighbors are overrun. They don't spend a lot on their military, relative to more militaristic nations, but it is clear that anyone wishing to take the country would have to spend a lot more than the defenders.

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

#64

Post by logfromblammo »

honestcoyote wrote: post #46
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…

To be fair, the actions of many (not all) of the rich in this country have brought it on themselves. When the middle class is stagnant or declining, and the wealthy keep getting richer and richer, then the populist rhetoric will take root. And who can blame them exactly? When wages are stagnant, income inequality is rising, most companies have little-to-no loyalty to their employees and discard them at will, and many…

If the rules of the game seem rigged against you, there is a great incentive to either stop playing or to cheat. Some people don't seem to realize that a gigantic portion of everybody's wealth in developed nations is the ability to go out in public without fearing for the loss of your life, liberty, or property.

When you intentionally cultivate a class of people with little to lose and much to gain by brutal and violent action practically on your own doorstep, you are very likely to be hoist by your own petard. If I were a billionaire, I would be quite certain to conspicuously make myself an obvious asset to the whole community, particularly with respect to the folks that might be thinking of me as they rescue mostly-edible food from garbage containers. Public relations are important, if you wish to be a man that is not an island unto himself.

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

#65

Post by tailrecursion »

If the scandals described in this article and Taibi's articles are the result of a few bad actors, and if the result of these scandals is a broad perception on the part of the public that the entire financial sector is corrupt, then Goldman Sachs should be interested in policing its own.

I wonder if G.S. feels unable to police itself, or maybe they feel the aluminum story is not a problem, or that what they did was harmless. I don't know what they think about what they do. I can't really blame below average people for cheating -- they're not good enough to win playing by the same rules as everyone else.

But if I'm to draw a circle around the corrupt people should I draw it around a piece of G.S., or around the whole company. It seems like the scandals keep happening, and that market manipulation such as laddering and hoarding are considered by the financial industry as another way to make money.

If the financial industry isn't greased entirely on deception, then I'd like to know what percentage is deceptive and what percentage is figuring out a hedge plan for e.g. BMW's exchange rate risk. I can see how billions can be made one way, but I don't see how billions can be made the other way.

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

#66

Post by SaltySailor »

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…

Please take your ridiculous bullshit and shove it back up your ass where you got it from. Also Zionists are evil pieces of shit so you shot yourself in the foot lumping them in with everyone else. I take it you are probably a Zionist yourself though.

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

#67

Post by ergoproxy »

ac29 wrote: post #61
ergoproxy wrote: post #54

Earlier quoted context omitted.

> 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.

Yes, though taxpayers have now received back more than was given out: http://projects.propublica.org/bailout/

Smoke and mirrors aside, the taxpayers have actually taken a huge loss on these bailouts. The official figures say: $608.9B out; $621.4B in. Looks like a $12.5B profit. But looks can be deceiving. First, it neglects the fact that we had to borrow that $608.9B and pay it back with interest. Second, and more importantly, it ignores inflation-- If we computed inflation the way we used to, before Greenspan took the helm of the Fed, we've been running 8-9% inflation per year recently. So the money we taxpayers got paid back isn't worth as much as the money we paid out. This devaluation of currency is especially evident when you consider that Ben Bernake printed up $3T out of thin air, and used half of it to buy up worthless mortgage backed securities.

But there's an even bigger issue at stake: While the US pays a lot of lip service to capitalism, this is not the way capitalism is supposed to work. AIG, Goldman Sachs, Fannie/Freddie,... they should have all been allowed to go out of business in a real capitalist economy. And that $608.9B should have been put to more productive purposes.

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

#68

Post by quanticle »

marcosdumay wrote: post #51
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.

They funny thing is that I'm only in my 20's :) It's not that I necessarily remember how times were before the Internet (I was but a child then), but I study a lot of history in my spare time.

So maybe everyone needs to sit down and read a few books and think about how different life was when you couldn't just look up whatever you wanted to know in a matter of minutes.

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

#69

Post by waps »

rdl wrote: post #19
craigyk wrote: post #10

Earlier quoted context omitted.

yes. why even bother to argue your point? while a lot of government spending might not benefit you directly, the odds are that someone out there is getting some kind of service from it. Also, a sizable fraction of government money is going to salaries of middle-class workers. They, in turn, are likely to spend that money on things you might consider useful or neat, thereby helping the overall economy. The process mig…

The military part is negative-sum for the world. A competent engineer designing weapons, even if he makes $150k to spend on food/cars/etc. and support those people, is still depriving humanity of the $100k to near-infinity of positive contribution ("consumer surplus") he could be making, some of which he'd capture as additional expected income, if he worked on something genuinely useful to humanity. The only reason w…

And what would we not have if it wasn't for militaries ... and even war. Where to begin ?

the Internet - hacker news, and of course your own comment

Rockets - and of course space travel

Nuclear power

GPS

Night vision

Duct tape

Jet engines - international aviation

Radar

Microwaves

Walkie talkies (and the follow ups to this technology, including cell phones)

Medical advances by Soviets and Nazis

I would argue that the military is negative sum only in theory.

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

#70

Post by FD3SA »

logfromblammo wrote: post #59
mediaman wrote: post #45

Earlier quoted context omitted.

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 mar…

Precisely. Now the real question is, why isn't everyone outraged over this practice? Why is none of this taught in junior high school? Why are we told that personal debt is a fact of life, and makes the world go around?

The answer lies within another question: Cui bono?

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