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stray 2057 posts |
Sep 19, 2008, 09:42
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God yes, but although politically I'm probably extreme left I don't blame the brokers/bankers as much as I blame the system, or more accurately it's regulation. Sure they're greedy fucks on the whole with no eye on the wider realities, but things have been geared to make them behave like that tbh. What this does mean, positively, is that this is an end to investment banking, completely as far as I can see. Also, its important to know that the Free Market has never existed really as per its definition. Now, if it had, this shit would probably all happened a good few years earlier. What else doesn't help is that every market has always had completely different rules. Types of deals you could do in London you just wouldn't be allowed to do legally say in NY and vice versa. This is going to seriously effect the strategies each section of the global market tries in order to fix things, and obviously this is going to mean that shit is going to bounce about a lot more and a lot longer than it would if the playing field was level. It's never been level. The only way out of this it seems is to completely rewrite the rules of the market. The US govt setting up a corporation to absorb all debt is, omg, an incredible circumventing of the terms of a market. I'm not sure it's going to help long term at all, if the market functioned properly it would be allowed to collapse completely. Thats not an option of course, but its theway it should play out according to the rules. Also brokers/bankers are going to royally fuck this new corporation for big and fast money which will prolly cause this whole thing to repeat further down the line. I'm finding it all fascinating, which is probably shitty of me I know considering the cost to us all. I was an IT bod inside the London Stock Exchange for a while, designing the dealing systems when trading went from the floors to screens (kind of responsible for the first day trading systems in terms of their build, no, I'm not proud of it). I used to say 'Is this legal ?' a lot when discussing things such as share borrowing/lending (which is the root of short selling), I was also freaked a bit by how out of hours/off book trading is acceptable here in London. I'm no economics expert, I really need to get my head round these 'fixes' more, at the moment I can't see how any of them are going to change things.
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handofdave 3515 posts |
Edited Sep 19, 2008, 10:23
Sep 19, 2008, 10:07
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It's not just the obscene bonuses, it's the 'little' things too, like the onerous, ever-mounting fees, the relaxing of usury restraints, the penalties, etc. My bank upped their fee for overdrafts to 28 dollars per instance this summer. When I asked why the arbitrary hike, the bank officer gave me this incredibly self-serving and nakedly opportunistic response (I'm paraphrasing); "Because all the other banks do it". And then she tells me that this is fair, because 'The bank is using it's money to cover your debt'... but of course, it's not really, it's floating you the $3.04 for a day, then taking that out plus the $28 on the next deposit. So what it really is is a kind of legal loan sharking... probably worse rates than the mob. What really pisses me off is that the 'Financial Services industry' (industry?) really seems to think that it's the backbone of our economy. Seriously. Not the workers- the farmers, the machinists, etc... but the guys shuffling fake money around the world, usually into their own pockets, and finding ever-more ways to justify a bigger take.
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handofdave 3515 posts |
Sep 19, 2008, 10:16
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stray wrote: God yes, but although politically I'm probably extreme left I don't blame the brokers/bankers as much as I blame the system, or more accurately it's regulation. I think you mean it's lack of regulation. The government in the USA has the memory of a gnat and the rich never forget a thing. Every time Congress loosens regulations on an industry, the predators go to work ripping off the public- it happened with the Savings and Loan 'industry' and it happened again, albeit to an even more damaging degree, with the investment banks. And every time, the government steps in and assumes the debts and passes on the losses to the average taxpayer while the execs (only a few might see jail) float gently to earth on their golden parachutes. stray wrote: Also brokers/bankers are going to royally fuck this new corporation for big and fast money which will prolly cause this whole thing to repeat further down the line. Exactly.
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stray 2057 posts |
Edited Sep 19, 2008, 11:22
Sep 19, 2008, 11:16
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I've been trying to get my head round the solution they're putting together, and thankfully they're not going to use the same approach they did with Savings & Loans (the RTC thing). It seems they're going to set up a government agency, a lot quicker to do than a corp, buy the debts from the banks at a discount and then auction them back to the market later. As its a govt agency this also allows a lot of leeway as to how it functions legally. Sooo... until we see how the auction happens, at an as yet unspecified date, and the rules applied to the auction (how much debt can you buy and how you can claim back more than you paid for said debt from whatever financial institution it represents) blah, blah, we're not going to know how it all pans out. This does however get the illiquid shite off the balance sheets of the banks which may, may, mean they start lending again, more importantly providing decent mortgages. So, the auction is going to happen once the housing market bottoms out, or maybe when it starts climbing again. The instinct to say that the housing market will not reach the prices it did before this nightmare is pretty strong. But we said that after the last housing market collapse in the eighties, and it did, in fact it climbed a shitload higher. Also during that peak in the eighties interest rates were silly high, maybe once it climbs again this time they'll ramp up interest rates to keep it more sensible. Also, I still reckon some major changes in regulation are on the way, not just in terms of how credit is traded but investment banking in general. Edit : I wouldnt be surprised if the auction includes some sort of deal for banks to buy their own debts back rather than being held hostage to a third party owning them.
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handofdave 3515 posts |
Sep 19, 2008, 11:27
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You've done more analysis than I have on this. Yes, at least the powers that be are getting better at damage control. But it seems once the panic's died down, the market starts creeping back to it's old ways. Just an observation based on history. Trying to put an optimistic light on things, I DO believe the world is slowwwlly figuring out how to manage this international economy sanely. But all parties need to keep a sharp eye on things. The seduction of gleaning huge sums with accounting tricks is too great for some people, obviously.
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stray 2057 posts |
Edited Sep 19, 2008, 11:35
Sep 19, 2008, 11:34
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Woah, hahaha, stop the presses. It was just announced that CIC (China Investment corp) are after a 49% stake in Morgan Stanley. This is going to be stopped quite hard by the US regulators under their foreign investment review. It'll be good to watch to see exactly how unfree this free market really is. Heh, if the US govt doesn't act soon the world is going to see a few huge super banks forming and running everything, then we're all screwed. *grabs popcorn*
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Moon Cat 9577 posts |
Sep 19, 2008, 11:41
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Spot on. I don't know if you saw it but a few months ago there was a documentary on the gogglebox called something along the lines of "Who really runs the world?" and I believe that the guy that presented it has also written a book along a similar theme called "The Super Rich". Not read it, but I'm keen to have a scan at least. The gist was basically what people have been saying here - how the megarich have made even more dosh from all this chaos and how they've used the complete lack of regulation in these areas to basically win-win gamble with other peoples money even if the 'other' people 'lose' themselves. I must confess, some of the economical and financial aspects of it were positively arcane and impenetrable to my feeble fiscal mind, but some of the processes and outcomes were fairly clear. The very language used is surely indicative of how people would be fully aware of how things might pan out for those further down the ladder; 'sub-prime', 'derivatives', 'speculation' - it's not language that inspires confidence is it? A few big players were interviewed and only one of them showed any sign of conscience at all. He argued for regulation and admitted that some of his colleagues and people in 'the business' just didn't have an iota of concern about repercussions regarding the less wealthy and fortunate. In fact, the nature of the people depicted amply illustrated the long held notion that many big-business behemoths have borderline, if not outright, sociopathic tendencies - they want to make shitloads of cash and they absolutely do not give a fuck about consequences. Some of these people were openly enjoying the downturn saying how they stood to benefit becasue they would have the opportunity to buy out struggling business for a pittance of their former worth, hovering like vultures, wait til the dust settles and build 'em up again to make more dosh. Another beneficiary of all this was a guy who ran a business that organised big events and extreme sports and so on to entertain the super-rich. He said some people had made so much money that they literally did not know what to do with it! His company did things like "Have a meal in Antarctica", helicopter to Harrods and buy everything, "Go into space on a platinum rocket with your initals on the side" - totally mad things that cost obscene amounts of cash to entertain the rich and bored! So, you know, if any of these folk go down with the ship, I'll be joining some of you on planet smirkalot. x
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handofdave 3515 posts |
Sep 19, 2008, 12:06
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Planet Smirkalot... heh heh. I don't think anyone needs a deep understanding of all the minutia of international finance to recognize the obvious... Any farmer can tell you what happens when you let a fox into the henhouse.
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Moon Cat 9577 posts |
Edited Sep 19, 2008, 12:49
Sep 19, 2008, 12:49
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Just remembered.... Think we should get a job on an advisory commission or think tank...;^) http://www.headheritage.co.uk/headtohead/u_know/topic/32234/threaded/404354
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handofdave 3515 posts |
Sep 19, 2008, 13:38
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I've toyed with the idea of being a speechwriter, except, of course, I'd insist on telling the truth, which provokes a violent allergic reaction in most candidates.
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