As many have said — though not many politicians in either party — something is fundamentally amiss in a financial culture that thrives on “products” that create nothing and produce nothing except new ways to make bigger bets and stack the deck in favor of the house. “At least in an actual casino, the damage is contained to gamblers,” wrote the financial journalist Roger Lowenstein in The Times Magazine last month. This catastrophe cost the economy eight million jobs.
via nytimes.com
Wall Street describes itself as the centre for innovation that helps the economy. Yes it is indeed a centre for innovation but for practices that help only itself and that have taken the life blood out of the economy.
They have found a system that extracts value from the real economy and gives it to them.
This slide shows the scale of the skimming since the 1980's and the advent of proprietary trading and derivatives. All of this was made possible by the access by the banks to vast pools of capital. Caused in turn by the change in regulation.
The heart of the matter is capital allocation. No insurance for trading. This means that the trading and deposit taking have to be severed as they were before the change in the 1980's.
If this continues, they cannot help themselves but make a bad situation worse.
But the will is not there to do this - so, we wait for the next show to drop as it must.
Meanwhile the markets ramp up again. Will you profess to be surprised when it all crashes down again? Will you play the Casino once again, knowing that the game is rigged in the hope that you will be smart enough to get out in time? Will you get angry with the politicians then?
