Every industry thinks it's special, but only finance gets treated that way


#1

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#2

Finance is not just another industry. Finance is special. It is literally made of money. Literally. It’s too special to oversee or regulate or criticize, and must be allowed to do whatever it wants, or the violent spasms of its mild discomfort can cause a lot of damage.

If it was a person, it would be Donald Trump.


#3

So interesting and clearly written — thanks for finding it.


In the most extreme manifestation of a sector which has lost sight of its purposes, some of the finest mathematical and scientific minds on the planet are employed to devise algorithms for computerised trading in securities which exploit the weaknesses of other algorithms for computerised trading in securities.

Finance exists to serve households and businesses. Individuals and companies engaged in finance should have specific knowledge of at least some of the needs of these users of the financial system.


#4

Money is like that. I use it to facilitate the work I do in running a small business and keeping my family in shoes and hamburgers. I see no reason to maximize the amount of money flowing in, as our needs are modest and constant.

Yet there is a culture in which obtaining more and more money is seen as an admirable goal. It seems to be a part of the standard American upbringing - ‘getting rich’ is considered to be a proper life’s ambition.

The practitioners of money-grabbing keep getting better and better at it, and the rest of us just get on with our lives.


#5

Let’s see. The most obvious case is there in every modern capitalist system, which is allowing these institutions to profit from fractional reserve banking, which amounts to a special government license to print money, which can then be used to bribe politicians to maintain this privilege.

Less obvious is that with algorithmic high-speed trading, major players routinely make bids they don’t intend to honor without any consequences, and individuals who try that get extradited and thrown in jail. Also, the big guys get a take-back when a bug in their algorithm should cost them millions of dollars. Thus, for big players only, they can take advantage of all the potential benefits of algorithmic trading without shouldering any of the risk. Frankly, I think any politician who supports this (which is most of them, in both parties) ought to be strung up from a lamp post.


#6

But…but…liquidity!


#7

I think it’s time to re-read Thorsten Veblen’s work.


#8

While I whole heartily agree with you, it’s only for the first two parts. Why want to need more? Why
getting rich, at all cost’s, make into a live goal instead of having a OK live for you and other people?

But I’m afraid the room and space and the possibilities to make a living for just enough to be good, is shrinking. Due to ‘the real world of economics’.
Am I a stubborn person, not willing to play the game/rat race. Not willing anymore I need to say, people need to learn often.
I only can imagine other people are not that stubborn and/or don’t have the possibility (luxury?) to.


#9

When you really get down to it, finance is all about money and they have shedloads of it. That money can be used to lobby (or the more accurate term, bribe) politicians, hence the current situation.

The only way to fix it would be taking big money out of politics plus lots of transparency.
Something like a yearly cap of donations of say $10 per citizen per year to political parties and banning all other funding would do wonders for example…


#10

The logical outcome for all that money-grabbing is that it will become more and more difficult for the rest of us to get on with our lives as Americans did between 1946 and 2001 (give or take a few years). For all that the money-grabbers use dollars as a scorekeeping mechanism amongst themselves, they also understand that ultimately concentration of wealth is the concentration of power over others.


#11

Or, you could change the game.

Instead of requiring ever nickel of political contribution be traceable back to its source, require them all to be anonymous instead. Candidates would be required to set up a PAC. Donations to the PAC are required to be unattributed, be it a giant check from Boeing or a bag of cash from Charles Koch or a ten dollar bill from RatMan. Need less to say, those three entities have much different goals in contributing. The PAC uses the current rules, in that it (wink, wink) can’t coordinate with the candidate. Now Boeing and Koch and RatMan all claim they kicked in a million.

All of a sudden the purpose of questionable contributions goes away. And it actually becomes EASIER to catch candidates who violate the process, especially if you reward whistleblowers within the campaigns.

Instead of PACs, you could handle the anonymous campaign contributions through the government. It wouldn’t be my first choice, though-- the US government has become so corrupt that it wouldn’t end well, and as we’ve seen, government whistleblowers are often treated harshly.


#12

I like it. You’re not saying wealthy people and corporations can’t donate, so how can they complain? Although maybe we’re so far around the bend that they’d admit openly that the lack of influence would negate their reason to donate.


#13

That would be still ripe for abuse.

Doesn’t matter if it’s anonymous, a wealthy individual/company could just let them know privately “we’re making an anonymous donation of $x right now, wink” and get exactly the same political influence they do now…

No, big donations need to be stopped, no exceptions.


#14

As long as it costs hundreds of millions of dollars to fund a national campaign, you will never stop the contributions. Or you’ll end up with a government of nothing but Trumps and Romneys, and a few others, who are so rich they can fund a campaign on their own.


#15

And his contemporary follower, James Galbraith.


#16

It’s perfectly feasible to put legal caps on campaign funding…
Or, that $10 per person cap i mentioned earlier? That applies to the person running too…

This wouldn’t restrict government to the wealthy, it’d be the reverse in that only grassroots funding would work as the wealthy would not be able to buy elections.


#17

I think most industries provide goods or services in exchange for payment.

The finance “industry” mostly mines their risk-immumity and preferential treatment for an endless stream of profit without serving the rest of society in any significant way.

Beyond bank accounts and the occasional loan, what do they provide the society that feeds them?

Why do we pay such an enormous cost (countless billions) and tolerate so much fraud and money laundering just for those simple services?


#18

Hell, make it $1000 person! But corporations are persons, we keep being told. So that $1000 cap now applies to a megabank and an oil supermajor too. Couldn’t be fairer.


#19

This thing above enormous. It absolutely makes banking a special industry. Compared to which

is such an irrelevance that it’s embarrassing to even see it mentioned in the same post.


#20

Not as much as you think, which is why I mentioned it in the same post. Don’t know what it is now, but:
“As of 2009, studies suggested HFT firms accounted for 60-73% of all US equity trading volume, with that number falling to approximately 50% in 2012.”

It’s also much much newer than fractional reserve banking, and its power is growing rapidly.