We don’t know you. You’ve got no commentary history. You’ve got no proof you’re not ignorant, just proof of your inflated sense of self importance.
Not until you started doing it.
I didn’t do it. I was pointing out that your commentary is merely the opposite of what you’re railing against. The people who are saying the opposite of you also think they’re not ignorant. The truth is somewhere in the middle and the fact you have friends in the industry (do you think you’re alone?) predisposes you to bias on their side.
However, I can also see that the main problems are rooted in the actions of government bodies
Yes. That might be the case, but is also the classic excuse of bankers for playing the system for maximum profit while being able to placate any sense of morality they may have. My country has a properly regulated financial industry and yet people are still screwed by terrible fund managers and bad financial advice. How does that fit into your narrative? And how about the studies that have found randomised investment choices outperform the average fund manager? Doesn’t making a living off people who would do better to have a monkey pick their investments sound at least somewhat immoral to you?
Someone flash the cow signal… we’ve never needed a @Cowicide rant more than today.
[quote=“teapot, post:83, topic:34594”]
You’ve got no commentary history. [/quote]
Commentary history is no indicator of financial knowledge, obviously. True this isn’t my native board, but it doesn’t matter because internet message boards are not a great place to establish or utilize credibility. My original comment was that people were creating a fictitious idea of what bankers are and what problems can rightly be attributed to them. Basically I felt that it would be a shame if a bunch of anonymous nobodies railed against bankers and blamed them for every problem under the sun without any anonymous nobody to take the other side.
It doesn’t. First of all, I don’t believe any such country exists. But even if it did, fund managers and financial advisors are not bankers. Well, I guess financial advisers are sometimes, but they are not the people who get vilified. I never met a financial advisor that anyone called a “bankster.” Mutual fund, hedge fund, and pension fund mangers are also not bankers.
Commentary history is no indicator of financial knowledge
I know that, but there are a lot of regulars here and by reading what people have to say over time you can tell who is full of shit and who is well informed. You may be either right now.
I never met a financial advisor that anyone called a “bankster.”
Nor have I.
without any anonymous nobody to take the other side.
That’s fine, but did you stop to think that the solution to blind cheerleading for one team might not be blind cheerleading for the other? Like I said… the truth is somewhere in the middle.
First of all, I don’t believe any such country exists.
No system is perfect, but in Australia we didn’t get fucked by the GFC too badly because our markets didn’t suffer Clinton-style deregulation.
PS @Cowicide I didn’t actually intend to draw you into this poo-flinging match… it’s unpleasant, unproductive and messy. I just kept thinking of you as I was reading our new friend’s commentary.
[quote=“teapot, post:87, topic:34594, full:true”]
I know that, but there are a lot of regulars here and by reading what people have to say over time you can tell who is full of shit and who is well informed. You may be either right now.[/quote]
Sorry, I don’t forsee spending enough time here to build significant rep. I’m not an expert on all things, but, I think my informedness on financial matters should be evident from the posts I’ve already made. Besides, how many people have you run across who cheerlead for bankers? Only people who have worked with them in the past, which almost by definition is someone with more than the usual knowledge on the subject.
It’s certainly not blind in my case, but you are right that without me, there could have been no middle on this topic. That would have been sad, and clearly unfair toward the bankers.
Bankers are not saints or anything, but they perform a critical and helpful role in our economy, and they do it resonably honestly. I’m fine with people slinging blame for the financial crisis–there is plenty to go around–but I think on average they are quite wrong in the proportion of blame that they throw at the bankers. Bankers were in fact some of the primary victims of the crisis, bailouts notwithstanding.
Not your best argument nor most compelling statement for the day. But I’ll still take it over your implicit assertion that we’d all be better off without anyone doing evil deeds like making loans or allowing people to have checking accounts.
No doubt you think you have come across as both knowledgeable and reasonable in the discussion. Cute.
Really it seems like your issues have nothing to do with my opinion about the financial system, so I guess I don’t see the relevance. On the other hand I have issues with the comments you have made about banks being both evil and irrelevant. They are both misinformed and harmful. When it gets said over and over enough that people believe it, they push lawmakers to take actions that make things worse. That actually affects me, unlike BB likes or your ad hominems.
No. I’m being an asshole to you because you’re being an asshole to everyone else. Plus I fucking hate cheerleaders for black and white. You come here to criticise those who hold a different opinion, perhaps as a result of being financially impacted by the asshole finance sector, as being biassed because of their position, but you make no secret of the fact that your own financial well being revolves around people drinking your banker dick-suck kool aid.
You also mischaracterise my comments to bolster the supposed validity of your arguments. I didn’t say banks are irrelevant, I said they’re increasingly irrelevant. That is undeniably true with crypto currencies and crowd-sourced loans - but you would never admit that because, as you’ve already stated, you’re biassed because it affects you.
You are so painfully self-obsessed yet so painfully ignorant of the fact that you’re merely doing exactly what you accuse others of.
Actually I’m not financially impacted by the finance sector except inasmuch as everyone is. I haven’t worked in it for some time, though I do still know many people in it and am aware of some of the issues going on with them.
As for being an asshole, well, the whole history is here, so anyone who wants can see who is what straight away, regardless of their feelings for the financial sector. Looking briefly over your posting history, of which you are so proud, I notice that you feel like you should be the resident upper-of-asshole-antes. I certainly wouldn’t bring up reputation if I were you. Being a first poster would have made you more credible.
Apologies for posting the following out of order but there’s a reply limit here. I did want to address bwv’s immediately following comments, though.
[quote=“bwv812, post:100, topic:34594”]
I know Moody’s is not a bank. But banks would not be able to market and sell their securities without ratings. That’s why the banks get their products rated, and why the banks pay Moody’s and S&P to rate their offerings. Ratings agencies are intended to turn complex investment products into information-insensitive commodities. One AAA-rated product is supposed to be as riskless as any other AAA-rated product, regardless if one is a T-bill and the other is the latest synthetic CDO. That’s the entire point: it is hugely inefficient to ask each individual investor to perform due diligence on every single product on the market (in fact even the issuing banks have been unable to properly manage, package, and vet their own securities otherwise we wouldn’t have all the confusion over who actually owns the mortgages for properties in default).[/quote]
True enough. Though the “investors” in this case are big-time professional money managers who have a little more responsibility than, say, individual investors. You are certainly right that Moodys and others were way off in their ratings, but that’s pretty common. Smart money managers should take that into account. Obviously this doesn’t absolve Moodys, nor any bankers who collaborated in the deceit.
It is unquestionably a problem that mortgage originators (not typically banks) have no skin in the game and that investment bankers who repackage crap loans are implicitly backed by the government (sometimes). Both of these present quite a moral hazard. The result is that immorality on some level takes over and any institution that won’t participate loses out big time to the point of disappearing. If we set up a system where you can only win by cheating (professional cycling, I’m looking at you) we can actually corrupt otherwise moral people, or drive them out. Remember that the inventor of, primary champion of, and principal participant in securitization is the US government. At the end of the day I always end up pointing my finger that direction.
Very true. I worry a lot about this. Current reserves are 1.8 Trillion dollars. They were a tiny fraction of that before 2008. For reference, the total number of circulating dollars plus the sum of all checking accounts is only around 2.5 Trillion. I am scared of the day in which the banks actually lend their reserves out. With the money multiplier, we could be looking at wicked inflation. Keeps me up at night.
Well, there’s the risk that what actually happened was the case and the securities were counterfeit for one. There are other risks as well. Notice that to exchange them apparently required a letter from someone big in the company, so apparently they aren’t the kind of thing you can just sell whenever you want. If they can’t be sold, then in what sense are they really worth 25 million? Who is to say what they are worth? Since we don’t know the company, we also don’t know how likely it is to fail horribly. These are equity shares, so if it went bankrupt, presumably they would be worth zero. I’m sure we could think of other risks. Personally if I were to lend a big chunk of change to an African royal I didn’t know, I’d want the promise of a VERY good return.
Point taken. Including the shadow banking system as “bankers” brings in a lot of people, good and bad. It also brings in a lot of people who I would say are the victims here, so one should be careful in expanding the definition too much.
I guess at the end of the day, I just vividly remember 2008 when all sorts of really smart, hard working, honest bankers I knew were laid off just as people started calling them “fatcats” and “banksters” and suggesting that they (or those who were able to keep their jobs) were somehow benefiting from the hard times that had befallen the whole country, but the financial industry in particular.
I know Moody’s is not a bank. But banks would not be able to market and sell their securities without ratings. That’s why the banks get their products rated, and why the banks pay Moody’s and S&P to rate their offerings—hardly the best way to engineer neutral and objective ratings. Ratings agencies are intended to turn complex investment products into information-insensitive commodities. One AAA-rated product is supposed to be as riskless as any other AAA-rated product, regardless if one is a T-bill and the other is the latest synthetic CDO. That’s the entire point: it is hugely inefficient to ask each individual investor to perform due diligence on every single product on the market (in fact even the issuing banks have been unable to properly manage, package, and vet their own securities otherwise we wouldn’t have all the confusion over who actually owns the mortgages for properties in default). Indeed, once the housing market crashed and it became clear that AAA-rated securities really didn’t carry AAA risk levels, the facade of information-insensitivity vanished. No one knew how risky the securities they had actually were, and the re-insurers of those securities no longer had any idea of their exposure. This effectively destroyed the market for all mortgage-backed securities, regardless of the actual risk of each security (which was virtually impossible to discover because of the complexity of the offering, and certainly too expensive to discover to make a market in them viable).
I’m not sure how you can conclude that banks are less to blame than, for example, investors, when it’s well established that there was a lot of predatory lending, robo-signing, and a complete lack of due diligence to verify the claimed incomes of many borrowers… especially when the banks recognized these securities were toxic but flogged them as investment-grade despite this knowledge. This is especially the case when just about every other party is fully incentivized to be as careful as possible, since if they make a bad decision they can lose everything. Unlike them, the banks have much less skin in the game since they are too big to fail and could count on the government to prop them up in the case of a crisis, which is exactly what happened. In the absence of the government, can you really argue that Lehman would be the only bank to disappear?
[quote=“gvfarns, post:80, topic:34594”]
This is a consequence of the regulatory and economic environment. I’m quite sure they would like to make more loans, but if it exposes them to too much liability and regulation to make it cost effective, they simply can’t. Blame the government if you can’t get a loan, not the bank. Banks are ordinarily (and would prefer to stay) in the business of making loans, not earning 25 bps hoarding cash in their reserve accounts.
[/quote]Post Glass-Steagall, I’m not sure that US-style “banks” prefer to focus on retail banking and lending, and riskless interest on excess reserves have apparently been profitable enough for them to avoid making loans with those reserves
I don’t quite see the huge risk when you have $25 million in security on what is effectively a $9.4 million loan. I mean, even if the valuation of this well-known stock drops by 60% before default, you’re still ahead by the $600k and whatever interest payments made before default. Sure, there’s opportunity cost, but the average expected return for hedge fund’s typical investment is likely to be less than 15%, I would think.
There’s a reason that the term “shadow banking” was invented.
I don’t think that’s the way it actually works. You get to learn who you agree with and who you don’t, and then confer the status of “well-informed” on those you agree with. Regardless of what you think of my positions, I see lots of things posted here that are straight-up, objectively wrong yet which receive tons of likes. Those who are well-informed yet make more thoughtful, nuanced positions go relatively unliked.
I disagree with the conclusions @gvfarns is drawing, but I don’t doubt his knowledge. I don’t think he’s using his knowledge particularly well, or approaching the issues from a reasonable perspective (and I’m sure you think the same of me), but it’s pretty clear he has familiarity with what he speaks.
They are increasingly irrelevant just like green-tech has made petroleum increasingly irrelevant, or how the resurgent barter system in Greece has made banks there increasingly irrelevant. When there are global bitcoin exchanges and clearinghouses that can handle international payments on the scale they occur we might be getting somewhere.
Very telling about you bwv. I actually don’t do things that way at all, because I’m not interested in talking to an echo chamber. @Cowicide and I fundamentally disagree on Google all the time, but I consider him to be one of the best informed people on the subject. @Mister44 and I have come up against each other a ton of times but I highly respect him and consider his opinions valuable, even if I entirely disagree with him.
Those who are well-informed yet make more thoughtful, nuanced positions go relatively unliked.
^And those are just a few of the regulars who I consider informed (and many of whom I’ve argued against in the past).
They are increasingly irrelevant
Cool, I’m glad we agree then.
@AcerPlatanoides
to me you sound like someone who disrespects every single question asked of him. You may or may not be a great orator, but you suck at conversation.
You obviously just don’t know how conversations work. Apparently it involves us reading lengthy monolithic comments that explain and demonstrate what excellent, unquestionable knowledge farns has while simultaneously talking down to anyone who dares disagree with his awesomely-informed position. He knows bankers, you see.
I disagree with Cowicide on many things. On Google his knowledge is undeniable. He and I may come to different conclusions but we both know that neither of us is talking out our asses on the matter.
