more lawless bankers. tis the season

23 hours ago, evildictait​or wrote

*snip*

So traditionally, bankers provided a service by allowing people starting out to borrow money (e.g. mortgages, small business loans) from people who had liquid assets available but not in use (e.g. millionaires, pension funds, other people's savings etc). ......

For this post, and this post alone, they should introduce the HTML <applause/> tag.

1 day ago, evildictait​or wrote

*snip*

The standard argument for why bankers get paid so much is that they make a lot of money. If you make $5m for your company today, shouldn't you be allowed to take $50000 home with you?

My response is this: A checkout assistant at Wal-Mart probably takes nearly $5k from customers in an eight hour shift, and yet he earns minimum wage. Why do we not pay him $500 for his brilliant achievement of earning so much for Wal-Mart? Because Wal-Mart would have made the same with anyone else in his place. The amount earned is independent of him and a consequence of Wal-Mart's back-room staff like deliveries and supply-management.

Similarly, a day-trader might have taken $5m today. But that's not because he's super-clever. It's because he put $1bn on "facebook shares go down" today and came up lucky. To be honest - he didn't even choose to put $1bn on that - the computer told him to and he obeyed.

Coming back to this a little late (been busy).

I disagree with your comparison to bankers versus supermarket checkouts:  a supermarket employee might sell $5K of goods, but that isn't $5K of profit, its $5K of turnover.  I don't know what the profit is, but say it's a generous 10%, so we have $500 in profit.  With the same %1 bonus basis as the banker example you gave above, that an extra $5 for the employee. If you're on minimum wage, that might be a nice present, but it's not going to drive you to a career at the checkout.

However, you are correct in that the employee doesn't drive the sale of the $5K of goods -- in fact I've seen supermarkets where some checkouts are busy, but the ones furthest from the door are empty -- so the employee at the checkout is in s kind of lottery in how busy they are (and I don't think they get to choose their posts either!). 

I didn't think bankers got daily bonuses -- I thought they got annual bonuses, based on their performance over the whole year.  So a lucky punt on shorting Facebook isn't going to get a bonus unless they can replicate that kind of 'luck' over the whole year.

The problem isn't really the fact that bankers get bonuses, it's that the period for which the bonus is earned is too short -- if you make the bank $5million in a year, but you've ignored the impact on profit the following year, then that leads to the kind of short-termism that gets banks into trouble three years down the line (like the sub-prime mortgage schemes did). Perhaps bonuses (or a large proportion of the bonuses) should be held in trust for a year or two, to ensure that there is no backfire from the profits earned; then investment bankers would be a bit more careful of the long-term consequences.

Herbie

@JohnAskew:

The great depression is a series of events that led to the global downfall of the stock markets.

To point to a single event and say; see, this is what caused the depression is, in my opinion, not justified (or something, don't know a better word).

http://en.wikipedia.org/wiki/Great_Depression

There is a series of events is what lead to the great depression, not just a simple stock market crash.

It's the same pattern we are seeing with our current economic crisis, the more you're trying to prevent a decline, the harder the decline will be. Because you have to pay for the original decline plus any measures that you have taken to prevent the decline.

@AndyC:

Ah, but who pays the bailout?

If it's not me, then who?

I do think it is me that's paying the bailout. My government has increased it's debt in order to bail them out. So taxes go up to pay for the added debt of my government, either through VAT or inflation, reducing the value of my life savings. Currently my pension is losing value, so is my house and so are my investments.

So the difference is that with the bailout, I get to keep my money, but I lose on money on all else and the bank doesn't feel the need to change anything, because they are not motivated to in any way.

I'd much rather have the choice of where to put my lifesavings. Then me and me alone would be responsible for finding a place for my money, with either a) high risk, high yield or b) low risk, low yield bank.

A perfect example is the ICE Save debacle. People took enormous risk, but hardly lost any money. And who gets to pay for the loss? People who didn't put their money at ICE Save and for the largest part the Icelandic citizens. Did they have a choice, is that just? I don't think so.

@evildictaitor:

Ask yourself the question, why would any bank be to big to fail?

I think it's a myth, banks are not to big to fail. Freddy and Fanny failed, the world didn't end. So why would that apply to other banks? 

Sure, we would have a situation if a big bank collapses. But I think trying to prevent banks from collapsing, only makes matters worse. The impact is still there and the root problem only gets bigger (bankers give themselves bigger raises, take larger risks, feel like they are above the law, etc. etc.).

Nearly every computer in the world runs Windows. Is Microsoft now to big to fail? Should we bail them out as well, if the need arises? What about Apple, Google, Boeing, GM (oh wait)? Where does it stop?

It shouldn't even start to begin with.

If you do not feel the consequences of your decisions, you make them poorly.

@magicalclick:

Providing a bank with $100 billion in guarantees, a bailout, is something entirely different then turning on the printing press.

A bank run is a panic attack. In order to overcome it, you need to give people the impression that the money is there and that it's safe. So you give people their money as fast as you can. So when people come to the banks, they see it's business as usual.

When you don't provide enough cash, word will get around that the banks are running out of cash and the run will get worse.

With our current high speed access to banks, it's an entirely different story. I'm still thinking about what I think is the best course of action there

51 minutes ago, Maddus Mattus wrote

Ask yourself the question, why would any bank be to big to fail?

Let me rephrase.

You get a bank account with JP Morgan Chase when you are 16. Your salary is paid into this account, and you are responsible and put lots of money away for a rainy day.

You get a pension with Global Pension Corp. Part of your salary is paid to them in return for a pension when you retire.

You reach the grand old age of 60 - nearly ready for retirement and you've built up $400k of pension and have $50k in the bank.

You receive a letter in the post. Global Pension Corp made a bad business decision and have gone bust. Unfortunately for you, JP Morgan Chase made the same bad decision and has also gone bust.

You're $450k poorer than you were yesterday. Should you have any recourse, or does it just suck to be you, being as you're old, have no savings and no pension?

The bailout was because the federal government said that letting hundreds of thousands of citizens receive a letter telling them that their pension and savings had vanished through no fault of their own was too unfair. No other institution can punish people to the tune of hundreds of thousands of dollars each because of their bad business decisions.

@Dr Herbie: If you want to make the comparison more accurate, you could have the cashiers bid for a station and give them a percentage of the earnings on top of their income. Should spice things up a bit at the supermarket.

And I totally agree with you on the short sightedness of the bankers. But I don't blame them. They don't bare the consequences for their actions, so why should they care?

Let's look at the bigger picture, those targets originate from somewhere, they trickle down from the top. The top gets their order from the shareholders. These shareholders can vote at a shareholders meeting on the course of a company. Those votes get turned into a course of action, and to get the noses in the same direction, translated into bonuses. When it's the right course, bank grows. When it's the wrong course, customers leave, banks shrinks and it turns to government for a bailout.

Now, where do I think the blame lies?

When things go good, customers benefit, bank employees benefit and stockholders benefit. When things go bad, taxpayer gets forwarded a big bill. Instead of; customers pay, bank employees pay and stockholders pay.

How is it possible that tax payers get a bill for something they had no take in? Who has the power to take money from them?

The situation gets even more complicated when you consider that not only shareholders can dictate the course of a bank, but government can as well. And this is also adding to the problem, because when you can slap your customers around with a law book, you spend considerable resources of getting involved in writing that book.

So when people use government to play their dirty games, it sends the society in a downwards spiral. That's why nearly all governments are corrupt, in one form or another. All the more reason to limit their power, if left to government, everything would be run by it.

@evildictaitor:

That's a trick question. Anybody would go for the option that government pays the $450k.

To answer your question; I would go for the option that government pays all, but I'd like to live in a society that doesn't.

Allow me to explain;

Let's say government paid me the $450k, because I've been such a law abiding citizen. The government doesn't have any money, so it gets added to the national debt and tax increases to pay for this debt. In this scenario I might have kept my $450k, but at the expense of the tax payer. The bank that made this mistake in the first place is still there, continuing to making even worse business decisions, they didn't feel pain so they will learn no lessons.

Let's say I had to take the loss. Then I would add my claim of $450k to the rest of the claims against the bank. Profitable bank assets would be sold to other banks and maybe I would see a little of that money back, people responsible for the bad management fired and branded for life. Then I would join the class action lawsuit against them and maybe see some money back there as well. And I've learned a valuable lesson; never bet on one horse.

I don't think it's very social to make someone else pay for other people's bad decisions, no matter how hard you may fall. 

http://www.bloomberg.com/news/2012-08-09/justice-finds-no-viable-basis-for-charges-against-goldman.html

That's only logical. First government forced them to sell mortgages to people who couldn't afford it, because you know everybody should be able to own a home. And that is not capitalism, but socialism. If I was GS, I would want to get rid of these as fast as possible, Uncle Sam just has to look the other way when I resell the turd as alt-A.

Then when these loans go down the rat hole, you ask government for a contribution;

http://www.usatoday.com/money/industries/banking/2010-07-24-goldman-bailout-cash_N.htm

They passed the law, so they should pay,.. Oh,.. wait,.. Uncle Sam signs the check, but the tax payers pay the check.

Are you beginning to see a pattern here?

And before you think Goldman Sachs is the problem, see who put them into trouble and saved their behind!

32 minutes ago, Maddus Mattus wrote

Then I would add my claim of $450k to the rest of the claims against the bank. ... and maybe I would see a little of that money back.

Fine. After two years of waiting, the administrators post you a check for $17 after winding up the business because you're a non-secured asset holder and the bank had lots of customers.

... people responsible for the bad management fired and branded for life.

 

I'm sure that'll be a great consolation when you're freezing in your tiny house wishing you had money when you're too old to work or pay for the care you need.

Then I would join the class action lawsuit against them and maybe see some money back there as well.

Which you promptly lose. The company didn't do anything illegal - it just went bankrupt because of bad investment decisions. It's a PLC so you don't get any come-back on the people who ran the business.

And for the record, they'll get to keep their mansion, their pension and will promptly get a job running a big company somewhere like Saudi Arabia. It still sucks to be you - you're too old to get another job and all of your savings and pension went missing, and hiring a hitman is illegal.

And I've learned a valuable lesson; never bet on one horse.

I'm sure that'll keep you a warm fuzzy feeling inside when you're shivering at night time, still furious that the guy who screwed you out of your pension and savings is sitting in his nice warm massive house.

I don't think it's very social to make someone else pay for other people's bad decisions, no matter how hard you may fall.

Then who should pay for the bad decisions? The customers of the bank or the taxpayers? Because the bank is bankrupt and can't pay. The staff are just pawns and the management are running a PLC to protect them from bankruptcy. You could screw over the shareholders, but then they go bankrupt too, and since they're mainly big pension companies, you lose your pension and your savings.

Government didn't bail out the banks because they love banks or wanted to abolish capitalism. They bailed them out because the alternative is having to call in the army to protect against the riots caused by everyone losing their pensions and savings.

13 minutes ago, evildictait​or wrote

*snip*

Government didn't bail out the banks because they love banks or wanted to abolish capitalism. They bailed them out because the alternative is having to call in the army to protect against the riots caused by everyone losing their pensions and savings.

+1

This is how private corporations hold their national treasuries hostage.

And then laugh, at the middle-class conservatives' compliance and struggle to retire, while in flight to the Cayman Islands...

11 minutes ago, evildictait​or wrote

Then who should pay for the bad decisions? The customers of the bank or the taxpayers? Because the bank is bankrupt and can't pay. The staff are just pawns and the management are running a PLC to protect them from bankruptcy. You could screw over the shareholders, but then they go bankrupt too, and since they're mainly big pension companies, you lose your pension and your savings.

Government didn't bail out the banks because they love banks or wanted to abolish capitalism. They bailed them out because the alternative is having to call in the army to protect against the riots caused by everyone losing their pensions and savings.

As it was the owners of the bank, together with the employees and the customers that decided the course of the bank, they should pay. The owners lose their ownership as the bank gets sold, the employees lose their job and the customer loses his money. They went into business voluntarily they reap the benefits, they should also take the blows.

It does not compute to me, that other people have to pay for mistakes in business they had no part in. If that is the solution for failures, we are all winners, regardless of what we do succeeds. This can only happen at the expense of other people and is pure socialism.

So, government bailed them out, because bankers losing money causes riots? Now you are just making threats of violence. If you need that to sustain the argument, the argument is lost. And if some people riot when they lose money, don't you think it would be worse if the loss of some people gets put on everybody? Again, think about it, clearly, without the emotion. For you to have your savings, other people have to suffer, mostly those at the bottom of society, how can anyone live with that?

@JohnAskew: You think it's +1 when government takes your money, by force, to give to some banker who made mistakes, to compensate the idiot who invested in him in the first place?

You make thread after thread ranting against banks and how they are lawless crooks, yet you are OK with this practice?

I would love speed camera's that pay out instead of fine when I cross the speed limit, but it doesn't work that way.

Banking is out of control. It should have NEVER been deregulated as it was. Corruption reigns and the Treasury is looted. Are they above the law or not?

** The US Justice Dept. is going after Standard Chartered for lying and falsifying records and covering up their trade with Iran, which is more prosecutable than for illegally trading with Iran...

http://www.reuters.com/article/2012/08/10/us-standardchartered-iran-falserecords-idUSBRE87905520120810

** Looks like Goldman Sachs gets another free pass from the US government.

A Senate subcommittee chaired by  Sen. Carl Levin, D-Mich., in April 2011 found that Goldman marketed four  sets of complex mortgage securities to banks and other investors but  that the firm failed to tell clients that the securities were very  risky. The Senate panel said Goldman secretly bet against the investors'  positions and deceived the investors about its own positions to shift  risk from its balance sheet to theirs.

The  Justice Department's decision capped a good day for Goldman as the  Securities and Exchange Commission decided not to file charges against  the firm over a $1.3 billion subprime mortgage portfolio. At the same  time, the Justice Department's decision ensured that the Obama  administration will continue to feel political heat, particularly from  the liberal wing of the president's own party, for not having brought  more prosecutions in the financial crisis.

** Finally, there is movement on the front for better trading software, because, you know, programmers are to blame for Knight's $440 million mistake...

http://www.upi.com/Science_News/Technology/2012/08/03/Trading-vulnerable-to-glitches-some-say/UPI-17661344010621/?rel=29701344525821

A former chairman of the U.S. Securities and Exchange Commission said the  digital culture leaves the financial system vulnerable to a major glitch.

"The larger question is whether our markets are adequate to deal with the  technology that is out there,"...

Several major players in the financial world are now calling for stricter  regulations on computerized trading, including vigorous tests for new programs....

Although some say the SEC is not doing enough in response to previous  computer glitches that shocked the system, the commission is scheduled to  install next year its own market override called "limit up, limit down."

It forces a stall in trading if a stock price behaves erratically.

@Maddus Mattus: You can't assess a chain of events by starting in the middle.

And to answer your underlying question, yes, I do trust government over bankers and traders.

Would I like to see more prosecution of individuals at the banks and investment houses? Yes!

So you make no point. But you are from Holland, isn't that vierd? (Goldmember reference)

33 minutes ago, Maddus Mattus wrote

*snip*

As it was the owners of the bank, together with the employees and the customers that decided the course of the bank, they should pay.

As I said, the bank is a PLC. The employees and the executives lose their job (since the bank goes bust) but they don't lose their houses or any money they had in other banks. That's what a PLC means.

The executives probably have their assets abroad, so you couldn't sieze them even if you wanted to - and the employees largely didn't do anything wrong - why should a janitor in a bank have his house taken just because someone else in the bank screwed up and lost loads of money? That's not how businesses work.

And the customers didn't decide anything. They thought their money was safe in a bank - hell the government actively encourages people to put their money in banks because money in banks is lent back out to the rest of society to help the economy. Under your system, everyone would hide their money under the bed and nobody would be able to get a loan or a mortgage at all.

So, government bailed them out, because bankers losing money causes riots? Now you are just making threats of violence.

That's a completely retarded thing to say, even for you.

@JohnAskew: There is only one law they should abide by, the law of the free market. No amount of regulation is going to be as effective. Power back to consumers instead of politicians.

Your trust in someone that has the power to dominate you is misplaced. It's a big power hungry, favor granting and self interest serving entity. It's full of people with good intensions paving a road to hell.

I'd much rather trust someone I can choose, but that's my opinion.

@evildictaitor:

The executives probably have their assets abroad.

So what? They can still be made to pay hefty fines if you can prove mismanagement, file a civil claim!

and the employees largely didn't do anything wrong

They have the moral obligation to do the right thing, if they didn't, tough. Makes you ponder twice before going to work for a firm. See how free markets operate? Bad companies wouldnt even exist, no one would want to work there.

You would think twice before working or doing business with a bank wich CEO has all of his own investments some place else. But since the rest of the country has your back, who cares!

Raise debt ceiling anyone?

And the customers didn't decide anything. They thought their money was safe in a bank

And we thought that government bonds was a sure investment as well, GUESS WHAT?

None of the arguments you made are valid points for bailing banks out, NONE.

They went into business together, they got the benefits together, now let them pay the price together. And if either of these parties resorts to violence, it will be dealt with accordingly, with more violence.

16 minutes ago, Maddus Mattus wr0ote

@evildictaitor:

So what? They can still be made to pay hefty fines if you can prove mismanagement, file a civil claim!

The bank is a PLC. You can't sue the directors unless their mismanagement was negligent or malicious.

They have the moral obligation to do the right thing, if they didn't, tough. Makes you ponder twice before going to work for a firm. See how free markets operate? Bad companies wouldnt even exist, no one would want to work there.

What on earth makes you think that CEOs do anything based on moral obligation?

You would think twice before working or doing business with a bank wich CEO has all of his own investments some place else.

They wouldn't tell you, so you wouldn't know.

And we thought that government bonds was a sure investment as well, GUESS WHAT?

I presume that based on this knowledge of how unsafe banks are, that you store all of your money in cash under your bed.

it will be dealt with accordingly, with more violence.

Yeah, that's right. Let's set the police on the grannies protesting outside parliament for complaining that the banks made off with all of her savings and pension. What a socialist she is for expecting her savings and pension to not be stolen by our wonderful capitalist bankers.

I've read that concussions are sometimes responsible for a person finding a new perspective...

Feudalism Rulez.

Honestly, though, it is disingenuous for conservatives to argue for less regulation to end looting. I can only suspect they have ill intent for pushing such a strategy...

@Maddus Mattus:

I am confused. Are you telling me that , with our current high speed access to banks, somehow government no longer need to bailout to stop the panic? How does that even work? I just click transfer button before you do? I am confused.