5 ms·

The financial sector never fails to demonstrate how utterly worthless it is.

by safgasCVS 8y ago

crishoj 8y ago
Perhaps not entirely useless, but certainly unscrupulous and corrupt.
linkmotif 8y ago
Finance makes the world go round
- rvense 8y ago
  No, other things makes the world go round. Finance is responsible for the downward momentum in this death spiral...
- makotech222 8y ago
  Labor makes the world go round. Finance is a parasite.
  - MR4D 8y ago
    That’s what the gears in an engine say about the oil....until someone removes the oil.
    - tokai 8y ago
      The oil is laboring as well, even though its labor isn't directly productive. It is doing work that supports production of engine power. Finance is an unsavory backseat passenger that demands to be cooled by a fan taking a huge amount of HP from the engine, claiming that the car wouldn't move anywhere without him/her and the parasitic fan.
- kzrdude 8y ago
  Finance is a service industry, it should create value for its customers. For example, making means available for creating a company. Always measure their utility Vs how well they serve everything outside of finance.
- arghwhat 8y ago
  Finance provides slight convenience and a few useful products (like mortgages). The vast majority of the financial sector does nothing significant to the outside world, and often just cause negative side-effects. A good story to tell here is the total bank strike in Ireland that lasted a year, where everything operated just fine without the banks.
  - gaius 8y ago
    The vast majority of the financial sector does nothing significant to the outside world, and often just cause negative side-effects. So... like Silicon Valley then?
    - safgasCVS 8y ago
      Shun the non-believer! (I guess we're both getting downvoted today huh)
  - HONEST_ANNIE 8y ago
    > few useful products (like mortgages). ... and personal loans, commercial loans, transactions and transfers, overdraft agreements, insurance brokerage, underwriting, and reinsurance. Ireland was poor and undeveloped economy during 1966–76 bank strikes. Irish pound had one-to-one link to pound sterling, so Ireland didn't even have monetary policy. Companies were able to operate with their accounts in UK banks. Today it would be total chaos.
    - arghwhat 8y ago
      Commercial loans or investments are necessary. For personal use, mortgages is the only normally needed product. Non-mortgage personal loans and overdraft agreements are not necessities (and seems to invite poor financial management). The rest are insurance products, which are also on the nice-to-have list. However, loans and insurance are a tiny fraction of what the financial sector does. The vast majority of other products would go mostly unnoticed if gone. > Today it would be total chaos. Briefly, yes. Some things without real value would collapse. But I strongly believe that it would stabilize within the first year.
- tonyedgecombe 8y ago
  https://en.wikipedia.org/wiki/Financialization https://en.wikipedia.org/wiki/Financialization
aedron 8y ago
Arguably worse than worseless, when it is actually destructive to society. The history of banking in most countries is the story of a repeated cycle of abusing the trust of the people with money in the bank: The bank holds people's gold -> the bank issues 'gold certificates' -> the bank issues more certificates than it has gold -> system crashes and everybody loses their money. In the end, the establishment of national banks to regulate/nationalize the appropriation of wealth. Here is the history of the Swedish national bank, as an example (it could be copy/pasted from every other European national bank): https://en.wikipedia.org/wiki/Sveriges_Riksbank#History https://en.wikipedia.org/wiki/Sveriges_Riksbank#History
- safgasCVS 8y ago
  So I'll void preaching to the choir and give you this little gem instead http://uk.businessinsider.com/pubs-replaced-banks-in-ireland-in-1970-and-the-economy-was-fine-2016-1?IR=T http://uk.businessinsider.com/pubs-replaced-banks-in-ireland...
  - drb91 8y ago
    Well, pubs are legitimately the oldest financial structure in ireland. Cheque-central!
krona 8y ago
The industrial revolution would never have happened if not for the revolution in finance that preceded it.
- safgasCVS 8y ago
  The industrial revolution was driven by the increasing adoption of coal as a shift away from burning wood and other biomass allowing for highly energy intensive industries to develop. Steam engines, massive smelting furnances etc couldnt function without the huge energy efficiency gains from the shift towards coal. That shift was driven entirely by thermal efficiencies gained. Finance powerful though it may be doesnt outrank thermodynamics
  - tashoecraft 8y ago
    This is looking at things from an engineers perspective, "Oh the technical solution wins because it was just better". How would this industrialists get the capital to purchase their machines? The raw materials? For their suppliers to have the product on hand, or go a long time with without repayment? All this was enabled by the finance revolution. Finance gets a bad rap (rightfully so) because it's ripe for theft and manipulation, but I don't believe we would have seen even close to the same industrial revolution if it wasn't for the progress to the financial system.
    - arghwhat 8y ago
      The industrial pioneers, if I'm not mistaken, were "old-school rich", with real wealth coming from either hard work or a rich linage. I doubt venture capitals and other financial solutions were involved in anything that'll make its way into a history book.
      - lovich 8y ago
        The term nouveau rich was coined specifically to describe the rich industrialists who had generated their fortune without being from the old aristocratic families. Also if hard work led to you having wealth then their wouldn't have been peasants, and even children could buy their own homes after a long day in the fields or mines. I am an avid critic of the financial industry, but the whole idea of lending money and having a store of it that was trusted enough to accept checks from altered all of society. Prior to that you could only purchase as much material as you had money on hand to buy, or something else to trade. There was no way to borrow 100 dollars to buy materials that you converted into 130 dollars of value without already having 100 dollars
zimablue 8y ago
I await your plan for a society with no markets.
- arghwhat 8y ago
  No financial sector does not mean no "markets". It means no providers of financial products. However, some financial products emerge naturally between individual parties, such as credits and small-scale loans. I think the most noticeable loss would be the lack of mortgages (i.e. having to pay for a house up front). No simple means for online purchases would also be inconvenient (Bitcoin is still not a viable normal solution). Didn't Ireland have a complete and total bank strike for a full year in the 1970's, with absolutely no negative side-effects?
  - chris_mc 8y ago
    >in the 1970's
  - zimablue 8y ago
    As you've noted yourself, if you allow markets most of the rest kind of emerges. Futures and forwards are pretty natural, unless you somehow stop it, large scale loans are no less natural than small scale loans, products between individuals get outcompeted by products between individuals and larger entities. Mortgages aren't great but having to pay for a house up front would move empower rentiers even further. I just think you need to be specific, you're already down the path of realizing that some (but not all) of this is like laws of nature, saying that there's no value in a financial sector just seems ignorant.
  - dantheman0207 8y ago
    Awesome, looked it up on Wikipedia. Strike was actually three separate strikes, just over one year in total duration. Dates as follow: May 7 – July 30, 1966 May 1 – November 17, 1970 June 28 – September 6, 1976 According to Wikipedia[1], the banking strikes had little affect on the preexisting economic woes, namely both high unemployment and inflation. [1] https://en.wikipedia.org/wiki/Irish_bank_strikes_%281966%E2%80%9376%29 https://en.wikipedia.org/wiki/Irish_bank_strikes_%281966%E2%...
kome 8y ago
Finance is needed. Better questions would be: - How much finance is needed? And how complex? - Are financial actors capable of seeing a crime when they see it, or pecunia non olet? There is widespread, high-level, white neck, corruption in northern Europe. And that just the tip of the iceberg.
sctb 8y ago
If that's true then presumably one doesn't need to point it out with snarky one-liners (which don't belong on Hacker News). https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html

The financial sector never fails to demonstrate how utterly worthless it is.

crishoj 8y ago

Perhaps not entirely useless, but certainly unscrupulous and corrupt.

linkmotif 8y ago

Finance makes the world go round

rvense 8y ago
No, other things makes the world go round. Finance is responsible for the downward momentum in this death spiral...
makotech222 8y ago
Labor makes the world go round. Finance is a parasite.
- MR4D 8y ago
  That’s what the gears in an engine say about the oil....until someone removes the oil.
  - tokai 8y ago
    The oil is laboring as well, even though its labor isn't directly productive. It is doing work that supports production of engine power. Finance is an unsavory backseat passenger that demands to be cooled by a fan taking a huge amount of HP from the engine, claiming that the car wouldn't move anywhere without him/her and the parasitic fan.
kzrdude 8y ago
Finance is a service industry, it should create value for its customers. For example, making means available for creating a company. Always measure their utility Vs how well they serve everything outside of finance.
arghwhat 8y ago
Finance provides slight convenience and a few useful products (like mortgages). The vast majority of the financial sector does nothing significant to the outside world, and often just cause negative side-effects. A good story to tell here is the total bank strike in Ireland that lasted a year, where everything operated just fine without the banks.
- gaius 8y ago
  The vast majority of the financial sector does nothing significant to the outside world, and often just cause negative side-effects. So... like Silicon Valley then?
  - safgasCVS 8y ago
    Shun the non-believer! (I guess we're both getting downvoted today huh)
- HONEST_ANNIE 8y ago
  > few useful products (like mortgages). ... and personal loans, commercial loans, transactions and transfers, overdraft agreements, insurance brokerage, underwriting, and reinsurance. Ireland was poor and undeveloped economy during 1966–76 bank strikes. Irish pound had one-to-one link to pound sterling, so Ireland didn't even have monetary policy. Companies were able to operate with their accounts in UK banks. Today it would be total chaos.
  - arghwhat 8y ago
    Commercial loans or investments are necessary. For personal use, mortgages is the only normally needed product. Non-mortgage personal loans and overdraft agreements are not necessities (and seems to invite poor financial management). The rest are insurance products, which are also on the nice-to-have list. However, loans and insurance are a tiny fraction of what the financial sector does. The vast majority of other products would go mostly unnoticed if gone. > Today it would be total chaos. Briefly, yes. Some things without real value would collapse. But I strongly believe that it would stabilize within the first year.
tonyedgecombe 8y ago
https://en.wikipedia.org/wiki/Financialization https://en.wikipedia.org/wiki/Financialization

aedron 8y ago

Arguably worse than worseless, when it is actually destructive to society. The history of banking in most countries is the story of a repeated cycle of abusing the trust of the people with money in the bank: The bank holds people's gold -> the bank issues 'gold certificates' -> the bank issues more certificates than it has gold -> system crashes and everybody loses their money. In the end, the establishment of national banks to regulate/nationalize the appropriation of wealth. Here is the history of the Swedish national bank, as an example (it could be copy/pasted from every other European national bank): https://en.wikipedia.org/wiki/Sveriges_Riksbank#History https://en.wikipedia.org/wiki/Sveriges_Riksbank#History

safgasCVS 8y ago
So I'll void preaching to the choir and give you this little gem instead http://uk.businessinsider.com/pubs-replaced-banks-in-ireland-in-1970-and-the-economy-was-fine-2016-1?IR=T http://uk.businessinsider.com/pubs-replaced-banks-in-ireland...
- drb91 8y ago
  Well, pubs are legitimately the oldest financial structure in ireland. Cheque-central!

krona 8y ago

The industrial revolution would never have happened if not for the revolution in finance that preceded it.

safgasCVS 8y ago
The industrial revolution was driven by the increasing adoption of coal as a shift away from burning wood and other biomass allowing for highly energy intensive industries to develop. Steam engines, massive smelting furnances etc couldnt function without the huge energy efficiency gains from the shift towards coal. That shift was driven entirely by thermal efficiencies gained. Finance powerful though it may be doesnt outrank thermodynamics
- tashoecraft 8y ago
  This is looking at things from an engineers perspective, "Oh the technical solution wins because it was just better". How would this industrialists get the capital to purchase their machines? The raw materials? For their suppliers to have the product on hand, or go a long time with without repayment? All this was enabled by the finance revolution. Finance gets a bad rap (rightfully so) because it's ripe for theft and manipulation, but I don't believe we would have seen even close to the same industrial revolution if it wasn't for the progress to the financial system.
  - arghwhat 8y ago
    The industrial pioneers, if I'm not mistaken, were "old-school rich", with real wealth coming from either hard work or a rich linage. I doubt venture capitals and other financial solutions were involved in anything that'll make its way into a history book.
    - lovich 8y ago
      The term nouveau rich was coined specifically to describe the rich industrialists who had generated their fortune without being from the old aristocratic families. Also if hard work led to you having wealth then their wouldn't have been peasants, and even children could buy their own homes after a long day in the fields or mines. I am an avid critic of the financial industry, but the whole idea of lending money and having a store of it that was trusted enough to accept checks from altered all of society. Prior to that you could only purchase as much material as you had money on hand to buy, or something else to trade. There was no way to borrow 100 dollars to buy materials that you converted into 130 dollars of value without already having 100 dollars

zimablue 8y ago

I await your plan for a society with no markets.

arghwhat 8y ago
No financial sector does not mean no "markets". It means no providers of financial products. However, some financial products emerge naturally between individual parties, such as credits and small-scale loans. I think the most noticeable loss would be the lack of mortgages (i.e. having to pay for a house up front). No simple means for online purchases would also be inconvenient (Bitcoin is still not a viable normal solution). Didn't Ireland have a complete and total bank strike for a full year in the 1970's, with absolutely no negative side-effects?
- chris_mc 8y ago
  >in the 1970's
- zimablue 8y ago
  As you've noted yourself, if you allow markets most of the rest kind of emerges. Futures and forwards are pretty natural, unless you somehow stop it, large scale loans are no less natural than small scale loans, products between individuals get outcompeted by products between individuals and larger entities. Mortgages aren't great but having to pay for a house up front would move empower rentiers even further. I just think you need to be specific, you're already down the path of realizing that some (but not all) of this is like laws of nature, saying that there's no value in a financial sector just seems ignorant.
- dantheman0207 8y ago
  Awesome, looked it up on Wikipedia. Strike was actually three separate strikes, just over one year in total duration. Dates as follow: May 7 – July 30, 1966 May 1 – November 17, 1970 June 28 – September 6, 1976 According to Wikipedia[1], the banking strikes had little affect on the preexisting economic woes, namely both high unemployment and inflation. [1] https://en.wikipedia.org/wiki/Irish_bank_strikes_%281966%E2%80%9376%29 https://en.wikipedia.org/wiki/Irish_bank_strikes_%281966%E2%...

kome 8y ago

Finance is needed. Better questions would be: - How much finance is needed? And how complex? - Are financial actors capable of seeing a crime when they see it, or pecunia non olet? There is widespread, high-level, white neck, corruption in northern Europe. And that just the tip of the iceberg.

sctb 8y ago

If that's true then presumably one doesn't need to point it out with snarky one-liners (which don't belong on Hacker News). https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html