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Your argument falls apart at the predicate. CDOs (and other exotic financial instruments) do not provide real value, not in the long term, anyway. This argument

Your argument falls apart at the predicate. CDOs (and other exotic financial instruments) do not provide real value, not in the long term, anyway. This argument is exactly how Wall Street bankers & traders justify their crappy activities. "CDOs provide value! We're making people rich!" > People forget that prices and money are ... information No, prices and money are imaginary measurements of imaginary things that do not exist except in our collective consciousness[1]. Cars, computers, buildings, aircraft... these things are not imaginary and provide real value. [1]http://en.wikipedia.org/wiki/Unidade_real_de_valor http://en.wikipedia.org/wiki/Unidade_real_de_valor

yummyfajitas 16y ago
Many of the uses of computers provide only "imaginary value" (to borrow your phrase). Google and Facebook, for example, merely provide a convenient way of getting information quickly. Markets and price discovery do the exact same thing.
- mattdeboard 16y ago
  No, they provide a service. To understand what I mean by "imaginary" you have to understand (and accept) that a dollar, or a pound, or a real, or whatever, represents our agreement that we'll all play the same game. It doesn't represent a real thing. Google and Facebook provide information about actual things, like people, places and events. Money provides information about itself. Which, hey, I like having an agreed-upon exchange rate so I can trade my labor for stuff (RIP Carlin). The problem is that exotic derivatives create an insane level of abstraction to the terms of our social agreement. Once you take away the ability of people to understand what money is for (I mean, seriously, buying insurance against the failure of a company you don't own? slices of a house's future value?) that agreement starts to corrode. And yeah the short-term profits of these abstractions does create PROFIT, but it's an unsustainable cash flow. It didn't arise from producing a better quality product. To say that Google's search service and CDOs are essentially the same thing shows a pretty poor understanding of both concepts.

yummyfajitas 16y ago

Many of the uses of computers provide only "imaginary value" (to borrow your phrase). Google and Facebook, for example, merely provide a convenient way of getting information quickly. Markets and price discovery do the exact same thing.

mattdeboard 16y ago
No, they provide a service. To understand what I mean by "imaginary" you have to understand (and accept) that a dollar, or a pound, or a real, or whatever, represents our agreement that we'll all play the same game. It doesn't represent a real thing. Google and Facebook provide information about actual things, like people, places and events. Money provides information about itself. Which, hey, I like having an agreed-upon exchange rate so I can trade my labor for stuff (RIP Carlin). The problem is that exotic derivatives create an insane level of abstraction to the terms of our social agreement. Once you take away the ability of people to understand what money is for (I mean, seriously, buying insurance against the failure of a company you don't own? slices of a house's future value?) that agreement starts to corrode. And yeah the short-term profits of these abstractions does create PROFIT, but it's an unsustainable cash flow. It didn't arise from producing a better quality product. To say that Google's search service and CDOs are essentially the same thing shows a pretty poor understanding of both concepts.