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> Still, I don't think all bankers are socially worthless. They help to create confidence in the banking system and in finance in general. I don't believe I ob

by ronaldx 13y ago

> Still, I don't think all bankers are socially worthless. They help to create confidence in the banking system and in finance in general. I don't believe I observe that value in my daily life. Would there be sufficient confidence in finance without investment banking? Surely, there was confidence in finance long before the current generation of exotic derivatives? Surely, there was more confidence in the past, when people were able to relate to what was going on? Even if the financial industry is apparently building value for now, it seems to be building value on top of a house of cards. And nobody is really sure that the base is stable. We can argue that this creates value out of nothing, but I don't view that as a good thing - especially not now that a large percentage of the economy is dependent on the financial industry having a steady hand.

gaius 13y ago
I think you don't know quite how old investment banking is. Hundreds and hundreds of years old. Look up the history of the Rothschilds, say, and the industry was well established before even them.
zacinbusiness 13y ago
You're right that a lot of finance is mostly smoke and mirrors. I send you money through my bank, but what actually happens is that debt gets moved around, rather than money. The result is that it looks like I have less money and you have more. And it gets even more tricky when I start paying you back for the loan on my house - you sell off a bundle of loans to someone else, who says that the bundle of loans they bought is a good investment, because now they own debt which is the primary market commodity. Now, there's a market that's built on there being a predictable ratio of payers to defaulters, which makes it easy to calculate how much the commodity is worth. But we do get the benefit of the trickery - I can go buy shoes at a store because the employees are paid out of debt, rather than out of the store's profits (which are mostly reinvested into other capital that, hopefully, exceeds the debt). Without the debt, and the ability of the market to utilize it as a commodity, I wouldn't be able to participate in mass-market purchasing, and thus my $50 shoes would cost $200
- ronaldx 13y ago
  I believe it's an exaggeration to claim that shoe manufacturers would quadruple their charges if they did not have access to debt. The structure of a successful business would be essentially the same. Plus, the bank is already charging an amount which corresponds to the value provided.

by ronaldx 13y ago

gaius 13y ago

I think you don't know quite how old investment banking is. Hundreds and hundreds of years old. Look up the history of the Rothschilds, say, and the industry was well established before even them.

zacinbusiness 13y ago

You're right that a lot of finance is mostly smoke and mirrors. I send you money through my bank, but what actually happens is that debt gets moved around, rather than money. The result is that it looks like I have less money and you have more. And it gets even more tricky when I start paying you back for the loan on my house - you sell off a bundle of loans to someone else, who says that the bundle of loans they bought is a good investment, because now they own debt which is the primary market commodity. Now, there's a market that's built on there being a predictable ratio of payers to defaulters, which makes it easy to calculate how much the commodity is worth. But we do get the benefit of the trickery - I can go buy shoes at a store because the employees are paid out of debt, rather than out of the store's profits (which are mostly reinvested into other capital that, hopefully, exceeds the debt). Without the debt, and the ability of the market to utilize it as a commodity, I wouldn't be able to participate in mass-market purchasing, and thus my $50 shoes would cost $200

ronaldx 13y ago
I believe it's an exaggeration to claim that shoe manufacturers would quadruple their charges if they did not have access to debt. The structure of a successful business would be essentially the same. Plus, the bank is already charging an amount which corresponds to the value provided.