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The finance sector does more than lend/invest capital themselves. Large investment banks provide a wide range of services for companies (e.g. bond issues, IPOs,

The finance sector does more than lend/invest capital themselves. Large investment banks provide a wide range of services for companies (e.g. bond issues, IPOs, secondary offerings, working out M&A deals, brokerage services, ...). The biggest problem with the finance sector is that it is extremely opaque and almost no one outside the industry understands what financial institutions actually do. Yet, everyone seems to know that banks are bad. Which is better: a bright graduate working on making a large web company's advertising algorithms slightly more efficient or the same person working for an investment bank on a bond deal that helps a biotech company raise more money for future R&D?

glesica 12y ago
The economy wasn't blown up because an M&A or bond issue went bad. I don't think anyone seriously believes that "banks are bad", I think they (myself included) tend to think that "the banks we have are bad". It's a subtle, but important difference and totally consistent with the article.
chroem- 12y ago
>Which is better: a bright graduate working on making a large web company's advertising algorithms slightly more efficient or the same person working for an investment bank on a bond deal that helps a biotech company raise more money for future R&D? That's the very definition of a false choice. We should be pouring more resources into developing new technology itself, not just trying to advertise or fund it more efficiently. Right now small technical innovators are being absolutely starved of capital, and it's going to have some pretty dire consequences for the US economy in the coming decades. When is the last time that you saw a successful hardware startup that did something nontrivial (a la Intel)? The only reason software businesses are doing so well is because they require very little capital. All of the shifting money between hands on Wall Street is sucking the air out of our industries.
- this_user 12y ago
  > When is the last time that you saw a successful hardware startup that did something nontrivial (a la Intel)? Define 'nontrivial'. I'd call Tesla and SpaceX nontrivial. Or what kind of hardware are you talking about? Maybe take a look here: https://angel.co/hardware https://angel.co/hardware > All of the shifting money between hands on Wall Street is sucking the air out of our industries. That's the very definition of a false cause and it's also so woolly that is barely means anything. Which money is "shifting hands on Wall Street" and what is is that even supposed to mean? Of course money is being transferred, that's the very idea of a financial system. And how does this "suck the air out" of anything? Banks are not the ones who would rather fund your photo sharing app than the next Intel. If you want to go down that route, blame the Angels/VCs who are the driving force behind what is getting funded. Or blame the people who are more interested in reading about/working on the latest flavour-of-the-month Javascript framework instead of actually tackling the hard(ware) problems. Wall St. are not the ones behind the wheel when it comes to determining which new ideas get attention.
  - nitrogen 12y ago
    Elon Musk nearly bankrupted himself funding SpaceX and Tesla.
- TheSpiceIsLife 12y ago
  IBM, Apple, Google, Telsa, Microsoft, SpaceX, Intel, BAE Systems, Raytheon, Lockheed Martin, Governments (a la ITER) and others, are pouring money in to R&D. The lack of capital for small hardware innovators (if this concept even is true) is rational because there's little profit to be made there. The age of small hardware innovators has come and gone. To bring non-trivial innovative hardware to market is a huge undertaking and requires a lot of capital. There's nothing unfair about this.
eli_gottlieb 12y ago
>Which is better: a bright graduate working on making a large web company's advertising algorithms slightly more efficient or the same person working for an investment bank on a bond deal that helps a biotech company raise more money for future R&D? The bright graduate working at the biotech company, of course. You know, not that biotech companies actually train or hire permanent professional employees these days (source: fiancee is a biologist).

glesica 12y ago

The economy wasn't blown up because an M&A or bond issue went bad. I don't think anyone seriously believes that "banks are bad", I think they (myself included) tend to think that "the banks we have are bad". It's a subtle, but important difference and totally consistent with the article.

chroem- 12y ago

>Which is better: a bright graduate working on making a large web company's advertising algorithms slightly more efficient or the same person working for an investment bank on a bond deal that helps a biotech company raise more money for future R&D? That's the very definition of a false choice. We should be pouring more resources into developing new technology itself, not just trying to advertise or fund it more efficiently. Right now small technical innovators are being absolutely starved of capital, and it's going to have some pretty dire consequences for the US economy in the coming decades. When is the last time that you saw a successful hardware startup that did something nontrivial (a la Intel)? The only reason software businesses are doing so well is because they require very little capital. All of the shifting money between hands on Wall Street is sucking the air out of our industries.

this_user 12y ago
> When is the last time that you saw a successful hardware startup that did something nontrivial (a la Intel)? Define 'nontrivial'. I'd call Tesla and SpaceX nontrivial. Or what kind of hardware are you talking about? Maybe take a look here: https://angel.co/hardware https://angel.co/hardware > All of the shifting money between hands on Wall Street is sucking the air out of our industries. That's the very definition of a false cause and it's also so woolly that is barely means anything. Which money is "shifting hands on Wall Street" and what is is that even supposed to mean? Of course money is being transferred, that's the very idea of a financial system. And how does this "suck the air out" of anything? Banks are not the ones who would rather fund your photo sharing app than the next Intel. If you want to go down that route, blame the Angels/VCs who are the driving force behind what is getting funded. Or blame the people who are more interested in reading about/working on the latest flavour-of-the-month Javascript framework instead of actually tackling the hard(ware) problems. Wall St. are not the ones behind the wheel when it comes to determining which new ideas get attention.
- nitrogen 12y ago
  Elon Musk nearly bankrupted himself funding SpaceX and Tesla.
TheSpiceIsLife 12y ago
IBM, Apple, Google, Telsa, Microsoft, SpaceX, Intel, BAE Systems, Raytheon, Lockheed Martin, Governments (a la ITER) and others, are pouring money in to R&D. The lack of capital for small hardware innovators (if this concept even is true) is rational because there's little profit to be made there. The age of small hardware innovators has come and gone. To bring non-trivial innovative hardware to market is a huge undertaking and requires a lot of capital. There's nothing unfair about this.

eli_gottlieb 12y ago