Scylla, I see you arguing that traders facilitate efficiency in a free market, but what about efficiency within the market for traders? I mean, some traders will be better than others, right? Shouldn’t the market for their skills identify and reward the good traders and punish the bad ones? It seems to me that those traders who drove AIG into credit default swaps and brought about the largest corporate loss in history can fairly be labeled bad traders. But most of what I’ve read says that they have moved on to other cushy jobs already, and only the dregs have nobly stayed behind to mop up the mess for mere six-figure bonuses. Where is the concern for efficiency now? I don’t mean from you, necessarily, but from an industry that has seen people screw up and still seeks to reward them.
And so do the traders. They are not the guardians of capitalism, presenting us with it as a gift to enrich our lives. They are participants in it, the same as all the rest of us, and have enjoyed more benefits than most. If the whole country suffers, shouldn’t they?
True, but they’re hardly to be defended for their noble sacrifice in doing so.
That should drive the pay for arbitrageurs down, shouldn’t it? Lots of people would love to live in a Manhattan penthouse and work in a corner office, but we only need a few of them; not a lot of people want to get up at dawn and work all day in the hot sun, but we need them by the thousands. Shouldn’t supply and demand have something to say about this?
I somewhat agree with you about capitalism. It has driven a lot of innovation, and I live a life that includes comforts unimagineable only a few generations ago. But it seems to me that you’re defending the financial industry for making the system work, but I haven’t seen you mention their responsibility to live by it. Is there truly a free market for CEO salaries? Does the industry reward the right people, with incentives for those who create real, long-term value? When mistakes are made, do they seek out the sources and fix them?
Again, it’s not the traders per se that screwed things up, though surely some are good and some are bad.
The forty to one leverage maginifies things and creates huge consequences for small miscalculations. Corporate governance and risk management is supposed to set the parameters for what traders do. In this instance, basically all the stops were pulled out.
I would character a bad trader as one who made commtiments for his firm in bad faith, such as a CDS that was unpayable upon default of the underlying, or who traded outside of the parameters risk management established, or one who lost money.
By this last, all traders most traders are “bad” as their inventories became worthless. By the other definitions few are. I had not heard about the “dregs” still being there. What I’m hearing is mostly very senior guys.
Yes, and overrall they will. There are a lot fewer jobs. Whole sectors of the market that were producing trillions simply no longer exist. You have a lot of traders pursuing relatively few positions.
The only problem I have is by making them suffer by not fulfilling the terms of government contracts that were entered into in good faith, or by the government demonizing them so that they get death threats and what have you.
It does work this way. Even though you only need a few, the demand is very high because there are even fewer that can do it. Same thing with Doctors. People would like to be Doctors, the demand is high. So is the pay. Yet, getting to the position where you a doctor and getting that high pay and prestige is a difficult thing to do.
No. I don’t think there is in the Financial services industry. I think corporate governance, the executive level, regulation all are broken and need to be overhauled.
What I’m essentially arguing in this thread is not that the system isn’t broken. It’s that it’s broken at a higher level than the media and our government would have you believe. It’s not broken at the level of traders. They don’t set policy. Most of these guys are honorable normal people.
The problem is incestuous boards, CEOs, upper management and government regulators who are supposed to be overseeing and setting policy. These are really all the same group of people. They are defending themselves by suggesting that this is a trader problem. These guys are scapegoats being thrown under the bus by the real villains.
In the long view, I think it does. In the short run, it’s not. I think there are two major problems we’re dealing with right now. The first is faulty corporate governance and government regulation as I’ve described.
The second is this relatively “new” business philosophy that came out of the Wharton school in the 80s and 90s. The theory goes that since it has been proven that you can’t really make a definitive business plan out beyond five years, you simply manage the company to maximize profits on a five year rolling basis. You don’t worry about things more than five years out until they become five years out.
I think it’s a bad philosophy as stated, but it’s not really even followed to that degree. People seem to confuse “can’t make a definitive business plan out beyond five years” with “can’t plan or think beyond five years.”
The investing public doesn’t help either. They are always focussed on the next quarters earnings. The long view doesn’t hold anywhere near the sway it should, and this is really a systemic problem. It’s everybody’s fault.
Forty! FORTY!??!. I heard thirty to one and my eyes spun about as I staggered. FORTY?! When did that become sane?
(I must take a moment of calm reflection, mustn’t get carried away, after all, I am not expert in these things…)
FORTY?!!?
(…steady now, these fellows were all highly regarded and placed in their fields, mustn’t forget that competition breeds excellence, so much the better that I may reap the rewards of their rigor and effort…)
FUCKING FORTY!!??
Tell me your shitting me. Its a cruel joke the guys in Bonds put you up to, kind of “panic the rubes” sort of thing…
Don’t tell me a band of congenital syphilitics on methedrine were given the keys to our wealth.
By the time the first execution in Colorado took place after the 1970 something Supreme Court decision, Colorado prisons had banned smoking. There was a bit of a flap about the rumor that one of the guards had snuck Davis a last cigarette.
You know, the question just occured to me, and like most really interesting questions there’s likely no way it will ever get answered, but still…
Where did he put *his *money? Assuming he didn’t spend it all on silk undies and concubines, where did he put it? In the bank, with its boring and dull interest rates? If stocks and bonds, which ones? In his sublime ignorance of shenanigans, did he invest it all in AIG, even after bits of discouraging news began to surface? Coca futures? Beanie babies?
Quite. He’s a lying sack of whining shit. Iraq, WMD’s, balsa-wood drones of death, the Swift-boaters? Is there any lie the discredited right-tards on this board won’t swallow?
Well I do not know the details but when reading “John Doe received a $30 Million bonus” you have to read “John Doe received $2 million cash and $28 million in stock”.
So many of this guys were, as we say in Argentina, burned by their own petard.
Still, and considering that they bankrupted the planet…
I’m not willing to go so far as to say that about the article, Scylla. It’s true that it is made up of extrapolations, second- and third-hand opinions of unestablished authority, and innuendo, but it does introduce a “smell test,” as it were, that the original editorial doesn’t, at first sniff, seem to pass.
Do you think any of the issues raised merit investigation, or do you feel that this is just an instructive example of how easily a “smell test” can be constructed by someone with an agenda and a talent for doing so?
Compared to your tired old and usually intentionally misleading postings rooted in a comprehensively failed ideology it is practically Shakespearean.
And yes - the guy is a lying sack of shit. And yes, it is your inability to shake your failed, misleading and irrelevant ideology that leads you to trumpet the self-pity whining of one of the guilty men as some sort of proof of anything.
Wall Street Compensation: Large Payouts In 2008 For CEOs (VIDEO) | HuffPost Impact What the execs reward themselves is divorced from what the company profits are. Their salaries just go up because they are in charge of making the determination. Lose billions and get a raise. Lose more billions get another raise. If they actually made money it would be scary to see what they would take out of the company.
A summary of that rebuttal can be found in the author’s own words:
“I have a few responses to those points. They are 1) Bullshit; 2) bullshit; 3) bullshit, plus of course; 4) bullshit. Lastly, there is 5) Boo-Fucking-Hoo. You dog.”
Upon further reading I saw precious little enhancement of those arguments by things like evidence or facts.
It seems to be written to an audience long on self-righteous indignation, short on reasoning capacity. No wonder tagos finds it so compelling.
If there are any specific points in their you’d like me to discuss feel free to bring them up, but I didn’t see anything that rose to a level that merited comment.
