Comments on: Why Wall Street won’t get shrunk http://blogs.reuters.com/felix-salmon/2010/11/22/why-wall-street-wont-get-shrunk/ A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: TFF http://blogs.reuters.com/felix-salmon/2010/11/22/why-wall-street-wont-get-shrunk/comment-page-1/#comment-21331 Sat, 27 Nov 2010 19:35:45 +0000 http://blogs.reuters.com/felix-salmon/?p=6262#comment-21331 hsvkitty, it has actually been a very good year for me. Perhaps that is because tutoring is a service business for the upper middle class? Perhaps it is the local economy? (Bouncing back stronger and faster here than elsewhere in the country.) But last year I was struggling to book clients and this year I filled up in early October.

I’m not quite ready to throw a $100,000 party, though!

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By: hsvkitty http://blogs.reuters.com/felix-salmon/2010/11/22/why-wall-street-wont-get-shrunk/comment-page-1/#comment-21309 Fri, 26 Nov 2010 19:45:45 +0000 http://blogs.reuters.com/felix-salmon/?p=6262#comment-21309 It has been a bad year more most people….hasn’t it?

http://dealbook.nytimes.com/2010/11/23/s igns-of-swagger-wallets-out-wall-st-dare s-to-celebrate/?ref=business

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By: TFF http://blogs.reuters.com/felix-salmon/2010/11/22/why-wall-street-wont-get-shrunk/comment-page-1/#comment-21297 Fri, 26 Nov 2010 02:49:07 +0000 http://blogs.reuters.com/felix-salmon/?p=6262#comment-21297 Well, yes. Absolutely gluttonous. Still hard to see how anybody can change that system. The real losers are the corporate stockholders who take ALL the risk for only HALF the profits.

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By: hsvkitty http://blogs.reuters.com/felix-salmon/2010/11/22/why-wall-street-wont-get-shrunk/comment-page-1/#comment-21288 Thu, 25 Nov 2010 19:17:57 +0000 http://blogs.reuters.com/felix-salmon/?p=6262#comment-21288 Basel III shortages between $100 and $150B, of which 90% is by the 6 largest US banks

http://www.reuters.com/article/idUSTRE6A L0A220101122

I don;t care what desk generates the bonuses… it is still exorbitant. ludicrous. Outrageous. Gluttonous.

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By: GHIDS90 http://blogs.reuters.com/felix-salmon/2010/11/22/why-wall-street-wont-get-shrunk/comment-page-1/#comment-21287 Thu, 25 Nov 2010 19:07:23 +0000 http://blogs.reuters.com/felix-salmon/?p=6262#comment-21287 “Chomsky praises Yves Smith’s book as being “really good”, and says nice things about Simon Johnson, too; I’m sure if asked he’d be equally complimentary of, say, Joe Stiglitz or Jamie Galbraith.”

In an interview with Cenk Uyger, Chomsky actually praised Joseph Stiglitz and (even) Paul Krugman.

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By: TFF http://blogs.reuters.com/felix-salmon/2010/11/22/why-wall-street-wont-get-shrunk/comment-page-1/#comment-21271 Thu, 25 Nov 2010 00:36:11 +0000 http://blogs.reuters.com/felix-salmon/?p=6262#comment-21271 Are the big 6 banks still $100B short of capital? Where do you get that figure?

As best I can tell, the “traditional banking” lines for the major banks are still unprofitable. Their loan books, whether mortgage, commercial, or consumer continue to sustain a high rate of defaults. Cost of funds is so low that you can’t even pad your margin by taking deposits — the cost of servicing the accounts is greater than the cost of acquiring funds through other avenues. And there is push-back from consumers and regulators on their fee income.

The trading desks turn a regular (daily) profit, however, which is what is keeping them afloat right now. And it is that activity that is generating the bonuses.

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By: hsvkitty http://blogs.reuters.com/felix-salmon/2010/11/22/why-wall-street-wont-get-shrunk/comment-page-1/#comment-21264 Wed, 24 Nov 2010 18:34:30 +0000 http://blogs.reuters.com/felix-salmon/?p=6262#comment-21264 That was a great foil to amateur’s response, TFF.

There was a time when banks were banks and everyone knew their purpose. Now we are back to thinking that all bankers are snidely do-littles (stereotypical villain) and fatcats. Wallstreet seems to relish that they are unproductive leeches and are ever looking for more and faster ways to spit out the dough.

Your comments on high frequency trading churning trades and money are so true and the SEC can’t keep up or perhaps even grasp. Hopefully the derivatives and the investment banks be reigned in with regulations.

Otherwise wallstreeters will be thought of as white collar bank robbers who haven’t been caught. This spate of insider trading busts are not going to appease anyone who knows that it isn’t the heart of the problem.

TFF< how can the salaries and bonuses be only borderline outrageous when the big 6 banks are $100B short of capital, yet have $145B in the bonus pool. Flat out outrageous!

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By: Hayes http://blogs.reuters.com/felix-salmon/2010/11/22/why-wall-street-wont-get-shrunk/comment-page-1/#comment-21250 Tue, 23 Nov 2010 19:34:12 +0000 http://blogs.reuters.com/felix-salmon/?p=6262#comment-21250 The real reason the financial sector is large is nothing to do with trading. The dominant revenue to the financial sector ultimately comes from interest payments on our record amount of debt. By intermediating in various ways, transforming maturity and liquidity etc., as well as managing portfolios and rolling over expiring debt, the financial sector captures as revenue much of the interest paid on all the debt in the system.

Since we currently have a record amount of debt, it is no surprise that the financial sector is at a record size. And, since the debt is not going away in a hurry, the financial sector will continue to be large for the foreseeable future. The bankers don’t need to be smart, or even greedy.

In the longer run, as deleveraging continues, the financial sector should shrink along with the debt, but that process could take many years.

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By: ObamaDonor http://blogs.reuters.com/felix-salmon/2010/11/22/why-wall-street-wont-get-shrunk/comment-page-1/#comment-21239 Tue, 23 Nov 2010 15:11:19 +0000 http://blogs.reuters.com/felix-salmon/?p=6262#comment-21239 “Economic historians refer to a period of “financial repression,” during which regulators and policymakers, reflecting public suspicion of Wall Street, restrained the growth of the banking sector. They placed limits on interest rates,”

Wiping out the savings of the American middle class by restricting their practical investment options to savings accounts legally prohibited from paying more than 2% when inflation was running in double digits.

“prohibited deposit-taking institutions from issuing securities,”

While encouraging them to recycle petrodollars, make crazy loans to unstable and dictatorial foreign governments and fund shaky development projects run by the people on their boards of directors.

“and, by preventing financial institutions from merging with one another, kept most of them relatively small.”

Which made every bank a one-branch local monopoly that could ignore customer satisfaction (business hours 10 to 3 on weekdays only, and take every holiday ever conceived) and make huge profits without work (like the famous 6 – 3 – 1 rule, make mortgage loans at 6%, pay 1% on deposits and be on the golf course by 3). These institutions were mainstays of local political machines funneling cash and loans to politicians and their favorites, while enforcing explicitly racist and sexist lending criteria. Oh, and in the end the government had to come up with hundreds of billions of dollars in bailouts.

“During this period, major financial crises were conspicuously absent”

Let’s see, the value of the dollar fell by a factor of 50 in terms of gold, and came perilously close to becoming worthless entirely. Neither stocks nor bonds kept up with inflation over periods longer than ten years and American industry went from leading the world to being completely uncompetitive. Pollution soared unchecked and innovation was forced to get funding outside the financial system. The banking system nearly collapsed twice.

I’m not saying things are perfect now, or were completely terrible from 1945 to 1980. There were good and bad things from that era, and good and bad things today. But this whitewashing of history is absurd.

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By: ObamaDonor http://blogs.reuters.com/felix-salmon/2010/11/22/why-wall-street-wont-get-shrunk/comment-page-1/#comment-21238 Tue, 23 Nov 2010 15:10:02 +0000 http://blogs.reuters.com/felix-salmon/?p=6262#comment-21238 <>

Wiping out the savings of the American middle class by restricting their practical investment options to savings accounts legally prohibited from paying more than 2% when inflation was running in double digits.

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While encouraging them to recycle petrodollars, make crazy loans to unstable and dictatorial foreign governments and fund shaky development projects run by the people on their boards of directors.

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Which made every bank a one-branch local monopoly that could ignore customer satisfaction (business hours 10 to 3 on weekdays only, and take every holiday ever conceived) and make huge profits without work (like the famous 6 – 3 – 1 rule, make mortgage loans at 6%, pay 1% on deposits and be on the golf course by 3). These institutions were mainstays of local political machines funneling cash and loans to politicians and their favorites, while enforcing explicitly racist and sexist lending criteria. Oh, and in the end the government had to come up with hundreds of billions of dollars in bailouts.

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Let’s see, the value of the dollar fell by a factor of 50 in terms of gold, and came perilously close to becoming worthless entirely. Neither stocks nor bonds kept up with inflation over periods longer than ten years and American industry went from leading the world to being completely uncompetitive. Pollution soared unchecked and innovation was forced to get funding outside the financial system. The banking system nearly collapsed twice.

I’m not saying things are perfect now, or were completely terrible from 1945 to 1980. There were good and bad things from that era, and good and bad things today. But this whitewashing of history is absurd.

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