Comments on: The lessons of “Margin Call” http://blogs.reuters.com/felix-salmon/2011/11/23/the-lessons-of-margin-call/ 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: stat_arb http://blogs.reuters.com/felix-salmon/2011/11/23/the-lessons-of-margin-call/comment-page-1/#comment-48083 Sun, 15 Sep 2013 04:27:33 +0000 http://blogs.reuters.com/felix-salmon/?p=11239#comment-48083 But the bigger idea, I guess, is that the “normal people” helped by Wall Street are the 1%

That’s not how I interpreted it. I thought that was a reference to the relative strength of the US dollar (trade imbalance / cheap imports) and especially to mortgage lenders and credit card lenders, student loans and every other kind of credit product, to chase yield as made manifest in the Working American Consumer.

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By: ibilln http://blogs.reuters.com/felix-salmon/2011/11/23/the-lessons-of-margin-call/comment-page-1/#comment-33470 Mon, 28 Nov 2011 16:10:21 +0000 http://blogs.reuters.com/felix-salmon/?p=11239#comment-33470 Ah! Feel much better. Wall Street eats the bad actors alive! Self-regulation works!

All the CDO’s are in fact not worthless. My house is back up to a Zillion $! The market is back to 1500!

Sheesh. I agree with CarlWeetabix.

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By: CarlWeetabix http://blogs.reuters.com/felix-salmon/2011/11/23/the-lessons-of-margin-call/comment-page-1/#comment-33469 Mon, 28 Nov 2011 15:48:10 +0000 http://blogs.reuters.com/felix-salmon/?p=11239#comment-33469 I’m not sure I can agree with this:

“In the real world, by contrast, Wall Street eats alive any bank which shows the slightest sign of weakness or potential insolvency.”

If so, why are B of A and Goldman still alive?

Otherwise, no arguments and well put.

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By: NormanB http://blogs.reuters.com/felix-salmon/2011/11/23/the-lessons-of-margin-call/comment-page-1/#comment-33415 Fri, 25 Nov 2011 22:09:17 +0000 http://blogs.reuters.com/felix-salmon/?p=11239#comment-33415 I’ve been in the investment business for 45 years. Wall Street has always been in the business of screwing everyone it can, be it the 1% folks or the 99% folks and I’m not being bitter. It does it mostly by obfuscating the fees it makes plus make you believe in a future that it itself does not believe in (read: IPOs, etc). Remember, Wall Street is in the business of being between buyer and seller and picking up as much as it can in the middle of that transaction; as much as it can! It will do this forever.

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By: GeorgeBitt http://blogs.reuters.com/felix-salmon/2011/11/23/the-lessons-of-margin-call/comment-page-1/#comment-33413 Fri, 25 Nov 2011 18:01:44 +0000 http://blogs.reuters.com/felix-salmon/?p=11239#comment-33413 Felix misinterprets Will Emerson’s speech. It was spot-on for the situation in 2007-08: Wall Street was the willing helpmate to the broad middle class and even aspirants who used bubble-enabled home equity loans and refinancing for in-ground jacuzzis and cherrywood kitchen remodels.

The sentence that follows Emerson’s speech is positioned as a tie-in, when in fact it takes us to new territory. “But the bigger idea, I guess, is that the “normal people” helped by Wall Street are the 1%.” The movie was about hard choices and callous institutions, not about bailout nation and heads-I-win-tails-you-lose banking, a good theme to be sure, but another movie.

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By: Curmudgeonly http://blogs.reuters.com/felix-salmon/2011/11/23/the-lessons-of-margin-call/comment-page-1/#comment-33400 Thu, 24 Nov 2011 05:46:34 +0000 http://blogs.reuters.com/felix-salmon/?p=11239#comment-33400 Paul Bettany did good – when I heard the speech, I was thinking more along the lines of the US dollar’s exorbitant privilege. For a brief moment, because we had nukes and carriers and a decent open financial system, we became the reserve currency and lived far better than we otherwise would have.

Overall, didn’t love the movie … the crisis was caused by recklessness (leverage), moral hazard (heads-we-win, tails-you-lose, essentially looting), stupidity (normal bad judgment plus the idiots who designed a financial system lacking a robust architecture and a minimum of resiliency).

If you don’t take a stand on the people who made the mess, blame fickle winds of fate, the risk fairy, and normal people just doing their jobs, then wittingly or not, this film is a tool of the people who manufactured the crisis, and now try to blame everyone but themselves.

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By: KenG_CA http://blogs.reuters.com/felix-salmon/2011/11/23/the-lessons-of-margin-call/comment-page-1/#comment-33397 Thu, 24 Nov 2011 03:46:28 +0000 http://blogs.reuters.com/felix-salmon/?p=11239#comment-33397 EpicureanDeal, let’s talked private equity, specifically leveraged buyout folks. So they borrow 90% of the cost of a company, often one that is already profitable, and then once they own the company, they have the company borrow money to pay off their loan, with the expectation that the profits will service the loan. But let’s say the profits decline, for whatever reason, maybe not even the new owner’s fault, and the profits are not enough to service the loan, and the the company goes bankrupt. People lose their jobs, and people who unknowingly lent the buyers money lose their money also. The leveraged buyers walk away, not with a profit, but still walk away mostly whole (they still have a job and nice homes and all the trappings they had before their deal failed. Everyone else, they lose.

I’m not bitter or ignorant, or self-righteous, in fact, I’m pretty fortunate and I recognize that every day. But don’t preach to me about how those LBO folks are just doin’ work. A parasite is an organism that extracts resources from a host, while providing nothing in return. These people are parasites, as they add no value to society, and ultimately cause a lot of damage in many cases, while they extract as much wealth as they can.

Selling drugs or weapons, protecting your market by eliminating competitors, and killing informants who threaten your income is still work. it requires effort, knowledge, connections, infrastructure, and often capital. Is that where you’re setting the bar?

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By: EpicureanDeal http://blogs.reuters.com/felix-salmon/2011/11/23/the-lessons-of-margin-call/comment-page-1/#comment-33396 Thu, 24 Nov 2011 03:10:08 +0000 http://blogs.reuters.com/felix-salmon/?p=11239#comment-33396 Moving money from one hand to another is work. It is a service, and it requires effort, knowledge, connections, infrastructure, and often capital. If users of capital and providers of capital could and wanted to deal directly with each other efficiently, they would (and often do). In other cases, they use middlemen, for whose effort they pay a percentage of the trade. There is no shortage of financial middlemen willing and able to perform this service, so whatever pricing obtains for these services is not a monopolistic or oligopolistic rent extracted over the objections of the investors and users of capital.

There are many parts of the economy outside of finance where middlemen provide their valuable services without being labeled parasites by the bitter, ignorant, and self-righteous. Perhaps one day Wall Street will rejoin that select company. I do not expect that any time soon.

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By: Dlawbailey http://blogs.reuters.com/felix-salmon/2011/11/23/the-lessons-of-margin-call/comment-page-1/#comment-33392 Wed, 23 Nov 2011 23:59:46 +0000 http://blogs.reuters.com/felix-salmon/?p=11239#comment-33392 Felix is absolutely wrong when he says that Wall Street is not about moving money from the 99% to the 1%. The entire business of Wall Street is generating income for rich people in “return” for those rich people supplying liquidity to the capital markets. The entire premise of capital markets is that they reward owners and creditors.

In the process, Wall Street dips its hand as deeply into that stream of money as it possibly can and follows an almost inevitable evolution towards self-dealing, corruption and cynicism. The population of what we call “Wall Street” (by which we really mean “the financial community”) is too small and their interests are too closely aligned. Likewise, the 1% is too small and their interests are too closely aligned.

In evolutionary terms, the 1% are a species that was able to carve out a nice niche for itself, but whose very existence is de-stabilizing the financial environment upon which they depend.

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By: KenG_CA http://blogs.reuters.com/felix-salmon/2011/11/23/the-lessons-of-margin-call/comment-page-1/#comment-33390 Wed, 23 Nov 2011 21:24:08 +0000 http://blogs.reuters.com/felix-salmon/?p=11239#comment-33390 I’m in the 1%, and Wall St has extracted a good share of my extremely diversified wealth, in addition to sucking the life out of the 99%’s economy. they are parasites, they add no value – if they did add value, other businesses in the U.S. would be flourishing, but they’re not. They mainly move papers around and contribute nothing to the advancement of society, while extracting their usual rents.

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