Other posters have pointed out that it takes about 4 household members addicted to video. Perhaps a family trip to Internet Addictions Anonymous is in their next vacation plan.
It's ironic to read about an "industry that will do what's profitable, not what's good policy" on a computer on the Internet. Seen an OS exploit list lately, or the release notes of every single new version of every single piece of software?
I'm pretty sure they don't care at all how you feel "back stabbed".
They spun off the code, you're more than welcome to fix your feelings of loss by taking it over.
Mods: Insightful would have been, "Hey, I saw this coming and I've been putting in 20 hours a week working on the XBox port. I feel back stabbed because they didn't tell me they were about to throw the code out."
Back-stabbing usually requires a personal relationship with someone.
Some of us do notice if cost of living is rising faster than our wages. But you have to pay attention.
If you're saying the center of the bell curve typically doesn't -- that's a damning comment on the state of personal finance education in general, isn't it?
Example: My company hasn't done "merit" increases in 3 years. Saying perhaps that inflation has been between 2-3% for those years means without even factoring in anything else (higher taxes,
in my case and anyone else who is about to lose the tax cuts that will expire in 2011...), I'm behind inflation by 6%-9%. I know this.
When I talk to co-workers who are "excited" that the merit increases are supposedly coming back to our company in a few months, and point out this fact -- they look at me like they'd never even thought of it before.
MOST PEOPLE DON'T PAY ANY DAMN ATTENTION. And they certainly wouldn't dare point out such a backlog to their boss during reviews. The old adage applies: "Ask nicely. If you don't ask, they can't say yes."
People can choose to remain ignorant of how the system works, and be run over it regularly, or they can learn. I'm no expert, but I am smart enough to keep expenses a reasonable margin below income, and have a plan for a job loss in the household.
Sadly, you may have a point -- I didn't used to pay attention. I started paying attention when the loss of a job (it took me a year to find another), and another three years to regain my original salary level, got my attention.
Have that happen once in your life, you'll learn how to plan properly...
I think we actually agree more than you think, but I don't see the false-value "games" some marketeers play as anything other than a side-show. Value still trumps it long-term.
Example: Apple passes up Microsoft in paper money this week. Apple's stock price is over-bought and inflated. But it triggered folks to re-evaluate... "Hmm, what has Microsoft really done since the X-Box that made them significant growth revenue?"
And the financial pundits start talking about, "Ballmer better watch out... the Board will replace him."
Any computer geek knows MicroSoft hasn't really added (much) value or growth to the company in quite a while. And what little they have added was via acquisitions, like it's always been with them. Innovation is weak sauce there.
Windows 7 is just "Vista Repaired 1.0".
But what makes this BS "market" data interesting, is that the fake paper-money bypass of MSFT by AAPL triggered people to think about it, out-loud. It got their ATTENTION.
So some of this jiggering and wiggling of silly paper investments provides some visibility by way of being "ooh, shiny" to get people's attention, IMHO.
As far as people getting poorer: I think people are getting poorer because they're producing less that's of any value!
Would you disagree? Our move to a "service economy" has more to do with that than anything. India and others figured out awfully quick how to beat us at that game: Cheap labor.
If you want to win, you have to think. And invent. And do things no one else is doing. And make things no one else is making. And take risks getting there.
We spend more time thinking up ways to make an easy buck here in America, and perhaps you're seeing that in the bankers. I agree. But their customers are demanding exactly that... quick get rich schemes.
We don't like doing the hard things. Who would DARE tell a kid they LOST the soccer game? Or allow a test to match the knowledge needs of the current world, vs being written so the majority of students pass so the parents think they got an education? Or go against their Union and say, "You know... we'd like to see General Motors not go under, but if we stick to getting all that was promised, the only way out for our own employer is free-fall to death, or a government bail-out no one's ever heard of before.
There's an undercurrent of people being disingenuous when the same people who think it's fine
The point is: You can wail and moan against "markets" all day, there will just be another scam and another "market" pop up to take its place if you regulate or even kill a particular one.
The vast majority of all this weeping and gnashing of teeth is people lamenting that other people are greedy. Good luck changing that.
One comment on your assumptions: The "Crowning Moment of Failure" was the people who defaulted on the loans, all at once.
An additional moment of failure (or at least cowardice) was not tearing down every bank that should have died. They took risk, and had no consequences. AIG should also not exist at this point.
We all looked over the precipice of a real hard-assed market correction of our silliness in loaning out billions and billions to people who couldn't possibly pay it back, and backed it with fake banks (Fannie and Freddie, who should also be gone, but provide politicians with a lot of money every election year to leave them alone... look it up...), and then printed a Trillion dollars to "fix it" when the chickens came home to roost.
The American press talks about us being "Addicted to foreign oil" but doesn't talk at all about our addiction to loans.
Most of your examples are just sour grapes against people trading things back and forth that have no value. The farmer's market doesn't take American Express, typically... or maybe these days they do? I haven't been to one in a while. But if there's a credit card machine at your local farmer's stand at the Farmer's Market... you can point your finger at it and see exactly where the problems really are...
Who would even care about these "markets" if we all weren't playing with the House's money? If you had to save up $300K in cash before you could purchase a house, most people wouldn't even have "investments". They'd have "savings" and expect a lot less return out of them...
WOPR playing the game against himself is what you end up with, eventually, with micro-second trades.
You're right, they don't add any value, but they don't really hurt it either. Remember, they have to spend big $ to buy those machines and that level of access... so they're screwing themselves, eventually... if they haven't accounted for all the costs.
If they're making money today over the *complete* operating costs, including staff to maintain them, of the fast-trade servers and gear, I'd be surprised. But managers don't think that way... staff is just "overhead"... and the servers are cheaper than the money they're making...
It's just water sloshing in the bucket. The shorts get called out regularly, and the longs get stopped out regularly.
Someone not willing to play that fast can watch carefully and use their screw-up points as entry and exit points for value purchases.
It really isn't any big deal. The intra-day traders don't "win" on every bet they make. They take money out, but they also get caught with their pants down and put money back in when they do.
Everyone just wants a scapegoat right now. Bankers and banking and even simple PERSONAL finance were ignored for so many years by folks (since about the time of the recovery in the 80's) who were running their entire lives on loans, that when the cows came home, they want to rant and wail against the system.
It won't change the system. I'm sure people ranted and wailed about those with the first ticker-tape machines, too... said their trades every WEEK instead of over a year, were "ruining the system!"...
Technically... purely technically... the closer these guys and their automated trading systems get to instantaneous, the sooner the systems will be hopelessly DEADLOCKED fighting against each other... and they'll stop doing it. Let 'em go as fast as they want. It'll end sooner.:-)
You can read the books of those folks who were powerful investors in the past and gave it up to do other things.
(Hint: READ books by former hedge fund managers and mutual fund managers. They were -- and are -- "powerful investors", and weren't necessarily rich people themselves, which is always the assumption when someone sees "powerful investor".)
Stock price to earnings ratio is the most commonly watched by savvy investors.
If you're betting on a high flying tech company coming out with better and better products, and getting much much bigger over time, paying 30x projected forward earnings for their stock, might be sane.
Contrarily, a wise investor might say that's already "overbought" and sit out on the sidelines waiting for the inevitable fall.
Every "sector" has a typical range, and pros and savvy amateur traders know them.
Example: British Petroleum's stock was taking a beating over the Gulf news. Long-term investors might see that as an excellent opportunity to buy their stock at a discount for a multi-year investment, because over time, they'll pop back up to their typical P/E range, eventually.
Of course, the underlying risk is that "all stocks can go to zero". If the powers that be decided tomorrow to fine BP so heavily that they can't run their business on the remaining capital... your long-term bet just became a personal tragedy.
Thus, there are techniques where you can force-sell your shares if the price falls below a certain point (stop-loss), but one wacky news day that drives the stock price down only temporarily can "stop you out" and force your shares to be sold.
So you set your stops as far down as you can bear to lose money, or build them in spreads on the way down, so you lose chunks of your shares at a time on a roller-coaster day. Or maybe you build your spreads based off of an index of "volatility" like the VIX.
All sorts of techniques out there, more than most people have the patience or time to learn.
But in the end... the stock tends to stay within a range around the average P/E ratio for that particular type of company and projected earnings level. The law of averages comes into play -- there's always a bell curve of people who won't pay too much for the stock and won't get lucky enough to pay too little.
Over time, the vast majority of companies trade within a fairly narrow range of a multiple of their projected earnings unless their earnings significantly change.
All this fast trading and other silliness, is just waves on top of the ocean.
Smart people try to trade at a trough and sell at a peak, but you can't accurately predict the waves any more than you can say there aren't rogue ones 10x the normal wave height in the ocean from time to time.
You just buy at a price that works for you, and sell when you either are satisfied with the results, or you chicken out... if the company is still earning what they earned relative to when you started.
Who cares what a stock does in a day? Unless the screw-making company just signed a multi-billion dollar deal today, in which case, the movement makes more sense.
Everyone knows how long it takes to make a big deal happen. Only over that same time-frequency are the numbers averaged out and determined to be worth buying or not.
Then you wait for one of those 10% daily down-turns to start, and scale in your purchases on the way down... since you know where the average company value should be in 6 months, a year, whatever you pre-determine your trading frequency is.
Volatility is just as good for buyers as it is for sellers. Ignoring the ups and downs is easy, which is why no real investor cares if someone is doing micro-second fractional trading off the top.
Many people go all the way through life never realizing that they really don't have to worry all that much about what the next guy is doing with his/her money. They just have to pay attention to their own. Good investments over the long-haul, either are worth it to you, or they're not. What the day-traders, and micro-second traders do over the next ten years that you're sitting on your good investments, doesn't really matter to you at all.
All you care about is that when you want to buy there are tons of sellers (low price) and when you sell, there are tons of buyers (higher pirice).
What happens in the middle is just noise on the oscilloscope.
There's always someone with more information than you out there. I believe we should halt all trading any time I'm away from an Internet connection because you have an unfair advantage sitting at your computer.
Get over it. Life isn't fair.
And many of the "fairness" laws have had far-reaching effects that no one foresaw, such as... even LESS information about the true financial state of most companies comes out than did in the past, even if only a few insiders had access to it. People talk, news got around. The term "whisper" price is a left-over from those days.
Today, all you'd get out of a CEO is their expected earnings, and their actual earnings after release. "Fair" practices mean less information for us all, in the long-run.
(And I'm not kidding myself, here.. There are still, and always is insider trading going on that doesn't get caught. All the "fairness" rules do it give them more motivation to clam up, to avoid jail time.)
It used to be that a powerful investor could get a bigger "story" out of a CEO than today. One could watch the larger investors and know they "knew something". Today, it's so "fair" you can't tell much of anything from a wealthy trader's trades.
There are plenty of investments that have time requirements. Bonds, T-Bills... if that's what you're looking for, fine.
The bankers are under scrutiny right now because they were handed piles of your cash via Fannie and Freddie and told to make home loans. They did. To tons and tons of people who defaulted. That caused a train-wreck in the capital markets that we're still recovering from.
But super-fast computerized fast trading isn't harming anyone, it's just driving down the cost of trading for everyone. If you want to play fast, you play fast, if you want to play slow, you play slow. There are advantages and disadvantages to both tactics.
For each of these rapid computerized trading systems out there, there's an equal number of Warren Buffet style investors who can invest and hold for years at a time and move the markets with their words. Unlike Warren, most keep a low profile and enjoy their privacy.
You mean we should stop allowing people to trade goods and services on imaginary money, like oh... let's say, mortgages?
Please recall that the current lending rate vs deposits has been 9:1 or higher for probably all of your life.
If imaginary money isn't allowable anymore, then so be it. Lenders can only lend as much money as they have in deposits. There ya go, 9/10's of the money gone instantly overnight should make everything come up roses.
You say you don't mind if there's 1-to-1 contracts, but those 1-to-1 contracts are based on money that doesn't exist for 9 out of every 10 dollars. That's how the system works.
That's not going to change any time soon. If I deposit $1 in my bank, they are allowed to go loan out $10. That basic system is so rigged from the start, you're tilting at windmills whining about derivatives. Let 'em play.
But also give 'em consequences. No one's "too big to fail", ever, or the system WILL be gamed. Bailing out AIG was the real mistake. If failure doesn't hurt, the whole system gets gamed.
You could be working hard to best them at their own game, or you could be here posting a bitch about them on/.
Oh, I see you've made your choice. You'll bitch until someone else takes what they've earned away from them for you. So much easier. I get it.
Have you created anything today worth what they have? They provide something the masses want: Loans for things they can't afford in their lifetimes.
When you sign a 30 year mortgage you're betting that you'll make enough money to survive, pay that debt, and maybe have a little left over to do something else with, for almost half of your natural adult human life.
The bankers provide the ability for you to do so. It's a lucrative and HIGHLY competitive business. So competitive that they accepted that bet from far too many people who couldn't make good on the terms.
And they did it on government-backed loans from Fannie and Freddie. Fannie and Freddie are banks created and paid for with tax money, and people voted for people who'd make their loan offers better and better to more and more people who wouldn't have qualified to even have a loan 20 years prior, with no regard for risk.
We voted and got our wish. It's easy to stop voting for people who would grow such ponzi schemes. We also vote for the people who hire the regulators who watch over them too.
For now we're living with our own consequences. Care to vote differently now that we've seen the results? I do.
And those people displaced will have to team up with the next wave of innovators and investors, and build something new...
Of course, if everyone sits here for a while wringing our hands and worrying about the "system" being broken, they might be waiting for those investors for a while.
Slapping the pool of money to make some waves to garner movement, really is the value of a market maker. There's a reason the root of the word "business" is "busy". People choose to buy and sell because they perceive a win or they're covering a loss. Without some "wave action" the system loses motivation.
Bummer you didn't have the foresight to carry your own weapon for self-defense, eh?
Most often in economics, this is your brain... you know, like not signing on the dotted line for a no income, no assets loan for a $300,000 house before realizing that it's a path to lifetime slavery at your income level?
The vast majority of the public wants banks to lend them money that they don't have so they can do things today they otherwise couldn't afford. The "too big to fail" is bupkis. It would have created temporary chaos, but other banks would have rushed in to fill the void, created by the desire of the masses. To buy stuff they don't have enough money to buy.
Slashdot Mirror
That actually explains it nicely. HQ is usually the first network built, and the last to get upgraded later on. Think about it.
Other posters have pointed out that it takes about 4 household members addicted to video. Perhaps a family trip to Internet Addictions Anonymous is in their next vacation plan.
Who gets SLA's to the home? SLA = guarantee, and most (if not all) residential services explicitly state there is no SLA, whatsoever.
Gigabits or gigabytes?
It's ironic to read about an "industry that will do what's profitable, not what's good policy" on a computer on the Internet. Seen an OS exploit list lately, or the release notes of every single new version of every single piece of software?
Mods? Insightful? Puh-leez.
I'm pretty sure they don't care at all how you feel "back stabbed".
They spun off the code, you're more than welcome to fix your feelings of loss by taking it over.
Mods: Insightful would have been, "Hey, I saw this coming and I've been putting in 20 hours a week working on the XBox port. I feel back stabbed because they didn't tell me they were about to throw the code out."
Back-stabbing usually requires a personal relationship with someone.
Some of us do notice if cost of living is rising faster than our wages. But you have to pay attention.
If you're saying the center of the bell curve typically doesn't -- that's a damning comment on the state of personal finance education in general, isn't it?
Example: My company hasn't done "merit" increases in 3 years. Saying perhaps that inflation has been between 2-3% for those years means without even factoring in anything else (higher taxes,
in my case and anyone else who is about to lose the tax cuts that will expire in 2011...), I'm behind inflation by 6%-9%. I know this.
When I talk to co-workers who are "excited" that the merit increases are supposedly coming back to our company in a few months, and point out this fact -- they look at me like they'd never even thought of it before.
MOST PEOPLE DON'T PAY ANY DAMN ATTENTION. And they certainly wouldn't dare point out such a backlog to their boss during reviews. The old adage applies: "Ask nicely. If you don't ask, they can't say yes."
People can choose to remain ignorant of how the system works, and be run over it regularly, or they can learn. I'm no expert, but I am smart enough to keep expenses a reasonable margin below income, and have a plan for a job loss in the household.
Sadly, you may have a point -- I didn't used to pay attention. I started paying attention when the loss of a job (it took me a year to find another), and another three years to regain my original salary level, got my attention.
Have that happen once in your life, you'll learn how to plan properly...
I think we actually agree more than you think, but I don't see the false-value "games" some marketeers play as anything other than a side-show. Value still trumps it long-term.
Example: Apple passes up Microsoft in paper money this week. Apple's stock price is over-bought and inflated. But it triggered folks to re-evaluate... "Hmm, what has Microsoft really done since the X-Box that made them significant growth revenue?"
And the financial pundits start talking about, "Ballmer better watch out... the Board will replace him."
Any computer geek knows MicroSoft hasn't really added (much) value or growth to the company in quite a while. And what little they have added was via acquisitions, like it's always been with them. Innovation is weak sauce there.
Windows 7 is just "Vista Repaired 1.0".
But what makes this BS "market" data interesting, is that the fake paper-money bypass of MSFT by AAPL triggered people to think about it, out-loud. It got their ATTENTION.
So some of this jiggering and wiggling of silly paper investments provides some visibility by way of being "ooh, shiny" to get people's attention, IMHO.
As far as people getting poorer: I think people are getting poorer because they're producing less that's of any value!
Would you disagree? Our move to a "service economy" has more to do with that than anything. India and others figured out awfully quick how to beat us at that game: Cheap labor.
If you want to win, you have to think. And invent. And do things no one else is doing. And make things no one else is making. And take risks getting there.
We spend more time thinking up ways to make an easy buck here in America, and perhaps you're seeing that in the bankers. I agree. But their customers are demanding exactly that... quick get rich schemes.
We don't like doing the hard things. Who would DARE tell a kid they LOST the soccer game? Or allow a test to match the knowledge needs of the current world, vs being written so the majority of students pass so the parents think they got an education? Or go against their Union and say, "You know... we'd like to see General Motors not go under, but if we stick to getting all that was promised, the only way out for our own employer is free-fall to death, or a government bail-out no one's ever heard of before.
There's an undercurrent of people being disingenuous when the same people who think it's fine
So you're saying you can't figure out what you want? :-)
The point is: You can wail and moan against "markets" all day, there will just be another scam and another "market" pop up to take its place if you regulate or even kill a particular one.
The vast majority of all this weeping and gnashing of teeth is people lamenting that other people are greedy. Good luck changing that.
One comment on your assumptions: The "Crowning Moment of Failure" was the people who defaulted on the loans, all at once.
An additional moment of failure (or at least cowardice) was not tearing down every bank that should have died. They took risk, and had no consequences. AIG should also not exist at this point.
We all looked over the precipice of a real hard-assed market correction of our silliness in loaning out billions and billions to people who couldn't possibly pay it back, and backed it with fake banks (Fannie and Freddie, who should also be gone, but provide politicians with a lot of money every election year to leave them alone... look it up...), and then printed a Trillion dollars to "fix it" when the chickens came home to roost.
The American press talks about us being "Addicted to foreign oil" but doesn't talk at all about our addiction to loans.
Most of your examples are just sour grapes against people trading things back and forth that have no value. The farmer's market doesn't take American Express, typically... or maybe these days they do? I haven't been to one in a while. But if there's a credit card machine at your local farmer's stand at the Farmer's Market... you can point your finger at it and see exactly where the problems really are...
Who would even care about these "markets" if we all weren't playing with the House's money? If you had to save up $300K in cash before you could purchase a house, most people wouldn't even have "investments". They'd have "savings" and expect a lot less return out of them...
p.s. Seen the movie WarGames? (or read the book?)
WOPR playing the game against himself is what you end up with, eventually, with micro-second trades.
You're right, they don't add any value, but they don't really hurt it either. Remember, they have to spend big $ to buy those machines and that level of access... so they're screwing themselves, eventually... if they haven't accounted for all the costs.
If they're making money today over the *complete* operating costs, including staff to maintain them, of the fast-trade servers and gear, I'd be surprised. But managers don't think that way... staff is just "overhead"... and the servers are cheaper than the money they're making...
It's just water sloshing in the bucket. The shorts get called out regularly, and the longs get stopped out regularly.
Someone not willing to play that fast can watch carefully and use their screw-up points as entry and exit points for value purchases.
It really isn't any big deal. The intra-day traders don't "win" on every bet they make. They take money out, but they also get caught with their pants down and put money back in when they do.
Everyone just wants a scapegoat right now. Bankers and banking and even simple PERSONAL finance were ignored for so many years by folks (since about the time of the recovery in the 80's) who were running their entire lives on loans, that when the cows came home, they want to rant and wail against the system.
It won't change the system. I'm sure people ranted and wailed about those with the first ticker-tape machines, too... said their trades every WEEK instead of over a year, were "ruining the system!"...
Technically... purely technically... the closer these guys and their automated trading systems get to instantaneous, the sooner the systems will be hopelessly DEADLOCKED fighting against each other... and they'll stop doing it. Let 'em go as fast as they want. It'll end sooner. :-)
All systems always have loopholes.
You can read the books of those folks who were powerful investors in the past and gave it up to do other things.
(Hint: READ books by former hedge fund managers and mutual fund managers. They were -- and are -- "powerful investors", and weren't necessarily rich people themselves, which is always the assumption when someone sees "powerful investor".)
Stock price to earnings ratio is the most commonly watched by savvy investors.
If you're betting on a high flying tech company coming out with better and better products, and getting much much bigger over time, paying 30x projected forward earnings for their stock, might be sane.
Contrarily, a wise investor might say that's already "overbought" and sit out on the sidelines waiting for the inevitable fall.
Every "sector" has a typical range, and pros and savvy amateur traders know them.
Example: British Petroleum's stock was taking a beating over the Gulf news. Long-term investors might see that as an excellent opportunity to buy their stock at a discount for a multi-year investment, because over time, they'll pop back up to their typical P/E range, eventually.
Of course, the underlying risk is that "all stocks can go to zero". If the powers that be decided tomorrow to fine BP so heavily that they can't run their business on the remaining capital... your long-term bet just became a personal tragedy.
Thus, there are techniques where you can force-sell your shares if the price falls below a certain point (stop-loss), but one wacky news day that drives the stock price down only temporarily can "stop you out" and force your shares to be sold.
So you set your stops as far down as you can bear to lose money, or build them in spreads on the way down, so you lose chunks of your shares at a time on a roller-coaster day. Or maybe you build your spreads based off of an index of "volatility" like the VIX.
All sorts of techniques out there, more than most people have the patience or time to learn.
But in the end... the stock tends to stay within a range around the average P/E ratio for that particular type of company and projected earnings level. The law of averages comes into play -- there's always a bell curve of people who won't pay too much for the stock and won't get lucky enough to pay too little.
Over time, the vast majority of companies trade within a fairly narrow range of a multiple of their projected earnings unless their earnings significantly change.
All this fast trading and other silliness, is just waves on top of the ocean.
Smart people try to trade at a trough and sell at a peak, but you can't accurately predict the waves any more than you can say there aren't rogue ones 10x the normal wave height in the ocean from time to time.
You just buy at a price that works for you, and sell when you either are satisfied with the results, or you chicken out... if the company is still earning what they earned relative to when you started.
Who cares what a stock does in a day? Unless the screw-making company just signed a multi-billion dollar deal today, in which case, the movement makes more sense.
Everyone knows how long it takes to make a big deal happen. Only over that same time-frequency are the numbers averaged out and determined to be worth buying or not.
Then you wait for one of those 10% daily down-turns to start, and scale in your purchases on the way down... since you know where the average company value should be in 6 months, a year, whatever you pre-determine your trading frequency is.
Volatility is just as good for buyers as it is for sellers. Ignoring the ups and downs is easy, which is why no real investor cares if someone is doing micro-second fractional trading off the top.
Many people go all the way through life never realizing that they really don't have to worry all that much about what the next guy is doing with his/her money. They just have to pay attention to their own. Good investments over the long-haul, either are worth it to you, or they're not. What the day-traders, and micro-second traders do over the next ten years that you're sitting on your good investments, doesn't really matter to you at all.
All you care about is that when you want to buy there are tons of sellers (low price) and when you sell, there are tons of buyers (higher pirice).
What happens in the middle is just noise on the oscilloscope.
Ah yes, processes over leadership. Epidemic levels of that here in our country, I'd say.
Hiring MBA's to run the place, only gets you so far.
There's always someone with more information than you out there. I believe we should halt all trading any time I'm away from an Internet connection because you have an unfair advantage sitting at your computer.
Get over it. Life isn't fair.
And many of the "fairness" laws have had far-reaching effects that no one foresaw, such as... even LESS information about the true financial state of most companies comes out than did in the past, even if only a few insiders had access to it. People talk, news got around. The term "whisper" price is a left-over from those days.
Today, all you'd get out of a CEO is their expected earnings, and their actual earnings after release. "Fair" practices mean less information for us all, in the long-run.
(And I'm not kidding myself, here.. There are still, and always is insider trading going on that doesn't get caught. All the "fairness" rules do it give them more motivation to clam up, to avoid jail time.)
It used to be that a powerful investor could get a bigger "story" out of a CEO than today. One could watch the larger investors and know they "knew something". Today, it's so "fair" you can't tell much of anything from a wealthy trader's trades.
There are plenty of investments that have time requirements. Bonds, T-Bills... if that's what you're looking for, fine.
The bankers are under scrutiny right now because they were handed piles of your cash via Fannie and Freddie and told to make home loans. They did. To tons and tons of people who defaulted. That caused a train-wreck in the capital markets that we're still recovering from.
But super-fast computerized fast trading isn't harming anyone, it's just driving down the cost of trading for everyone. If you want to play fast, you play fast, if you want to play slow, you play slow. There are advantages and disadvantages to both tactics.
For each of these rapid computerized trading systems out there, there's an equal number of Warren Buffet style investors who can invest and hold for years at a time and move the markets with their words. Unlike Warren, most keep a low profile and enjoy their privacy.
You mean we should stop allowing people to trade goods and services on imaginary money, like oh... let's say, mortgages?
Please recall that the current lending rate vs deposits has been 9:1 or higher for probably all of your life.
If imaginary money isn't allowable anymore, then so be it. Lenders can only lend as much money as they have in deposits. There ya go, 9/10's of the money gone instantly overnight should make everything come up roses.
You say you don't mind if there's 1-to-1 contracts, but those 1-to-1 contracts are based on money that doesn't exist for 9 out of every 10 dollars. That's how the system works.
That's not going to change any time soon. If I deposit $1 in my bank, they are allowed to go loan out $10. That basic system is so rigged from the start, you're tilting at windmills whining about derivatives. Let 'em play.
But also give 'em consequences. No one's "too big to fail", ever, or the system WILL be gamed. Bailing out AIG was the real mistake. If failure doesn't hurt, the whole system gets gamed.
You could be working hard to best them at their own game, or you could be here posting a bitch about them on /.
Oh, I see you've made your choice. You'll bitch until someone else takes what they've earned away from them for you. So much easier. I get it.
Have you created anything today worth what they have? They provide something the masses want: Loans for things they can't afford in their lifetimes.
When you sign a 30 year mortgage you're betting that you'll make enough money to survive, pay that debt, and maybe have a little left over to do something else with, for almost half of your natural adult human life.
The bankers provide the ability for you to do so. It's a lucrative and HIGHLY competitive business. So competitive that they accepted that bet from far too many people who couldn't make good on the terms.
And they did it on government-backed loans from Fannie and Freddie. Fannie and Freddie are banks created and paid for with tax money, and people voted for people who'd make their loan offers better and better to more and more people who wouldn't have qualified to even have a loan 20 years prior, with no regard for risk.
We voted and got our wish. It's easy to stop voting for people who would grow such ponzi schemes. We also vote for the people who hire the regulators who watch over them too.
For now we're living with our own consequences. Care to vote differently now that we've seen the results? I do.
And those people displaced will have to team up with the next wave of innovators and investors, and build something new...
Of course, if everyone sits here for a while wringing our hands and worrying about the "system" being broken, they might be waiting for those investors for a while.
Smartest. Post. Ever. Bravo! You "get it".
Slapping the pool of money to make some waves to garner movement, really is the value of a market maker. There's a reason the root of the word "business" is "busy". People choose to buy and sell because they perceive a win or they're covering a loss. Without some "wave action" the system loses motivation.
Bummer you didn't have the foresight to carry your own weapon for self-defense, eh?
Most often in economics, this is your brain... you know, like not signing on the dotted line for a no income, no assets loan for a $300,000 house before realizing that it's a path to lifetime slavery at your income level?
The vast majority of the public wants banks to lend them money that they don't have so they can do things today they otherwise couldn't afford. The "too big to fail" is bupkis. It would have created temporary chaos, but other banks would have rushed in to fill the void, created by the desire of the masses. To buy stuff they don't have enough money to buy.