Galifrey

iTrader: (3)

Without borrowing there is no interest made to be paid to savers and to pay Pensions.

Borrowing IS an essential part of a debt based economy, without borrowing you cannot have the debt based enconomy we have. Banks or building societies used to lend their own money, now they securitise loans in huge funds and the whole fund becomes vulnerable. Those funds are owned by merchant banks, or merchant arms of the high street banks and the interest gained used to fun high interest schemes that they "promise to pay". In some cases the interest is used to fund the premium on futures for Guaranteed stock market plans, those futures have to be paid and if bad debt stops the interest flow, the banks have to fund those schemes out of your money or their capital.

You cannot simply try and re-apportion blame from the corporate entities to the individuals, they thought the debt was going to be manageable until job cuts hit.

Then finally, you have the ultimate example of debt, the amount the Govt borrowed to fund its schemes over the last 13 years, debt which we are funding through our taxes, massively unsustainable.

I don't blame the banks, I don't blame the individuals, I blame the economic system we have now where the shareholders of companies hold so many shares they can aquire or dump them at will forcing a massive movement in share prices to suit their own goals. We may not be going the same way as Greece yet, but we are very vulnerable.

The Govt buying shares in banks to prop them up is not a bad thing, they will recover in price and the govt will get its money back, ergo we will get our tax money back, that was a smokescreen to mask the real issue, and that is a debt based ecnonomy is unsustainable.

I am no longer concerned for myself, I no longer work for Barclays Bank (after 14 years) I now work in a service industry, the only real industry that is growing in the UK nowadays.

Maz

iTrader: (34)

Indeed Galifrey. The debt based economy is the ultimate pseudo economic deck of cards waiting to topple. Similarly hoarding your money in gold and the like is also pseudo economics in the national/global context. With nothing tangible to underpin a nation's wealth the deck of cards will at some point fall and fall spectacularly.

http://rodgermitchell.com/pseudoeconomics.html

JTaylor

It's a Ponzi scheme.

tony de wonderful

It's people buying and selling things like stocks or forex with each other.

For one trader to make money another has to lose money...hence it is a zero sum game.

GlesgaKiss

Still an important part of the market. Whether it's necessary or not by your standards and for your goals is irrelevant.

markjmd

iTrader: (11)

Please go back and re-read my post. I never once said that borrowing and lending per se aren't an acknowledged and legitimate part of a capitalist system, I said specifically that borrowing enormous sums that you know you can't afford, or that as the lender you know the borrower can't, has never been a part of how capitalism is supposed to function. The rest of your post is pure strawman and irrelevance, since it demonstrably fails to take into account that very important distinction.

I'll repeat, the crisis we're seeing now isn't in any way shape or form a failure of capitalism, it's a failure of people who purported to be following its rules to actually do so.

Daryl

You sound like a ****!

Trout

iTrader: (1)

Equity trading is not a zero sum game.

Trout

iTrader: (1)

F*ck me - now there is an insightful analysis of the complexities of the modern finance

BTW were you reading your own posts when you wrote that?

Dingdongler

Explain please

Luan Pra bang

clearly not hence the recent problems

This is so wrong its unbelieveable that anyone could be so far away from reality. Banks are clearly capitalist and they are choosing governments and government policy, in a complete absolution of responsability the banks were effectively regulating themselves. Given the complete arrogance of banking officials, traders and hedgefund managers and their stupid bonus systems being so short term in outlook, its not surprising that they cocked up. As a matter of interest do you know what percentage of traders beat the market ?

Exactly we have to force our governments to crack down on the banking system and not take any more of their bull****. If the public do not force the governments of the world to do somthing then the whole of Europe will continue to be run for the benefit of a load of scumbags.

davyboy

It seems to be the poor who moan about the bankers.....yet are the ones who lost the least.

Screw em, always looking for someone else to blame.

Luan Pra bang

You sure, I am not poor and I moan plenty about bankers. The poor around Europe were promised great things by the Euro and just got given inflation at much higher rates than wage increases and larger gaps between the haves and the have nots. I cannot understand why the poor are not out daily setting fire to the worlds financial districts.

Trout

iTrader: (1)

I can assure you that the industry is awash with regulation from many quarters - regulator, tax, consumer laws all impact banks and banking. However, the point which you have missed is that much of the regulation was to encourage banks to extend credit - in the US in the early '80s there were significant tax incentives for banks to get into mortgage backed securities and drive the US housing market.

Regulation is a fungible thing that Banks operate in at the whim of various regulators and political interests.


In what way is it so wrong. Banks (not traders that you seem to so easily use synonymously) are required to execute the fiscal policies of modern Western Governments. Almost all modern societies use fractional reserve banking that require banks to lend money to push capital into the economy. So banks are both capitalist and socialist, or neither - they have exist with this paradox.


As you said yourself (albeit I think for completely the wrong reasons) you cannot currently separate banking from government - without banks there would be no cash in the economy. To change the model you need to fundamentally change Goverment and the fiscal infrastructure. There lies the way of revolution

Trout

iTrader: (1)

Some trading systems are a zero sum game (Options marketplace is one) but straightforward equities trading is not.

I sell BP at 100p.

You buy BP at 100p.

Who made a profit and who made a loss?

Example 1

I had bought at 150p then I would be making a loss of 50p per share.
You sell a day later at 110p you make a gain of 10p per share.
My loss and your profit are entirely unrelated.

Example 2

I had bought at 50p and am taking a 50p per share profit
You bought to cover a short position taken at 150p taking a 50p per share profit.
We both make a profit.

etc, etc. both lose, both win, one wins, the other wins.

So as said earlier in a trade one person has to make a profit and one make a loss just does not pan out in equity trading.

Trout

iTrader: (1)

BTW in Options trades it is zero sum.


I sell a put contract at £1.10 per share.

You buy my contract.

I have made £1.10 per share - you have spent £1.10 per share.

I will always keep my money; you will have always spent that money and have no direct asset to trade it against.

The underlying assets the contract relates to have value and can bring profit or loss (unless it was a naked put - then it would relate to potential assets).

Lee247

Well, it's all way over my head. I am not remotely interested apart from I would love to know what they do to earn so much money in bonuses.
Oh and they all seem to be a bunch of boring ba$tard$

tony de wonderful

The Seller incurs an opportunity cost even if they make a paper profit, this opportunity is passed on to the Buyer. The opportunity is to sell at a higher price in the future.

Put it another way, if it is not a zero sum game then trading equity is a positive sum game, and we can all become infinitely rich by trading equities with each other an infinite number of times.

tony de wonderful

I could write a bit more here but I am busy, but if as you say Banks are just an extension of the state then there should be no reason why they deserve such high profits and bonuses.

Trout

iTrader: (1)

TDW that is the point though.

They are both capitalist and yet at the same time an extension of the fabric of the state.

In terms of bonuses - if the same bonuses were linked to capital preservation then we would all be dancing in the street.

It is not bonuses per se, it is the applicaton of them.

Trout

iTrader: (1)

I was over complexificating it.

For equities to be a zero sum game it is very simple.

For every penny gained in an equities value there must be a corresponding penny lost somewhere.

And that is not true.

Galifrey

iTrader: (3)

I know exactly what you said, but what you fail to acknowledge is that without people borrowing huge sums, the books do not balance, and for the books to balance they have to lend as much as possible, otherwise the interest comes from shareholder profits, and that just wouldn't do would it <--- at the banks not you...

Most of the debt was affordable when it was taken and well within budget (a very small percentage isn't) but changes to the employment markets change this very quickly. Both my wife and I were made redundant this year (2nd time in 2 years for me) and the worry of debt becomes very real when you are at the point of claiming bankruptcy. Luckily she was redeployed and I found a job just above minimum wage, my 25 years in banking meaning nothing as the bank closed down the division I worked in due to low profits and high reputational risk post banking crisis.

It is very easy to blame consumers for borrowing too much, but that is an easy scapegoat in a much larger story, maybe even watch the 3 hour film I posted, just the first hour should be sufficient.

Oh and BTW my wife is a Junior VP for a very large UK bank wealth division, so I even know what the banks are up to these days...

alloy

Some very intelligent discussion on this thread, some absolutely ignorant BS too.....

The economy moves in cycles of boom and bust, nothing can go up in a straight line forever....yes banks are partly to blame, yes so are traders, but every end user in the economy has to some extent played a role in the creation of the current "bust".

There has also been a dearth of leadership among policy makers and governments alike, where ill advise and a failure to regulate their own systems and procedures has also been a major catalyst to the current situation we find ourselves in.

Trout

iTrader: (1)

...and it this is true, then surely it is the shareholders fault - the banks are merely an delivery system for their dividends

tony de wonderful

That's looking at it too narrow Trout, like I said it's the less tangible opportunity cost which makes it a zero sum game.

Also moving away from money again, trading equities back and forth does not generate any wealth only transfers its ownership. It's a zero sum game from that POV also.

TelBoy

Couldn't agree more. Banking threads are the new religious threads on Scoobynet. Nobody, not ONE person has demonstrably changed their overall opinion of who's right, who's to blame, what should be done about it.

But as somebody who works in the industry, i just cannot be bothered to argue in the face of the deeply mis-informed. It just boils my **** that somebody who can say all bankers are scumbags is allowed a chair at the table at all, even in the light of numerous explanations and reasonings as to their actions. Wallow in your own ignorance is what i say.

Trout

iTrader: (1)

I would offer an additional view - there are key examples of policy makers and governments who have actively regulated to create this situation - good idea at the time - not so good with hindsight.

Trout

iTrader: (1)

You are stretching the argument.

Zero sum game is simple - the equation of by and sell must always balance.

Using your argument - hardly anyone with a funded pension would get a pay out of any value

Galifrey

iTrader: (3)

Well technically the board of directers and the senior execs that drive this behaviour.

In a certain bank I could name, very large UK based, the directors are paid MASSIVE bonuses for driving up the share price, and we are talking 7 zeros+ on those bonuses if they achieve certain levels.

That bank is massively concerned that this info will get out, not to shareholders, but to customers. They recently aquired a huge input of cash for shares from abroad as well.

They brag that the didn't take money from the Govt, when in reality, they just took the money from another source that WOULDN'T place restrictions on senior exec bonuses! (the UK Govt were going to place restrictions hence why they went abroad for the cash).

It is a joke these traders having a sandwich board that reads I am the "1%", they really aren't, if they were the last thing they would ever do is work. What they really are is a part of the 99% that doesn't care because their jobs havent been taken by an eurasian who will work for half the money YET!

Luan Pra bang

I am well aware of the complete failure of banking regulation, hoe ever much of it you think there is as it happens I have one cousin working for the FSA , and another who is a trader, both agree that regulation has been completely inadequete and yet you seem to disagree despite overwhelming evidence to the contrary.




As I have explained many many times, Banks are telling governments what to do, not the other way round, I even provided a link to help you understand this but you appear to be uninterested

It is telling that you have made no mention of the removal of democratically elected leaders in order to keep bankers happy, do you agree with that ? Also do you agree or not that the time scales used to determine 'success' in terms of banking are far far too short ?