Re:It Feels Like the Game Is Rigged
by RestlessMind on Tuesday February 02, 2021 @03:46PM
(#26006397)
> That's fine, just let me know when you have an alternative.
Here are the alternatives: 1. prosecute the bankers and send those to jail who broke law, instead of just fining those banks a few millions.
2. severely curtail risk taking abilities and bonuses if a bank depends on any explicit or implicit govt guarantees. Implicit benefits include access to cheap fed loans (ZIRPs), QEs, counterparty risks (eg. beneficiaries of AIG bailout) etc.
We could have stood on principle and refused to bailout banks in 2008. Interest rates would have spiked, investment would have ground to a halt as companies collapsed. House prices would plummet as no one could get a mortgage, leading to people defaulting on their mortgages leading to falling prices etc.
But we'd have don't the right thing. What's 30m unemployed and a decade of economic stagnation?
I'm not saying there is nothing wrong. I agree about rating agencies, they should at least have been killed off.
I'm just saying, 98% of the things people call conspiracies are actually just good practical decisions that they don't like. The bank bailouts are a perfect example of that. Even your own line contains one such glaring misconception:
>Same with investment banks who knew the mortgage bubble was about to collapse but nonetheless sold those securities to their clients.
The clients are hedge funds so whose the bad guy here? Plus if the bank is selling and you're buying, you're not their client, you're their counterparty: they want to sneak as much shit into the portfolio as possible and you have to catch them and refuse the deal. If you don't do your job, you can't complain your opponent didn't do it for you!? And where did all these toxic loans come from? From requirements put in place by people we elected who decided that just because a customer has on income or assets they should still get a 110% mortgage on a house they don't actually need. Banks had to sell that to someone...
My worry here is that we're doomed to repeat these mistakes:
* politicians will deregulate finance because doing so spurs the economy (like it or not)
* finance will do its thing and spur the economy and get nice fat bonus cheques (like it or not)
* some other product will be all the rage
* that product will balloon in size, the assets underlying it will turn to shit as regulators push more of it and customers decline to check the contents before they buy
* the whole thing will crash and people will blame bankers who will say "we're turds, but so is everyone else, we just don't bother acting like we're not a part of the problem.".
* ill come back here and make this comment again.