This site makes extensive use of JavaScript.
Please enable JavaScript in your browser.
Live
PTR
10.2.7
PTR
10.2.6
Beta
Occupy Wall Street Protests
Post Reply
Return to board index
Post by
gamerunknown
My ambivalence to your job is predicated on two things.
1. Whether you invested in productive enterprises. I don't consider a derivative a productive enterprise any more than I consider someone betting on a horse making an investment. It's just redistribution of wealth, not an increase in the rate of valorisation (unlike with ownership of means of production, education to increase capacity to valorise labour or purchasing property closer to the site of production in order to waste less time pursuing unproductive activities)
2. Whether you personally invested in companies that insured or sold mortgages to people that couldn't afford to make repayment, in which case you are most likely benefiting from public money and should thus be held accountable to the public.
Lets not be disingenuous. I'm obviously not discussing bank tellers, I'm discussing those that think investment is an amoral activity despite the extant evidence, even before the financial bubble burst that while each investment may have been in the best interests of the investor, each would increase the risk of systemic failure.
So no, I don't particularly care about remuneration in proportion to services rendered, but when an institution receives public funding, is not put under public control and in fact apportions that public funding for personal purposes, the public has a right to complain. You admitted as such a few pages ago, saying that it's only fair that one should take the same approach to individuals on welfare. I'll try to avoid sweeping categorical statements in the future and instead provide specific examples (the real example I wanted was a headline I read about an investment banker that had to repay a bonus, but I couldn't find a source).
Post by
91278
This post was from a user who has deleted their account.
Post by
Squishalot
1. Whether you invested in productive enterprises.
I don't consider a derivative a productive enterprise any more than I consider someone betting on a horse making an investment.
It's just redistribution of wealth, not an increase in the rate of valorisation (unlike with ownership of means of production, education to increase capacity to valorise labour or purchasing property closer to the site of production in order to waste less time pursuing unproductive activities)
Economics lesson time. The development of the derivative was to provide an insurance policy to people who wanted certainty. A 'future' or 'forward' product is one that will guarantee, for example, that farmers will be able to sell their produce at a fixed price at X date in the future.
Derivatives cannot and should not be painted generally as something that is no better than betting on the horses. Where derivatives are a problem is when they're used for purposes other than what they're intended, for example, taking out an insurance policy on Obama's life. That's like gambling on the horses. That's not to say that insurance products in general are no better than betting on horses.
That being said, we lent money to mining companies, infrastructure projects, property developments and energy projects. I think they should be sufficiently 'productive' to meet your scrutiny.
2. Whether you personally invested in companies that insured or sold mortgages to people that couldn't afford to make repayment, in which case you are most likely benefiting from public money and should thus be held accountable to the public.
Do you personally invest in companies that withhold mortgages from the bottom class of society and don't give them a chance? Just because people can make repayments today doesn't mean that they can continue to make repayments tomorrow. If you're going to lend to people, you have to make a call on what they can pay tomorrow. How are you going to know?
That being said, you also keep saying 'benefited from public money' or words to that effect. You're an Australian, right? It should be made clear that the Australian banks benefited
zero
from public money. They were offered the Australian Government's AAA credit rating for the purposes of issuing covered bonds, and they paid a rental fee to do so.
but when an institution receives public funding, is not put under public control and in fact apportions that public funding for personal purposes, the public has a right to complain. You admitted as such a few pages ago, saying that it's only fair that one should take the same approach to individuals on welfare.
You see, my issue with the funding is that it should have been conditional on offering of shares. For example, BOSI in the UK was taken over by the government - the bailout was essentially a takeover of the bank. Issuance of new shares, that's how the money comes in. That's how all the bailouts should have been done. Part of the reason why that wasn't done in places was due to public sensitivity about the government intervening and taking ownership of private enterprises. So which is better - a) the collapse of a bank; b) the bailout with no remuneration to the government; or c) the bailout with public ownership?
I'm going to confess an ignorance here: I'm also not entirely sure what "recession" is supposed to mean at ground level ... I've been into my city throughout the latter part of November and all through December so far -- I don't see a recession; I see people shopping and stimulating the economy in so doing; if more people did that, we'd probably dig ourselves out of this hole a little bit more quickly. I'm really not seeing the difference this Christmas any more than last Christmas, or the Christmas before that.
Total revenues are down. Retailers need to discount more steeply than normal to get shoppers coming through the door. Although people are spending money, they're not spending as much as they used to, whether it's because they're more conservative, or because they've lost their jobs / been downsized.
The difference between a $100 Christmas gift and a $99 Christmas gift is pretty miniscule, taken in isolation. In the grand scheme of things though, that's a 1% fall in the volume of money moving around.
As it should've done, and congratulations for being part of one of the ones that did. I think a lot of the outrage
is
should be in the fact that governments are propping up banks that don't deserve to have survived the financial crisis: because they lent irresponsibly and invested poorly.
Thank you. That being said, I do have a lot of sympathy with banks who did lend irresponsibly, because if they didn't, we'd be sitting here talking about how the numbers of homeless people are rising, housing prices falling and how unfair it is that the big bankers aren't helping Mrs Smith into a home loan for her house.
The big thing in Australia at the moment is that the banks are being sued for charging excessive fees. My question back to the people complaining is: how else is the bank going to have the money to keep running its business?(##RESPBREAK##)8##DELIM##Squishalot##DELIM##
Post by
91278
This post was from a user who has deleted their account.
Post by
gamerunknown
It should be made clear that the Australian banks benefited zero from public money.
I highly doubt that no single Australian has made a killing off of the bailouts. Indirectly, but that's how financial manipulations work.
Also, d. Worker control of banks, apportionment to the people that are suffering as a result of the recession. (Those that lost their jobs and homes). Failing that, public control of banks with the stakeholders deciding what to do with net profit - I honeslty don't see how they could do a worse job than current apportionment other than burning it. I'm not sure if its a Keynsian view, but I was under the impression that a recession is not the best time to address the deficit, so the government could defer any repayment. However, if the government merely provided a loan to the banks without any new regulations, there'd still be the divide where mismanagement of finances was essentially rewarded on a sufficiently large scale and punished in the individual (AIG for example still awarding themselves bonuses with public money and leaving debt to those that proceed them, while individuals having their homes repossesed cannot make similar appeals to the government).
Post by
Squishalot
I don't have that sympathy -- because banks who lend irresponsibly implies people borrowing and living irresponsibly. In other words, I don't not have that sympathy towards the banks; I don't have that sympathy towards the people who are/have been living beyond their means. I don't think banks have an obligation to lend irresponsibly as a result of people living irresponsibly.
Fair enough, I share the same view on that, generally speaking.
I highly doubt that no single Australian has made a killing off of the bailouts. Indirectly, but that's how financial manipulations work.
Australians may have benefited from the economic conditions. However, no single Australian has been bailed out by the Australian government without having to give something back.
d. Worker control of banks, apportionment to the people that are suffering as a result of the recession.
How does that solve the immediate problem that a bank might owe billions of dollars of cash? Your solution of (d) has precisely the same result as (a) - bank collapse.
Failing that, public control of banks with the stakeholders deciding what to do with net profit - I honeslty don't see how they could do a worse job than current apportionment other than burning it.
The shareholders already decide what to do with net profit. They take it as dividends, pay the heads-of some nice bonuses for their net profit, remembering that bailouts don't occur if your bank is making a profit.
I'm not sure if its a Keynsian view, but I was under the impression that a recession is not the best time to address the deficit, so the government could defer any repayment. However, if the government merely provided a loan to the banks without any new regulations, there'd still be the divide where mismanagement of finances was essentially rewarded on a sufficiently large scale and punished in the individual (AIG for example still awarding themselves bonuses with public money and leaving debt to those that proceed them, while individuals having their homes repossesed cannot make similar appeals to the government).
Again, that is more an issue of how the government set the terms of the bailout, not what a private corporation decides to do with its own money (which it became, once the government
gave
it to them).
Post by
134377
This post was from a user who has deleted their account.
Post by
Squishalot
I don't think that gamer intended for the customer of a business to determine what happens to the profits of said business instead of the shareholders. You'd have to be delusional to think that such a system would work.
In relation to your second point, the vast majority of shares are owned by investment funds, who don't receive wages by the companies, so I have no idea what you're talking about.
Post by
gamerunknown
You'd have to be delusional to think that such a system would work.
Why? If the investors that contributed to the systemic failure that caused the recession are such incredible geniuses that no prole could comprehend or influence their craft, whence the systemic collapse? If the investors are too arrogant to allow their management by the people that pay their bills and buy their champagne, then I change my stance to "a", that yes, the banks should have collapsed and the $450m that the executives of the financial manipulation segment of AIG got could be given to people that have lost their homes. In fact, the total cost of the bailout of AIG could have fed every starving person on Earth four times over and would be a vindication of free market capitalism (though it may perhaps have lead to a depression and the fall of American unilateral supremacy). Perhaps that'd stimulate the American economy more than deposits in Cayman Island banks or beverage specialists in Reims.
Post by
Heckler
As we discussed earlier, TIME Magazine had nominated both "The 99%" and the Arab Spring protesters as candidates for 2011 Person of the Year.
TIME's Person of the Year for 2011 is "The Protester."
A year after a Tunisian fruit vendor set himself ablaze, dissent has spread across the Middle East, to Europe and the US, reshaping global politics and redefining people power.
Magazine Cover
TIME.com Photo Essay: The Protester
Full Story on TIME.com
The article is pretty good; it tries to summarize and tie together a handful of protests across the globe, discussing various aspects of them and their net effect on global politics. I liked this paragraph, concerning the use of YouTube, Facebook, Twitter and other new technologies in the efforts:
So America's great 21st century contribution to fomenting freedom abroad was not imposing it militarily but enabling it technologically, as an epiphenomenon of globalization. And for a second act, globalization returned the favor, turning democratic uprisings in developing countries into inspirational exports for the rich world. "We were on the receiving side," Egyptian presidential candidate Amr Moussa told me, "and now we are on the sending side. We have contributed to this global movement for change. There's a new spirit. The grassroots are revolting — young people on Wall Street and young people in Europe."
Looking forward (concerning OWS), I'm still curious how much relevance the Occupy movement will have over the next year and beyond. Large scale change takes time, and Occupy will have to evolve significantly if it's to survive in one form or another. From the article:
The nonleader leaders of Occupy are using the winter to build an organization and enlist new protesters for the next phase. They have shifted the national conversation. As Politico recently reported, the Nexis news-media database now registers almost 500 mentions of "inequality" each week; the week before Occupy Wall Street started, there were only 91. But what would count, a few years hence, as success? According to gung-ho
Adbusters
editors Kalle Lasn and Micah White, it's already "the greatest social-justice movement to emerge in the United States since the civil rights era." Yet it took a decade to get from the Montgomery bus boycott to the federal civil rights acts, which were just the end of the beginning.
In any event, the global protests have proven to me that there is undeniably real, even startling power in popular movements. I'll keep watching with awe and inspiration as
The Protester
gives voice to the voiceless, power to the powerless, and motivates Change for the better around the Globe.
Post by
Squishalot
Why? If the investors that contributed to the systemic failure that caused the recession are such incredible geniuses that no prole could comprehend or influence their craft, whence the systemic collapse?
Oops, I forgot to reply to this last week.
The reason why is simple - if you own a corner store, under what fair and reasonable principle should your customers decide what happens to your profits? If you rent out a property, and your tenants are your customers, under what fair and reasonable principle should they decide where your profits go? The idea that a customer should have some measure of
control
of an asset without having
ownership
is what I'm saying is delusional. To suggest otherwise is to propose the destruction of the underlying principles of property ownership.
I'll keep watching with awe and inspiration as The Protester gives voice to the voiceless, power to the powerless, and motivates Change for the better around the Globe.
Call my cynical, but I'm just going to keep keeping an eye on my wallet as I walk past these folks through the CBD. I'd like to point out that The Protester also gang-raped several people during the revolution whilst they were celebrating their revolution. Is the movement powerful? Yes. Are their actions always for good? Not necessarily.
Post by
Heckler
Call my cynical
Hey, your cynical. (cwutidid?)
I'd like to point out that The Protester also gang-raped several people during the revolution whilst they were celebrating their revolution. Is the movement powerful? Yes. Are their actions always for good? Not necessarily.
I'm going to categorize this reply in the "borderline hostile, and not designed to promote a conversation" bin that I talked about in the Defense Bill post. I've never been one to defend the destructive acts by members of the protests, but I don't allow them to define the entire movement, and I especially don't allow them to discredit the good things that have come of it. I simultaneously praise the good, condemn the bad, and see the overall motion as an imperfect path toward the better, in which the corrections of the imperfections should be an ever-present goal.
Post by
gamerunknown
The reason why is simple - if you own a corner store, under what fair and reasonable principle should your customers decide what happens to your profits? If you rent out a property, and your tenants are your customers, under what fair and reasonable principle should they decide where your profits go? The idea that a customer should have some measure of control of an asset without having ownership is what I'm saying is delusional. To suggest otherwise is to propose the destruction of the underlying principles of property ownership.
This is a red herring or you're conflating two of my arguments. The owners of the banks that collapsed are now the people. At any rate, they have a majority share in them. But the principle that businesses are not responsible to their stakeholders is not set in stone, as Heckler and I discussed earlier in the thread. The corner store owner has a responsibility not to sell faulty goods to their customers, the landlord not to defraud their tenant to the terms of their tenancy. Likewise, people selling credit should not sell toxic produce, nor should they misrepresent what they are offering - which does happen. We had a guy over for dinner at our house that said sometimes he couldn't sleep at night because he offered loans to elderly people that clearly didn't understand the terms and possibly had dementia.
Post by
Squishalot
I'm going to categorize this reply in the "borderline hostile, and not designed to promote a conversation" bin that I talked about in the Defense Bill post. I've never been one to defend the destructive acts by members of the protests, but I don't allow them to define the entire movement, and I especially don't allow them to discredit the good things that have come of it. I simultaneously praise the good, condemn the bad, and see the overall motion as an imperfect path toward the better, in which the corrections of the imperfections should be an ever-present goal.
No more capable of promoting a conversation than your statement. I'm just saying that the crowd-protest movement this year hasn't always been for the better, and as such, to say that you'll be watching with awe and inspiration is either too simplistic or naive, due to the non-'better' actions that it takes at times.
The owners of the banks that collapsed are now the people.
No they're not. The owners are the shareholders, not anybody else, unless the government goes down the path of providing cash support in the form of equity, which is one of the options I had in my list.
But the principle that businesses are not responsible to their stakeholders is not set in stone
You're missing the point. 'Responsible to' is completely different to 'control'. I may enter into a contract with you to provide services to you. You have no control over me or my posessions (or my bank account!).
Likewise, people selling credit should not sell toxic produce, nor should they misrepresent what they are offering - which does happen.
That had a minimal impact on the start of the GFC. The vast bulk of credit that defaulted was due to housing prices falling in the US and people walking out of their mortgages. There's a very good reason why the Australian banks didn't suffer to the same extent as the US ones, and that is that people here are liable for any shortfall between the sale price of the house and the mortgage amount. There may be unscrupulous people out there like your friend, but if he can't sleep, he can only blame himself - the bank isn't forcing him to sell such home loans, he just wants his bonus.
Post by
Azazel
Go poor people!
Post by
Heckler
No more capable of promoting a conversation than your statement. I'm just saying that the crowd-protest movement this year hasn't always been for the better, and as such, to say that you'll be watching with awe and inspiration is either too simplistic or naive, due to the non-'better' actions that it takes at times.
Actually I think a few of the other things I posted were quite a bit better at promoting conversation, and as an added bonus there was no hostility to them whatsoever. But I'm probably just being naive again.
Post by
Squishalot
Actually I think a few of the other things I posted were quite a bit better at promoting conversation, and as an added bonus there was no hostility to them whatsoever. But I'm probably just being naive again.
I wasn't trying to say that your post as a whole wasn't stimulating conversation, I was just responding to the part that disturbed me to some extent.
Post by
gamerunknown
No they're not. The owners are the shareholders, not anybody else, unless the government goes down the path of providing cash support in the form of equity, which is one of the options I had in my list.
Well, the conception that shareholders can take public funds and then privatise them as a reward for their incompetence deserves to be challenged. While I was going to say that there's nothing to indicate that the stakeholders would make off with the profit rather than reinvist it, that's precisely what the shareholders did in the form of bonuses.
You're missing the point. 'Responsible to' is completely different to 'control'. I may enter into a contract with you to provide services to you. You have no control over me or my posessions (or my bank account!).
An entirely one-sided relationship. Banks can enter into a contract with people where the people's possessions are at stake, so it's not like the principle doesn't have precedent.
That had a minimal impact on the start of the GFC. The vast bulk of credit that defaulted was due to housing prices falling in the US and people walking out of their mortgages. There's a very good reason why the Australian banks didn't suffer to the same extent as the US ones, and that is that people here are liable for any shortfall between the sale price of the house and the mortgage amount. There may be unscrupulous people out there like your friend, but if he can't sleep, he can only blame himself - the bank isn't forcing him to sell such home loans, he just wants his bonus.
Actually, it was systemic. If the majority were not informed that it was part of their job to defraud people, then why did very few economists predict the international collapse? I'd say it is most likely due to the fact that they were basing their estimates on faulty data. For example, I heard of one couple that were sold a house in California and were informed their mortgage would be $3900 a month, when it worked out to be $5800 with various additional charges (not including other bills). An economist would look at their income and predict they'd have an 85% chance with their combined income to make all payments at $3900, but their unscrupulous mortgage providers sold them a deal they knew they couldn't afford.
Post by
Squishalot
Well, the conception that shareholders can take public funds and then privatise them as a reward for their incompetence deserves to be challenged. While I was going to say that there's nothing to indicate that the stakeholders would make off with the profit rather than reinvist it, that's precisely what the shareholders did in the form of bonuses.
Where the funds come from is completely irrelevant. If a company is
taking
public funds freely with no restrictions, then it's the government which needs to be held accountable, not the company. Again, the issue:
So which is better - a) the collapse of a bank; b) the bailout with no remuneration to the government; or c) the bailout with public ownership?
What you seem to be supporting is c) that public funds = public ownership.
An entirely one-sided relationship. Banks can enter into a contract with people where the people's possessions are at stake, so it's not like the principle doesn't have precedent.
You seem to forget that when people enter into contracts with the bank, it's the bank's money at stake as well.
Actually, it was systemic.
I made a lot of points in that paragraph - which part precisely are you referring to as being systemic?
If the majority were not informed that it was part of their job to defraud people, then why did very few economists predict the international collapse? I'd say it is most likely due to the fact that they were basing their estimates on faulty data.
You're not making any sense. If bankers knew that they were defrauding people, then it'd be really easy to predict the international collapse, because they know which loans are going to go bad. The reason why few people predicted it is what you conclude (though in perception, not in raw data), but the reason the perception was faulty was because of their underlying belief that their home loans were safe, likely to be repaid, and secured against the value of the house. If the banks knew that the loans were going to go bad, because they fudged the numbers and sold bad loans, they could have taken action much earlier to limit their losses, which is precisely what they did once they realised the crap was about to hit the fan.
For example, I heard of one couple that were sold a house in California and were informed their mortgage would be $3900 a month, when it worked out to be $5800 with various additional charges (not including other bills). An economist would look at their income and predict they'd have an 85% chance with their combined income to make all payments at $3900, but their unscrupulous mortgage providers sold them a deal they knew they couldn't afford.
Circumstantial, one-off example, that is not necessarily reflective of the broader market or any systemic issue. I'd like to remind you that for every home loan that went into mortgagee posession because people couldn't afford it, there were another 50 that were just fine. And that's during the GFC. Again, the GFC wasn't caused so much by people in the US not being able to afford their mortgages, it was due to the price of property falling by such a great deal that homes went into negative equity (i.e. mortgage > home value), and that it was better value for people to simply walk away from their houses instead and let the bank take the house.
And as I mentioned earlier, it's very much a case of "only in the US would this happen", because the mortgage system there means that the borrower has limited liability - you can walk away at any time by handing the keys over. In Australia and most elsewhere in the world, the bank can come after you for the price difference, meaning that they don't lose as much money on foreclosures, and therefore aren't as susceptible to those sorts of risks. The banks issuing CDOs in the US were essentially sharing the risk around, in the same sort of way as taking out a (re)insurance policy does.
So, in context, every dollar that the banks lost in GFC 1 is essentially off the back of people who punted on property, lost, and passed the losses on to the banks. Let's stop and consider that for a while, shall we?
Post by
gamerunknown
What you seem to be supporting is c) that public funds = public ownership.
Is there any other institution where public money is privatised?
You seem to forget that when people enter into contracts with the bank, it's the bank's money at stake as well.
We went through this several pages ago. When individuals fail to manage their finances, they lose their jobs, homes and possibly their lives (in the US at least). When Fred Goodwin mismanages his company, he retires 12 years before everyone on a retirement plan 10* higher than the average salary.
I made a lot of points in that paragraph - which part precisely are you referring to as being systemic?
Provision of toxic loans. If it were not the case, why was the Gramm-Leach-Bliley act necessary in the first place?
You're not making any sense. If bankers knew that they were defrauding people, then it'd be really easy to predict the international collapse, because they know which loans are going to go bad.
While it is a bit of a non sequitur, I kind of meant that the collapse would have not occurred had it not been a general principle to sell mortgages that were not substantiated. If economists used tools to accurately predict how many mortgages would be paid for and bankers used those tools to guide them in the provision of mortgages, they wouldn't have sold as many mortgages that would ultimately fail. After all, the lucrative market was based in part about the ease of obtaining a market. The higher the demand (people buying mortgages on credit), the bigger the market, the more contracts for housing development. When it was realised that such development was unsustainable due to the provision of mortgages to people that couldn't afford to pay them, house prices fell.
Goldman Sachs even apologised
since it became clear that they profited from selling short of collaterised debt obligations.
Post Reply
You are not logged in. Please
log in
to post a reply or
register
if you don't already have an account.