On Sat, Oct 22, 2011 at 9:09 AM, Alfredo Covaleda <[email protected]
> wrote:
>
> After Gadaffi's death a local newspaper wrote : "who is going to be the
> next dictator to fall?". Well, my answer is: Wall Street.
>
> --
> Alfredo
I certainly agree with the sentiment. And I do believe the core signal in
our noise is the lack of a robust middle class, thus I find very troubling
the divide between the wealthy and the "rest of us" and our immense struggle
just to get by nowadays.
But I don't think the problem is wall street per se. After all, wall street
funds companies who build things that are useful.
I think the problems are 1) in the financial sector 2) caused by
too-big-to-fail, including monopolies.
The financial sector is "different". It makes money by manipulating money.
Sometimes that's fine, for example futures markets help stabilize the price
of components of products we buy. Hedge is not a bad word here. Even
lending is important when it too relates to real things like houses and
companies building products.
I think the disconnect is when real products and people are abstracted out
of the financial world, when we're building bundles of loans, slicing and
dicing, and nothing real in sight. Or when we are trading in currencies.
Big is different too, distorting markets and dangerous if they fail.
As much as we hate them, regulations are important. But they are very hard
to manage, and with the global economy, they need to be balanced world wide.
And we don't really know which ones will really build the right incentives.
We have, however, just learned by experiments gone wrong, that letting banks
also be insurers is a mistake. And that banks and companies are too large,
they distort the economy, and worse, need rescuing when they err.
So yes, let the financial dictator fail next. Now lets figure out how!
-- Owen
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