[EDIT: I may have misinterpreted the parent post as criticizing finance. I'd delete my comment but I'm leaving part of it here because it has already been replied to.]
What we have here is a worthless parasite class -- a decadent nobility -- that has buried itself into our civilization like a tick
The fact of the matter is you will have a very hard time finding a financial person who defends the current state of things. I never have. Nobody considers bailouts or too-big-to-fail optimal, and nobody likes the regulatory mud the financial industry swims in. And the financial industry, and probably my paycheck, would be smaller if none of this stuff existed. And I wouldn't mind because it'd be made up for by living in a more productive nation.
Of course, you'll still see mega-rich financiers because the economies of scale are unbeatable in this industry. And calling the financial system "con artistry vs everyone else on the planet" is a worthless thing to say because trading, investing, credit, and risk management add value and to say otherwise puts you in a very flimsy position, a position by which you'd have to adopt a wildly heterodox economic view--such as classical Marxism--to reasonably defend yourself.
I often play "defender" of the finance industry among my friends, but I think we should separate two claims:
1) finance, as a whole, is "bad" for whatever reason
2) separate from (1) the people and companies involved in finance are "bad"
These are two entirely different claims. It's totally possible to believe that the finance industry provides valuable capital allocation and risk management services, but to also believe that the companies running these services have become corrupt (and that said corruption happens at the expense of the "99%").
I don't think one can reasonably blame the population at large for suspecting something fishy. Between bailouts of "clearing house counterparties" like AIG/Fannie/Freddie, below-inflation Fed Funds rate to which finance elites have exclusive access, a revolving door of GS alumni at Treasury, etc., one could easily be forgiven for suspecting systematic corruption. The only way to overcome this predisposition is an open commitment to transparency and "taking your lumps when you deserve them", which, in my opinion, has not been demonstrated by the finance community vis-a-vis the taxpayer.
I agree with the attitude of this post, but I'm puzzled that you criticize the Fed Funds rate as below inflation. This is how you create an expansionary monetary policy which is the correct response to a credit-collapse recession. This enriches commerical banks, but all monetary policy is distortionary.
A good alternative might be helicopter money. I wonder how well that would do, politically.
Sorry, I didn't mean to align myself with specific monetary policy. I barely know anything about it. The only point is that I personally can't call up Bernanke for a Fed Funds loan, so the expansion of the money happens asymmetrically across society (in particular, preferentially for the Federal Reserve member banks).
I regret mentioning it. I don't want this to become a Federal Reserve or monetary policy debate. My bad. Go in peace :-)
I have no problem creating enriching commercial banks in the short term to stop a credit-collapse, but steps could be taken to correct that distortion later. None have.
I think you misinterpreted the original statement. Both the article and the parent post take a critical view on inherited wealth, which doesn't necessarily come from the financial industry per se.
Article does claim much of the highest tier's wealth comes from investment as opposed to income. The products in which they invest have to come from financial services, including Cynicalkane's employer.
People make a lot of money on wall street from doing one of 2 things either playing the lotto, or taking a modest slice of vary big cash flows. I would argue that much of the current financial system is designed to extract money from people and institutions with capital though fees and Martingale style investments. Consider, few people would trade an extra 1% return for a 1% risk of complete loss of all equity unless they only share in the upside. Yet, plenty of institutions try and 'pickup penny's in-front of steamrollers' because the people making the decisions share the same risk profile as the company.
Also, the risk profile idea is: A company's decision makers tend to act in their own self interest. So, when their risk profile is favors high risks followed by a quick exit the company will end taking lot's of long term risks even if it's not healthy for it to do so. EX: There is a continuum of lean manufacturing where each stage is slightly more efficient, but the risk that supply chain issues cascading increases. If everyone is focused on the next quarters profit independent of all other issues then things may be trimmed past the point of reasons. This carries over into every area, if you can get a 6 months supply of a part at significantly below market rates it may be worth it to do so but again risk reward of decision maker informs what the company will end up doing. What separates the financial industry is simply the scale of risks and rewards offered to low level individuals within a company.
What we have here is a worthless parasite class -- a decadent nobility -- that has buried itself into our civilization like a tick
The fact of the matter is you will have a very hard time finding a financial person who defends the current state of things. I never have. Nobody considers bailouts or too-big-to-fail optimal, and nobody likes the regulatory mud the financial industry swims in. And the financial industry, and probably my paycheck, would be smaller if none of this stuff existed. And I wouldn't mind because it'd be made up for by living in a more productive nation.
Of course, you'll still see mega-rich financiers because the economies of scale are unbeatable in this industry. And calling the financial system "con artistry vs everyone else on the planet" is a worthless thing to say because trading, investing, credit, and risk management add value and to say otherwise puts you in a very flimsy position, a position by which you'd have to adopt a wildly heterodox economic view--such as classical Marxism--to reasonably defend yourself.