Quote:
Originally Posted by Starkler
Tell me what business does anyone other than a primary producer or a food company have in trading wheat futures? Parties other than oil producers/industrial consumers in oil futures etc?
Its speculation for speculations sake, which is the art of profiting from market inefficiencies whilst value adding absolutely nothing, and when you're a big enough entity to move and manipulate markets to your advantage its truly parasitic!
The purpose of a bank is to be a conduit between those requiring loans, and those with capital to lend.
Investment banks creating money and then distorting markets with it to their own ends is predatory, parasitic and serves nobodies interests but their own.
/rant
|
Partly true and I partly agree.
Curiously, most commodity exchanges are actually on behalf of primary producers and secondary processors. The amount of speculation by 3rd parties is actually only about 3% +/-.
Real estate speculation is far more damaging to the average person. But would you deny someone the right to buy a rental property or lease out a shop?
A bank's raisonne d'etre is the same as any other company's: to make money for its
shareholders, any benefit accrued by the customer is, technically, an irrelevance. Shareholders generally demand a return of 8-10% minimum before they invest. No shareholders. No bank.
So High Street banks only loan you money to make money for the people who put money IN, in the first place. They are only nice to you to get hold of your $$$ so they can make more.
An investment bank is a different matter. Unless you burst through the door with a cool million or two in your purse, you're unlikely to get further than the front step.
They do not deal in high street bank's business. Their job is to direct large amounts of capital into investments for clients and, importantly, to
make markets - that is stimulate various sectors of an economy in order to produce profit.
Granted, some of the biggest were woefully bad at it, getting it hopelessly wrong and in some cases criminally negligent.
We're back to regulation again. The US banking system is one of the most heavily tegulated in the world. But under the Bush administration the whole free-wheeling-cowboy, yee-haa, lets make billions. buy-now-pay-never policies, seriously undermined the authority of the SEC & the FDC.
Laisse-Faire capitalism of the worst kind become the order of the day.
End result: Global financial meltdown. But not because of the system itself, rather a failure to govern and a failure to comprehend.
Its worth reading Adam Smith's seminal work The Wealth of Nations' written in the 18th century.
As they say on Bttlestar Galactica-"All this has happend before. All this will happen again!"