Divorcing a Wall Street Addict

I'm doing all this for you....That says it all right there! Turn it around to make it look like the "gamble" was for "OUR" benifit!!? The best way to deal with an addict is to stop inabling it! Turn your back on it and let it hit bottom, while NOT letting it drag you down with it....AGAIN! After a "BIG HURT", would you be willing to "gamble" on doing the SAME THING again??? Most sane people wouldn't!!!! Good article, perfect analogy!!!!

Good article storyartist.

I don't dislike capitalism but I agree that it needs regulation. Let them gamble with their own money. I couldn't have said it better myself.

At the same time, I always think how unbridled capitalism is doomed to failure. I say that because, imagine profits increasing every quarter. For that to happen, a company would need to - A.) Sell more products. B.) Increase prices C.) Cut expenses or D.) Any combination of each. For A and B to be possible wages would need to increase or jobs need to be created to allow the population to spend more money. But, that goes against one of the principles, "C", that I listed. A company can't cut costs to increase profits while at the same time hiring more people and increasing wages. If they don't hire more people or increase wages to compensate for higher prices, then who will buy their products? Also, what happens when a market gets saturated and you can't sell more products?

But profits must increase every quarter. Bonuses must be paid. How is that possible? And when does it end? When we are paying 1,000 for a gallon of gas and a 100 bill is the same value as a penny?

So, I guess the alternative is to create a unique and innovative product that everybody wants or find a segment of the population that can't afford your products and offer them incentives. That is what happened with the big banks and the auto companies. We all know what happened next.

I like to use GM as an example. A crew cab pickup truck averages around 35,000 dollars. A guy working at Walmart probably can't afford one. So either GM needs to sell a huge amount of inexpensive, more innovative vehicles, so more people can buy them or they need to cut costs and layoff people. That happens during every recession. In theory, that only makes their situation worse because less people can buy their products.

It would seem that bailouts without stronger regulation won't work.

I am for regulations as I think it has been proven that without regulations we have a run away freight train coming at us with no means to stop it. I have no problem with anyone wanting to make zillions of dollars but I do take issue that the zillions they make are on the backs of hardworking others. Can you imagine what would be happening right now if Social Security had been handed to Wall Street? Unfortunately I know quite a few optimistic investors that lost everything from trusting those without consciousness and a mega portion of greed.

My son-in-law was working for the company building the complex in Las Vegas. One morning he started to boot up his office computer and was locked out. A supervisor came in and told him it was over and everyone simply walked away. The company got away with blowing off their obligation to give notice the hundreds of employees. They left equipment to rust and building left unfinished and vacant. It boggled my mind how many companies were doing this and without an ounce of consciousness

Great analogy, storyartist. I saw the obsession running away with itself and wondered if it could last. A bit like the Dot-Com debacle the balloon can stay in the air just so long.

Don't come begging for my ATM access code when yours doesn't work, honey. And don't come looking for a place to sleep when the casino kicks you out of your house, honey. Got mine protected this time.

Very accurate analogy and I guess addiction is all the same. Take away their chips and let them hit bottom.

Yes, but they had the mortgages, the 401k's, the mutual funds, the keys to the corporate safe's, workers pensions... all insured, all over leveraged, and all deep in the murk of unregulated otc derivatives.

When a bookie lays odds he makes sure he has the cash in the pot to cover it. When wall st lays odds, there is a lot of other peoples money riding in that pot along with a fair amount of wishfull thinking, and cash-out isn't necessarily the same as the cash in. It could be more, or it could be less. For a while it was more, more, more, then all of the sudden it got less, less, less... holy markets,Batman!

B.S.

Yeah, but we treat Wall st. as the house. Who supposedly "drives" the economy? (I have often likened letting Wall Street drive the economy was like giving a bi-polar alcoholic the keys to the schoolbus)>

Besides, I have never met a metaphore I didn't mix.... :o)

B.S.

I always thought exactly that, bailing out the companies that hurt everyone, yet every one that was hurt are still hurting!

Actually, a lot of the Tarp funds have been repayed. That probably has a lot to do with the fact that many of the investment banks were picking up barigans galore for pennies on the dollar. They had the bad assets mixed in, but there were many many assets that were sound. (Take WaMu for example. The asset base was sold (some might say stolen) for 3 or 4 cents on the dollar book value. If those assets retained only 10% of their book value, that is still over 100% roi. I really don't think that 90% of the assets went bad. So JP Morgan Chase, the bank that bought WaMu, made an investment, a bet, that they could hold out long enough to see the profits. What is the real kicker in all of this is that the sale was promulgated by the depositors and investors taking flight because they thought that the bank might fail, and that turned into a self fullfilling prophecy. ...but I have side-tracked myself.)

In principle, the bailing out of the companies was bad because it gave succor to those institutions who may have had a bad business plan or faulty logic behind the asset managment and propped up the too big to fail banks and companies. (Personally, I think the institutions responsible for the creation and sale of the derivatives should have been dissassembled and sold off.) In action, the bailout stabilized an economy that was collapsing under the weight of bad practices and let it implode at a more gentle pace. Instead of catastrophic financial collapse, we a slower economic impolsion. Now is the time, as story artist said, to regulate the financial sector so that we don't have to come to the aid of our gambling relatives. We can let them fail.

B.S.

I wasn't a fan of the bailout either, but I do believe that it was a necessary evil at the time, and that the repurcussions of doing nothing would have been far worse. One small positive nugget in the bailout story is that a lot of it has been repaid, with interest, so in theory we actually made a little money. Now is certainly the time to enact regulation with teeth, so we don't need to bail them out again. Companies that are,"Too Big to Fail", from now on shall be deemed, "Too Big to Exist", and must be broken down into managable corporations. Also, a new version of the Glass/Stegall regulations should be put in place so the tradional banking operations are once again separate from the 'wheeling and dealing' financial services that are so risky. (hedge funds, derivatives, etc.) Right before the collapse, some institutions were 'betting' up to thirty dollars for each dollar they actually had. That should never be allowed to occur again either. If you're going to gamble, you can only bet that which you can cover. Another thing that should be done away with would be the exotic financial products that are so complicated, even the institutions dealing in them don't fully understand them. Instead of trying to invent devious little tricks to pull money out of a place where there wasn't any before, they should refocus their efforts into solid, substantial investments that mitigate the risks. You know, back to the basics. Banks have always made money with the fundamental services they provide, but greed dictates that it's never enough, so they made up new ways to squeeze cash out of the system. And they'll continue to make up new ways to snatch and grab the system without regard to anything but the bottom line unless we enact regulations preventing it. Then we need to take a long look at the SEC, and make sure that they're enforcing the rules efficiently, instead of watching internet porn at work. I would like to see the entire organization cleared out and restructered with hardworking Americans that lost their retirement funds. Honest folks that we can trust to blow the whistle as needed, without having to worry about whether they have their hands in Wall Street's pockets, or their own for that matter. We've allowed Wall Street to run rampant for so long now, it's going to be painful reining the beast back in. But if we don't regain some control over the markets, we'll continue to be held hostage to them, and the next collapse could be right around the corner.

Thanks for the e-mail Story, nice idea. Nice article as well, thanks.

I really think this internet porn thing has been magnified so that it is out of proportion. I have seen on here allusions to everbody at the SEC sitting around and watching porn all day. I think that it might be an isolated problem, but doubt seriously that it is cultural and endemic to the SEC.

B.S.

. I have seen on here allusions to everbody at the SEC sitting around and watching porn all day. I think that it might be an isolated problem, but doubt seriously that it is cultural and endemic to the SEC.

It does enforce the idea of the SEC's inability re oversight, though. They couldn't even oversee what their own employees were doing on company time, in company offices, on company computers.

VerbalBarb Said:

...the idea of the SEC's inability re oversight, though. They couldn't even oversee what their own employees were doing on company time, in company offices, on company computers.

I respectfully disagree. There is a level of trust (that when at work you will be doing whatever it is you do) that was violated by certain individuals. This is true in regulatory agencies as well as the rest of the work places, public or private, throughout the country. Or, in other words, who watches the watchers?

I do not think that it is a beyond a localized phenomenon.

Storyartist said:

It is, however, a commonality among behavior addicts (such as gambling), so it fits into the analogy here.

Not being addicted to gambling or internet porn, I cannot speak to that assertion. I still don't think that it is relavent to larger metaphor of a need to gamble, other than being an addiction or cumpulsive type of behavior. (That pun was intended. Sorry, having a problem remaining serious here...)

B.S.

I respectfully disagree. There is a level of trust (that when at work you will be doing whatever it is you do) that was violated by certain individuals. This is true in regulatory agencies as well as the rest of the work places, public or private, throughout the country.

Nah. Most companies have policies and procedures that are to be followed and they take steps that make sure some of them will definitely be followed - such as blocking the access to certain types of sites from company computers. The very fact that SEC employees (trusted or not) could access porn on company computers is evidence of weak internal management.

Well said, Andi.

storyartist, you are very gifted! I have learned from your style and use of metaphor... my anger and frustration from this whole deal has cramped my style, you are an inspiration.

One is to adjust our thinking about Wall Street and banks as caretakers of our money.

Totally true and really that is the change we need to make. Congress needs to keep that in mind with these new reforms. We need GOOD government that actually works for the benefit of Americans and not Wall Street campaign donors.

Second is that we're really better off when we can trust ourselves and take charge of our own financial management.

This a a great point as well. But I feel we need help with this. It used to be most Americans worked and received a defined pension at retirement...enough to live pretty okay on through your Golden years. Now days we have 401K's replacing defined pension plans. Most of us out here do not understand enough about investing and our long term needs to make proper choices with our 401K's. We don't put enough in and we don't manage our investments to make the most money. This is where GOOD government regulations can help Americans. We could enact some basic changes to 401K's that make it easier for us to save the proper amounts we will need and to optimize our returns and lessen the fees, charges and such that we incur. I fear we are headed in a direction where more and more of us will need to work til we finally drop and/ or rely solely on Social Security.

This a a great point as well. But I feel we need help with this. It used to be most Americans worked and received a defined pension at retirement...enough to live pretty okay on through your Golden years. Now days we have 401K's replacing defined pension plans. Most of us out here do not understand enough about investing and our long term needs to make proper choices with our 401K's. We don't put enough in and we don't manage our investments to make the most money. This is where GOOD government regulations can help Americans. We could enact some basic changes to 401K's that make it easier for us to save the proper amounts we will need and to optimize our returns and lessen the fees, charges and such that we incur. I fear we are headed in a direction where more and more of us will need to work til we finally drop and/ or rely solely on Social Security.

btco

Two things: 1st, we need to reevaluate our culture as to investing or saving our money independently, to learn what we need to know. 2nd, we need a true living wage.

Excellent points, Pamela, as always.

I moved my money to a credit union. The customer "service" rep at BofA asked me the reason for closing the account and I told her. She pursed her lips but continued without comment.

When I signed in at the bank that day, there were three others before me who had written the same reason for their own visit - "close account".

In this game of chicken, who will win? The banksters, of course. But we'll give them a run for their money (and ours), won't we?

Sigh.

I moved my money to a credit union. The customer "service" rep at BofA asked me the reason for closing the account and I told her.

Good for you, putting your money where it serves you is the most powerful tool we have.

In this game of chicken, who will win? The banksters, of course. But we'll give them a run for their money (and ours), won't we? Sigh.

Don't underestimate the power we consumers can wield and it's an information game in an information age which changes the rules. One by one, dollar by dollar that leverage will make change. If anyone else wants to change from supporting the TARPsters Move Your Money. org is a great site to find options.

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The gambling analogy is perfect, storyartist, I imagine all the sweaty feverish mobs with chips in hand and ready to roll the dice. At the first sign of losing the gambler plays harder frantically trying to make it back to the "score" only to find that goal has collapsed and will inflate no more. The gambler then looks wildly around hoping to find someone to finance the next game and on and on it goes. I say hang on to your dough and don't let go.

I've been to Reno, Las Vegas and Dubuque Iowa and watched gamblers. I am not one to gamble much but like to play a bit. I was in Dubuque for my Aunt and Uncle's 75th wedding anniversary and the cousins took us to the gambling boat. I had $30 on me and decided this would be my play money while a couple of the cousins were packing $400-$500 bucks on them. One cousin was going nuts gambling and I'd check in with her now and again. I played for two hours on my $30 and felt satisfied, yet ready to quit. I was down to my last token, put it in and came out with $60. I cashed out and was finished for the night. I walked over to the cousin and she' lost over $400 and wasn't finished losing more which she did. I could not understand how anyone would drop a bunch of dough gambling and still can't. I saw that $500 as tires for the car, clothes for the children and all sorts of beneficial purchases. She was a single mom with kids but didn't think ahead about consequences. She had to borrow money to get back home to California. That's sort of Wall Street for me. "I made really horrific choices, please bail me out"

Even if they never get another bailout, their funds still come from the American public. The only difference is, investors and stockholders give willingly and the public had no choice re the bailout funds.

I'm ok with them not getting any bailouts again; but the "checking account" they will use for their risky investments will still be funded by the American people.

Those people who work for Wall Street with the huge houses and the uber-million dollar bonuses aren't the people who throw their money into risky investments. I worked with that type of people for years and years, and they are mostly very cautious.

Wall Street needed to suffer big time for their unhealthy gambling habits. I am so relieved legislation is happening to stop this debacle.

Wall Street needed to suffer big time for their unhealthy gambling habits. I am so relieved legislation is happening to stop this debacle.

I'm hoping they pull in the reins hard enough to stop any more runaway investment schemes. They also need to put some starch into the shorts of the overseers, FDIC, Fed, SEC, etc.

Total agreement, VerbalBarb!

#14:Of course, since it appears the main interest at the SEC was surfing for internet porn during the day, I shouldn't be surprised.

I'm glad that you added the bit about the porn viewing at the end, because I was going to point it out as a newly reported "scandal"!

It appears that "we" are the only ones working, doesn't it? Boy are these great jobs to have - or what? And how much were they getting paid to do nothing? Whatever it was they owe the taxpayer a refund for overpayment of their salaries.

Because tho otc derivatives market was not (is not) regulated. I posted a link to a Frontline Program called "The Warning" up the page (I think it was on my first comment.) It discusses the attempt to regulate why they didn't. It is a fairly long program, so you might want to watch it some other time.

Also unregulated are some of the markets for oil.

(They cornered the markets on screen cleaner at the SEC.)

B.S.

Well written, PowerIsKnowledge!