What Good Is Wall Street?

[dtotire]

What Good Is Wall Street?
Much of what investment bankers do is socially worthless.
by John Cassidy

November 29, 2010


For years, the most profitable industry in America has been one that doesn’t design, build, or sell a single tangible thing.


A few months ago, I came across an announcement that Citigroup, the parent company of Citibank, was to be honored, along with its chief executive, Vikram Pandit, for “Advancing the Field of Asset Building in America.” This seemed akin to, say, saluting BP for services to the environment or praising Facebook for its commitment to privacy. During the past decade, Citi has become synonymous with financial misjudgment, reckless lending, and gargantuan losses: what might be termed asset denuding rather than asset building. In late 2008, the sprawling firm might well have collapsed but for a government bailout. Even today the U.S. taxpayer is Citigroup’s largest shareholder.

The award ceremony took place on September 23rd in Washington, D.C., where the Corporation for Enterprise Development, a not-for-profit organization dedicated to expanding economic opportunities for low-income families and communities, was holding its biennial conference. A ballroom at the Marriott Wardman Park was full of government officials, lawyers, tax experts, and community workers, two of whom were busy at my table lamenting the impact of budget cuts on financial-education programs in Vermont.

Pandit, a slight, bespectacled fifty-three-year-old native of Nagpur, in western India, was seated near the front of the room. Fred Goldberg, a former commissioner of the Internal Revenue Service who is now a partner at Skadden, Arps, introduced him to the crowd, pointing out that, over the years, Citi has taken many initiatives designed to encourage entrepreneurship and thrift in impoverished areas, setting up lending programs for mom-and-pop stores, for instance, and establishing savings accounts for the children of low-income families. “When the history is written, Citi will be singled out as one of the pioneers of the asset movement,” Goldberg said. “They have demonstrated the capacity, the vision, and the will.”

Pandit, who moved to the United States at sixteen, is rarely described as a communitarian. A former investment banker and hedge-fund manager, he sold his investment firm to Citigroup in 2007 for eight hundred million dollars, earning about a hundred and sixty-five million dollars for himself. Eight months later, after Citi announced billions of dollars in writeoffs, Pandit became the company’s new C.E.O. He oversaw the company’s near collapse in 2008 and its moderate recovery since.


Read more http://www.newyorker.com/reporting/2010/11/29/101129fa_fact_cassidy#ixzz161bCv9LN

[pansypoo53219]

1. wall street is the biggest ponzi scheme ever.

and everybody should read the last section of kevin philips-american theocracy. if the boring 2nd part hadn't made readers give up on the book...1st section important too.

[marmar]

2. The Financial Services biz produces nothing......

...... as David Korten says, it's a way for pirates to stake claims on wealth produced by others.

[Igel]

6. If it produces nothing, then it doesn't matter.

So all the talk about lack of lending to small businesses or to prospective homebuyers is crap. Small business loans are worth precisely nothing. Neither are mortgates.

Nah. That means that so many prominent (D) are insanely stupid. Or lying. Granted, possible, but let's not go there, esp. since the liquidity crunch really did have real-world consequences.

So perhaps "produces" is the wrong word, and "contributes" or "facilitates" would be a better word. Of course, this means that the OP is essentially setting up a straw man. Not like *that* ever happens in politically-oriented discourse.

Note that fundamental research also produces little. You can't eat it. You can't wear it. You can't sell it. Yet it contributes an absurd amount and usually--eventually--permits the development of production. I mean, really: Imaginary numbers are rather pointless and their researchers produced little, even if they are crucial in foolish things like circuit theory and fluid dynamics. But far from claims on wealth produced by others, the theorists used wealth produced by others to make up non-productive nonsense.

Again, "We're off to see the Wizard, the wonderful wizard of Oz." And it's not Dorothy, the Lion, or the Tinman that's at issue.

[Tansy_Gold]

7. There's a huge, huge differences between the Ponzi schemers of

Wall Street and the local banks and credit unions that most of us use for mortgages and business loans.

Prior to the repeal of Glass-Steagall, that kind of lending was kept separate from the Ponziers' activities. The Ponziers, however, wanted access to the "safe" money in the banks, and they lobbied for that repeal. That's why they're not lending now -- they can make more money playing their Ponzi games and they don't NEED to lend.

Fundamental research, contrary to your claims, DOES produce. While it may not manufacture consumer goods, it does improve them, make them safer, make them cheaper. It contributes to advances in medicine and health care. Education, likewise, is not directly productive, but it enables individuals to be productive.

Ponzi investing, on the other hand, merely establishes vehicles for the non-productive to extract wealth out of the society at large and then to USE that wealth to deny benefits to the productive sector.

Wall Street has indeed become a Ponzi pyramid, looking for ever more and more "investors" at the bottom so it can pay out at the top.

But hey, if you prefer to believe otherwise, don't let me stop you.


TG, NTY

[Blue_Tires]

3. very true...

kick

[texshelters]

4. Excellent Article

full of reality.

Peace,
Tex Shelters
http://texshelters.wordpress.com/2010/11/22/the-deficit-of-truth-and-ideas-the-surplus-of-lies-and-greed/

[Populist_Prole]

5. The fact they are the polar oppisite of labor is enough for some RW-ers.

Couple of rabid cons/baggers I know seem that way. Before the Obama administration, they believed, as I do now, that "Wall St" is a grifter laden parasitic drag on the economy. They are working class but have been brainwashed by rushbo, Cavuto, to hate unions. Now that Obama is in office, these brainwashed turds area actually on Wall St's side!