Wall St. shrieks SOCIALISM at idea of returning bonuses.

[General Havoc]

You want me to respond to you? Why? You're not gonna read it, you're just gonna look for another excuse to flex your E-penis. We've had this exact fight eight times already, and every single time, every single time instead of arguing in good faith, you start making shit up and screaming at me whenever a point that is inconvenient for your world-view shows up. But I'm the bad guy because I got sick of it? Here's a line stolen from your debating tactics: Go Fuck Yourself.

Seriously, go fuck yourself. I'm under no obligation to provide you with a mouthpiece to make yourself look tough. You're looking for a spine? How about trying to find the guts to respond to what someone is asking you one of these days. You have yet to do that once. Not once. Not in this thread, not in eight or nine others I could CITE. You're a gutless, intellectual coward, too afraid of being wrong to dare subject his ideas to the fires of actual public debate. All you want is approbations for being so edgy as to tell me to go to hell.

I am not your fucking child, and I am under no obligation to further explain points you ignored six times already. Am I to believe that you will magically decide to read them on the seventh occasion? Or the eighth? You've admitted to me twice that you argue in bad faith. You're presently engaged in doing it again. I would sooner argue my points with a deaf-mute.

[The Minx]

SirNitram, a question, if I may:

Why do you want to reduce the size of the financial sector?

I understand your point regarding the investment bankers receiving bonuses despite their failures (while I am not sure about the government being best suited to handle it), but what is the point of reducing the financial sector itself, per se?

[Derek Thunder]

SirNitram, a question, if I may:

Why do you want to reduce the size of the financial sector?

I understand your point regarding the investment bankers receiving bonuses despite their failures (while I am not sure about the government being best suited to handle it), but what is the point of reducing the financial sector itself, per se?

I don't want to speak for Nitram, but there's just something viscerally amiss with the production of tangible goods declining so fast, whilst being replaced with positions that either require advanced post-secondary education, or McJobs.

[General Havoc]

Well I would say that begs the obvious question: What should we replace the "shrinkage" whatever it is, in the financial industry with, in this theoretical future wherein we act to cut back the financial industry to its levels from earlier days?

[The Minx]

But industrial production overall has not gone down, only its share in the overall economy. There was a similarly profound upheaval during the Industrial Revolution, and sharp divisions occurred during that time, with the traditionally huge agricultural sector shrinking compared with manufacturing, and later, the services overtook manufacturing in the same way. Yet, in the long run, it was change for the better. Now, finances are overtaking traditional services.

[Derek Thunder]

Developing a green power generation and distribution system comes to mind as a possible alternative, which would require both blue- and white-collar labor, but this would require a higher degree of taxation and regulation such that the cost of polluting reflects the true ecological and social cost and becomes more expensive than switching to renewable energy sources.

That's just one alternative, I'm sure there are others, but energy does seem to be the big ticket issue for the 21st century. That, and water conservation and distribution.

Edit - I'm not sure I'd agree to the premise that the service economy replacing the manufacturing economy was a beneficial move, income inequality was quite a bit lower during the 40s and 50s.

Severe Edit-osis - What I should say is that at least superficially, it seems like fewer people are able to take part in the financial services sector than say... the dot-com bubble, meaning bigger slices of the pie for those who can muscle their way into a field that requires a very small pool of talent.

Terminal Edit-isis - I'm not an economist or anything, my background is in rocks.

[General Havoc]

Minx, if I might ask, are you... certain that industrial production has only declined as a share in the overall economy? I don't have any numbers to back it up with, but I was fairly sure that the actual industrial output in the US had also declined, and done so drastically, and that in fact, that was one of the reasons for the increase in income inequality with the transition to a service-based economy.

I mean, I could easily be wrong about it, but that fact surprises me is all.

[The Minx]

I got it from here: Link. Granted, it has dipped sharply in 2008, but I would imagine that to be due to the recession (there is another dip in 2002). Overall, the trend is still up.

[SirNitram]

Minx: It's very simple, in my mind. I want to shrink it because it's money was often, well, illusionary. All those bad assets that cause so much trouble are a good sign of it: Everyone paid good market prices for it, but it was so infected with bad loans that they never got repaid, so the price never manifested. Alot of the recent boom was money from nowhere, all summoned by expectations that were not reasonable. See: House prices always go up.

The other big reason is that the 1980-2008 period cited in the lecture had several bubbles that wouldn't have existed if things were more restrained around investments. S&L scandal, the .com Bubble(Think about it: THe bubble came from investors pouring huge loads into IPO's because it was a tech stock, regardless of economic viability of companies), and this housing bubble.

[SirNitram]

Yea, manufacturing is still going up. It's increasingly specializing, though, or clinging to tariffs and the like. A highly specialized manufacturing industry isn't bad at all, though.

[The Minx]

Minx: It's very simple, in my mind. I want to shrink it because it's money was often, well, illusionary. All those bad assets that cause so much trouble are a good sign of it: Everyone paid good market prices for it, but it was so infected with bad loans that they never got repaid, so the price never manifested. Alot of the recent boom was money from nowhere, all summoned by expectations that were not reasonable. See: House prices always go up.

The other big reason is that the 1980-2008 period cited in the lecture had several bubbles that wouldn't have existed if things were more restrained around investments. S&L scandal, the .com Bubble(Think about it: THe bubble came from investors pouring huge loads into IPO's because it was a tech stock, regardless of economic viability of companies), and this housing bubble.

OK, I can see that, but I'd rather see regulations increasing transparency and accountability to prevent that sort of thing. If the financial sector is where the cash needed for other projects is going to be coming from, it seems like a bad idea to reduce it. Also, a reduced financial sector will still produce bad assets without such reforms, and if you have the reforms and they work, why the reduction of the industry?

[General Havoc]

I got it from here: Link. Granted, it has dipped sharply in 2008, but I would imagine that to be due to the recession (there is another dip in 2002). Overall, the trend is still up.

I'll be damned. That's almost the precise opposite of what I expected to see. I wonder where I got the impression that overall industrial output was down...

I still don't see the viability of cutting back the Financial services sector though (as opposed to just causing it to flee overseas). People are going to arbitrage whatever leverage they can to acquire real capital by any means necessary, it happens all the time. And the boom and bust cycles have long-predated the emergence of the modern financial sector.

Granted though, Nitram is probably right about the bubble effect being suppressed by tighter control of investments in general (assuming we use the right controls of course). But I just don't see how you cut down on the actual size of the industry by government action alone. Would higher Capital Gains taxes do it? Probably not, as there's too many tax loopholes, it would just re-arrange the market to favor them more. I don't think salary caps would do it either. As I mentioned before, the real crooks would find ways of getting their salary-bonuses anyway, it would just distort the compensation system further.

I'm probably not seeing the obvious method, but I don't understand how one would return the financial services sector to its pre-inflated size, without just ensuring that the banks powering the next bubble were European ones rather than American ones.

EDIT: Actually, now that I give it some more thought, higher Capital Gains taxes, coupled with more stringent regulation, MIGHT actually do the trick, over time of course.

[SirNitram]

First Havoc: You starve them off the vine. It sadly is unlikely to happen, but the simplest method is for Obama to look into an investment banks direction when they come, and say 'No'. It works because the industry doesn't, and without the TARP they disappear. The more complicated option involves simply starting to nationalize them after they reach a threshold of TARP funds in regards to size, essentially as if the government were buying stock.

Minx: Possibly. But I fear that it will leave this bloated carcass on the proverbial national deck, the GOP will keep it's hate of financial regulation, and thus it'll go on. It's also influenced by the fact that Wall Street is downright unhealthy for those in the big firms. After your work week hits 70 hours, your priorities change a minimum of three times daily, and you are constantly in a stressful enviroment, it's akin to psychological conditioning, and unlike some groups which have proved they can use that responsibly(The military is a noticable one), Wall Street mostly shows it makes people who believe they're the gods and masters of economy.

[The Minx]

Minx: Possibly. But I fear that it will leave this bloated carcass on the proverbial national deck, the GOP will keep it's hate of financial regulation, and thus it'll go on.

I doubt they'll be more amenable to cutting the industry down all together, than to make it work. When the Republicans inevitably return to power, what is to prevent them from simply reversing such a radical decision with radicalism in return? Perhaps they'd me more amenable to the latter option if they thought the former were a real possibility as a consequence of intransigence?

It's also influenced by the fact that Wall Street is downright unhealthy for those in the big firms. After your work week hits 70 hours, your priorities change a minimum of three times daily, and you are constantly in a stressful enviroment, it's akin to psychological conditioning, and unlike some groups which have proved they can use that responsibly(The military is a noticable one), Wall Street mostly shows it makes people who believe they're the gods and masters of economy.

Workplace health regulations for the filthy rich?

[SirNitram]

If the industry is shrunk, it has to be re-grown.. Which at least slows the process. ANd again, I'm not advocating ripping it all down. That one's getting irritating.

As for workplace health... I can't help but think exposure to a psychologically conditioning enviroment and the message the firm is the most important is part of why they became so enamoured of their models. Which in turn led to worldwide recession. So.. Workplace health for the extremely wealthy.

[General Havoc]

Well as the good laisez-faire capitalist I am (I joke), I'm all in favor of cutting bad companies off and letting them die natural deaths when it turns out their business plan sucks and they simply can't work out. Nationalization is a bit more of a drastic step. I'm not sure I want the government holding those companies any more than I'd want to invest in them myself.

But Wall street is hardly the only high-stress job out there, nor even the worst offender (military aside as you said). And even if you cut back on the scale of the financial services industry, the culture of financial pressure will still be there, just like the toxic assets will. I don't see how curbing the extent of the industry does anything but limit our financial options. It's not like the non-American banking firms are going to disappear even if we curb our own industry.

[SirNitram]

Nationalization is a major step, and not to be taken lightly. But neither is investing taxpayer dollars with no control.

[The Minx]

If the industry is shrunk, it has to be re-grown.. Which at least slows the process. ANd again, I'm not advocating ripping it all down. That one's getting irritating.

I never claimed you were saying that.

EDIT: OK I said "cut the industry down all together", sorries. I didn't actually mean that in the literal sense.

[SirNitram]

If the industry is shrunk, it has to be re-grown.. Which at least slows the process. ANd again, I'm not advocating ripping it all down. That one's getting irritating.

I never claimed you were saying that.

EDIT: OK I said "cut the industry down all together", sorries. I didn't actually mean that in the literal sense.

I get touchy sometimes. Sorry for not realizing it wasn't literal.

[The Minx]

That's OK.

As for the point you made, I don't really see "slowing the process" by cutting the industry down to size as sustainable in the long run. I have no doubt that the Republicans would respond to radical measures in kind when they returned to power. I fear that this kind of tit for tat reversals whenever the power balance shifted would only increase the scramble for quick profits whenever the opportunity permitted it. That's why I felt that reforms that would work with the industry instead of against it would be more likely to survive politically, and be more economically wholesome to boot. Naive?