Making the Economy Work for The Many and Not the Few

Arnathor said:
Russell Street Russell Street who would you lock up?
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I've previously alluded to Taibbi's The Divide, which mentions that not so long ago a governmental investigation into corporate malfeasance would cause shaking in boots. Now it's a mild inconvenience, like a speeding ticket is for an affluent person.
As small government as I am, they have regulatory and enforcement power and they should wield it with authority. Instead, we hear this "too big to fail" nonsense and get fines collected and no prosecutions for truly criminal matters.
 
Russell Street said:
I've previously alluded to Taibbi's The Divide, which mentions that not so long ago a governmental investigation into corporate malfeasance would cause shaking in boots. Now it's a mild inconvenience, like a speeding ticket is for an affluent person.
As small government as I am, they have regulatory and enforcement power and they should wield it with authority. Instead, we hear this "too big to fail" nonsense and get fines collected and no prosecutions for truly criminal matters.
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To a large extent I agree. You put a few large players in jail and most of this trash will right itself.

But they're elite, and as it stands their corporations pay big fines, which has no impact on their actual lives, and then it goes back to business as usual. The elite is in fact above the law.
 
OfficePants said:
To a large extent I agree. You put a few large players in jail and most of this trash will right itself.

But they're elite, and as it stands their corporations pay big fines, which has no impact on their actual lives, and then it goes back to business as usual. The elite is in fact above the law.
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That's false. Someone else will take their position. As long as the incentives aren't changed, the behaviour won't change either.
 
Monkeyface said:
That's false. Someone else will take their position. As long as the incentives aren't changed, the behaviour won't change either.
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That's your opinion that it's false, you state it like a fact. Perhaps "I disagree" makes more sense in context.

In my life experience, people behave very differently with a very real threat of going to jail. Anyone taking that spot would be very weary of repeating the behavior regardless of the incentive. Street drug dealers with nothing to lose? Sure. Millionaire with the risk assessment shifted completely towards a loss of their personal freedom? Very different story.

I disagree with you. Jail is a very effective deterrent with the corpo-elite.
 
Russell Street said:
I've previously alluded to Taibbi's The Divide, which mentions that not so long ago a governmental investigation into corporate malfeasance would cause shaking in boots. Now it's a mild inconvenience, like a speeding ticket is for an affluent person.
As small government as I am, they have regulatory and enforcement power and they should wield it with authority. Instead, we hear this "too big to fail" nonsense and get fines collected and no prosecutions for truly criminal matters.
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But 90% government regulations squeeze the smaller corporations/businesses and therefore stifle competition and shaft the consumer. The larger companies are able to influence the regulations the most or, even if they are shut out of the process, they are most able to afford the changes (or attorneys to find loopholes in the changes). Same thing with the ever-increasing number of behaviors that are criminalized. Rambo's article about the football players and the low conviction rates highlights that. And I'm not even getting into all the "advocacy" groups whose very existence/income is predicated on telling people how much your regulations need to change. An example of this would be MADD who has had to make their goals ever more extreme as they accomplish their original ones.

I'm the head of a regulatory agency and I struggle with this all the time. I don't think there is a perfect system out there. My job is a series of "least terrible" decisions.
 
Yeah, that's another problem. It's extremely expensive to keep up with regulations, which stifles competition as well. You need 1000s of legal and compliance people just to deal with the ever expanding regulations. No wonder it's nearly impossible to start up a bank, because it's impossible to keep up with regulations without having enough people.

Often it's vague how they should be interpreted, which means that different regulators and banks will adhere to different standards . At the moment the American and Canadian banks are destroying the European banks for example, due to regulatory arbitrage.
 
I'm not talking nuisance legislation here, but basic laws that prevent major problems. Mostly, we have the laws, it's a matter of applying them and doing the legwork to prosecute.
 
Russell Street said:
I'm not talking nuisance legislation here, but basic laws that prevent major problems. Mostly, we have the laws, it's a matter of applying them and doing the legwork to prosecute.
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There are no basic laws when it comes to banking, as it's not a basic business. There are lawyers who specialise in the laws covering a certain derivative product and are able to make a career out of it. Even hedge funds have lots of inhouse lawyers now, that's how complicated the laws and regulations have gotten. It's a bit strange, because derivatives themselves are quite easy to understand, even without a math PhD.
 
Monkeyface said:
Yeah, that's another problem. It's extremely expensive to keep up with regulations, which stifles competition as well. You need 1000s of legal and compliance people just to deal with the ever expanding regulations. No wonder it's nearly impossible to start up a bank, because it's impossible to keep up with regulations without having enough people.

Often it's vague how they should be interpreted, which means that different regulators and banks will adhere to different standards . At the moment the American and Canadian banks are destroying the European banks for example, due to regulatory arbitrage.
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Corporations basically write regulations, so it's not complicated for them. "Ever expanding regulations" sounds like Fox News jargon to me. There are ever expanding criminal offenses, don't know about the rest. Starting a bank is complicated, but it's designed to be that way to keep out riff-raff.
 
OfficePants said:
Corporations basically write regulations, so it's not complicated for them. "Ever expanding regulations" sounds like Fox News jargon to me. There are ever expanding criminal offenses, don't know about the rest. Starting a bank is complicated, but it's designed to be that way to keep out riff-raff.
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It's true dude. You can deny it all you want, but you're not working in finance.

I've been trying to keep up with them and it takes a hell of a lot of time. And just when you're all caught up a new piece is introduced, or the interptation is more closely defined. Trying to understand how it will affect certain parts of the business is even more difficult. Smaller banks and even major corporations can't do it themselves, so they rely on us.

Also, corporations do not write all regulations, at least not in Europe. One of the most basic products that every major corporation uses has suddenly gotten massively more expensive and a hell of a lot less liquid. We're talking 10 times more expensive here. CFOs had no idea it was coming or what was going on, and it has caused European banks to be very uncompetitive in that product. You seriously think CFOs of every major European multinational and CEOs of major European banks asked for that?

Hell no. Deutsche Bank's CEOs had to step down, and that new regulation was part of the reason.
 
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Rambo said:
You quoted new regulations as the reasons the Deutche Bank CEO's resigned. They resigned because the bank was found manipulating the LIBOR rate.
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Not entirely. Deutsche Bank's balance sheet has gotten massive over the years because they were such a successful bank, and they have a very sizeable proportion of a particular asset class on their balance sheet. This new regulation made that asset class much more expensive, and seeing as you cannot just get rid of it, those products will stay on your balance sheet and you'll incur massive costs. Deutsche Bank reacted too late/didn't prepare enough for those new regulations, which is part of the reason they're stepping down.

Incidentally, DB also has a very large exposure to Greece, so it's going to be interesting to see what happens. There is a tiny chance of DB going belly up, which would have far reaching effects for Europe and the world as a whole, which means they'd be bailed out.

The LIBOR scandal hit pretty much every major bank, but you don't see every single CEO stepping down.
 
Monkeyface said:
Not entirely. Deutsche Bank's balance sheet has gotten massive over the years because they were such a successful bank, and they have a very sizeable proportion of a particular asset class on their balance sheet. This new regulation made that asset class much more expensive, and seeing as you cannot just get rid of it, those products will stay on your balance sheet and you'll incur massive costs. Deutsche Bank reacted too late/didn't prepare enough for those new regulations, which is part of the reason they're stepping down.

Incidentally, DB also has a very large exposure to Greece, so it's going to be interesting to see what happens. There is a tiny chance of DB going belly up, which would have far reaching effects for Europe and the world as a whole, which means they'd be bailed out.

The LIBOR scandal hit pretty much every major bank, but you don't see every single CEO stepping down.
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So wouldn't DBs interest in manipulating the L rate be explained by the balance sheet? Seems like you are pointing to the symptom.
 
OfficePants said:
So wouldn't DBs interest in manipulating the L rate be explained by the balance sheet? Seems like you are pointing to the symptom.
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No. The LIBOR rates were manipulated by individual traders in order to generate a higher PnL for themselves. Traders have nothing do with the balance sheet, don't know anything about it and have no way of finding out about it or calculating the impact of a move in LIBOR on the entire banks and their buddies banks' balance sheets.

My point has nothing to do with the LIBOR manipulation whatsoever. LIBOR manipulation was yet another symptom of the incentives being wrong, which I had explained in previous posts and am not going to explain again.
 
OfficePants said:
"Ever expanding regulations" sounds like Fox News jargon to me.
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Then you are the one person on this earth that might actually need to watch Fox News. You might learn that a new federal regulation has been promulgated every two hours and nine minutes for the last twenty years. 24/7/365.
 
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John Lee Pettimore III said:
Then you are the one person on this earth that might actually need to watch Fox News. You might learn that a new federal regulation has been promulgated every two hours and nine minutes for the last twenty years. 24/7/365.
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That's a misleading technical truth. This isn't a news conference pitching for Team R knowing a corpo-media reporter won't question a statement like that.

The internet didn't exist in the past, nor did derivatives trading, or cellular networks, satellites, HFT, or computers for that matter, many of the chemicals we now have, or Viagra, AIDS, research findings, Uber, fracking, ABS, and basically every new idea or technology ever invented.

There will need to be regulation on driverless cars, and when people vacation in space. And as much as I dislike regulation as well, it will continue to happen because corporations write their own laws and people are greedy pieces of shit that can't control their behavior without regulation.
 
John Lee Pettimore III said:
So how many more would have to be passed per day for you to acknowledge that they are "ever increasing"? 20? 50?
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He's contradicting himself anyways. On the one hand he's saying that all regulations are written by corporations themselves just to benefit the 'Elite', and on the other hand he's saying regulations are necessary in order to control the corporations' greedy behaviour.

So corporations are greedy and they know it, so in a moment of clarity they write regulations themselves to limit their own greedy behaviour, even though they're greedy self-serving people?

:jchan:
 
John Lee Pettimore III said:
So how many more would have to be passed per day for you to acknowledge that they are "ever increasing"? 20? 50?
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Fill in the blank with 10,000 and it's still misleading. The misdirection is the soundbite of "mountains of new legislation" somehow pervasively effects every industry in America simultaneously and equally. Is this chaos theory as politics? A .0001 added to a water regulation in north Idaho becomes an avalanche of new regulations for Wall St banks?
 
Monkeyface said:
He's contradicting himself anyways. On the one hand he's saying that all regulations are written by corporations themselves just to benefit the 'Elite', and on the other hand he's saying regulations are necessary in order to control the corporations' greedy behaviour.

So corporations are greedy and they know it, so in a moment of clarity they write regulations themselves to limit their own greedy behaviour, even though they're greedy self-serving people?

:jchan:
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They are not mutually exclusive, therefore not contradictory. Re-read. Corporations and people.

:thelongpause:
 
OfficePants said:
Fill in the blank with 10,000 and it's still misleading. The misdirection is the soundbite of "mountains of new legislation" somehow pervasively effects every industry in America simultaneously and equally. Is this chaos theory as politics? A .0001 added to a water regulation in north Idaho becomes an avalanche of new regulations for Wall St banks?
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As misleading as saying there is no such thing as ever increasing regulations and then changing the subject, splitting hairs, and resorting to ad hominem and "no true scotsmen" when shown otherwise? That kind of misleading?
 
John Lee Pettimore III said:
As misleading as saying there is no such thing as ever increasing regulations and then changing the subject, splitting hairs, and resorting to ad hominem and "no true scotsmen" when shown otherwise? That kind of misleading?
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I never said "there is no such thing as ever increasing regulations". Quite the opposite, in fact I acknowledged the technical truth you presented.

To the technical view, I added the objective observation that regulation has naturally expansive properties because of human activity, this is not splitting hairs. The characterization of expanding regulation as a political talking point was not intended as an ad hominem attack or any form of disrespect, I was merely attacking the viewpoint, sorry if my word choice made it seem otherwise.
 
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