They argue, that majority of wall street workers make measly $150k, so the bonus amounts are not outrageous. So, are they arguing $150k to be the minimum wages?

They made money on their skills. Borrowing at 0% and buying market with that money is a great skill (GS made a lot of money by shorting vol in March 2008: equivalent of getting long the markets).

In an ordinary year, they spend 15% of time to fight for compensation. The best of the best (GS), even have their former employees in governments working for them.

They talk about the challenges of retaining talent. Ah, so where are they going to go? Hedge funds? How many will go to hedge funds? Why should everybody be paid large sums because select few want to go to hedge funds.

Banking is about borrowing and lending with proper controls. That is their value add to the society. They should be at par with the rest of the society.

If they create businesses, they should start companies, and get paid accordingly (no harm if they go to hedge funds for that). If they create businesses for banks, how do they bring more value to the table than the guy who starts Domina’s pizza franchise in India.

Let me tell you the real reason. Peer pressure! The cost of living in NYC and LN is so high (your kids go to $35k private schools. You need $100 dinners. You need “fill in the blanks”). They can’t survive without such large compensations.

The guy next door (the hedge fund guy) makes so much money. They want to make that too, and are not willing to take the risk. Solution, demand from the confused system.

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Do you like transparency? Or you hate it!

It is not good when it is about your privacy. But, when it applies to your dealings, it has to be transparent!

If you know how much money your counterparty is making off a transaction, you will demand fair share. Where does that leave your counterparty though?

It is in the incentive of a businessman to be less transparent. Hide fees. Figure out ways so that you don’t know or understand how you are paying (and worse, you are going to pay).

Mutual funds hide fees in their underperformance. They will tell you that they bought a stock at $50.10, when in reality, their broker bought it at $50, and booked it at higher price for them, pocketing $.10 which is undeclared commission.

Hedge fund has a whole concept of soft dollar, even legitimizing the above.

Insurance companies manage your money. Promise you return on your premium. Return which is much lower than long term bonds (granted, these days, US bonds carry very low interest, but it is not always the case).

New age companies (such as Facebook itself) don’t want to tell you what do they do with your information.

If you are looking to renovate your kitchen, do you really get a straight answer from your contractor?

What will you do if they really tell you the real cost? Would you give them business?

PS: In my view, regulations should work on increasing transparency, reducing conflict of interest. Not dictate or decide if some business models are correct or incorrect.

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Growth comes from improving efficiency. By coming up with better way of fulfilling our lives. Not by producing more, or consuming more.

America and the western world forgot the value of productive work. Every wants to enhance their lives by fooling somebody else, as opposed to helping somebody else.

The financial crisis of 2008 look distant. We are already seeing the new crisis. There are so many of us whose skill set are proving useless. How many of us are willing to acknowledge that. How many of us are looking beyond the glass and ask, can I do better (as opposed to, why am I stuck?). The group of people in this category will only grow.

My nephew told me that it is looking scary. Indeed it is scary. Who knows if London riots evolve into something sinister. What are we doing about this. 9/11 and follow on events brought down the world to its knees. So, hatred is winning.

What is the answer? Optimism. Sure. I am an optimist. I believe in GOD and creativity of human beings. I guess that is where it stops. We need somebody/something to help us provide growth.

PS: I don’t consider FB, Google, and apple to be those people. There are many reasons why they have their own shortcomings. We need more than that. We need people to take charge in a better way than democracy. We need a superior sBuy growth get Value free.

The best one I heard. If we have growth in America, then it will increase employment, taxes… and it will solve the problems.

So, growth is available in Walmart. Can we buy it?

Solution other than democracy. Can we come up with an alternative?

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You decide what makes sense.

Fed’s mandate is employment and inflation. Long term or short term?

You can go thru the academics of it. In a recession, it appears, printing money means — no risk of inflation (recession means risk of contraction). It can only increase employment…

Why?

I suppose, because, we now have the formula. Decades of economics just gave us the formula for fighting deflation and increase employment.

How about centuries old formula — we need to earn our living.

Hmm… Do I see T3 or Bourne Ultimatum

T3 had a formula. Expect the unexpected. Not sure why… Bourne wanted to know why?

Do we want to understand why QE3 will work? Specially, since, people want to keep doing what they were doing (irrespective of the contribution). Answer — Give money to people:Build infrastructure:Keep generating employment…Employees get money and they spend. GDP will grow…

Obama will take care of all of us, because everybody has a birthright to live well.

Why would that work? Whose money are they printing?

May be we will see a prequel with Alan Greenspan (and he will tell us why Ayn Rand told him to let everybody free by borrowing with no consequences… ) and Bourne would interpret her differently…

The post Bourne Ultimatum/T3/QE3 – An introspection appeared first on Mathisys Quantcap.

Go to a car mechanic. He thinks your transmission needs replacement. It will cost you lot of money. You get second opinion. Give the car to the mechanic. Come back and pick up the car. Did he steal any other part? Did he really do what he is claiming he needed to do? How did you check that? You trust him!

Driving a car at 70 mph on a freeway on your lane. Not expecting that the guy in the next lane will hit you. You are not worried. You trust he will do the “right” thing.

How many times you had been in a situation where you almost passed out, and this noble guy helped you (and others didn’t snatch your wallet).

Trust. Whether you are trusting somebody in noble profession (the doctor), or somebody driving (acting out of self preservation logic), or just humanly trust, that people will do the right thing, is what keeps the society.

What if that guy snatched your wallet and took some money from it when you were not yourself. What if the car mechanic replaced some other parts of the car. You won’t know.

Welcome to wall street. Do you trust your advisor and/or your bank and/or your credit card company?

You signed the contract. He has every right to take money from you, because you signed on the dotted lines.

Why?

May be you have a better answer. I would love to know. Mine is very simple. Wall street has the highest level of opportunities to find the flaws in the trust system. So, it attracts people with low level of integrity. Money is supreme for them. If you have agreed by signing a 500 page document, so be it. You are his breakfast, lunch, dinner and that expensive wine.

Somebody told me, it is better to have smart enemies than stupid friends. So, don’t get me wrong. I do desire a system where these businesses and people exist. And, properly channeling them, should produce for the society.

In an amazing way, our system has brought these people in a narrow set of professions (Las Vegas Pimps and Wall Street). Shouldn’t it be easy (and beneficial) to regulate them?

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