Friday, January 11, 2013

The Gap - how it happened

Many things that happen on Wall Street and in
London’s financial district are “socially useless,”
says Lord Adair Turner, chairman of Britain’s
Financial Services Authority

I believe that banking institutions are more dangerous to our liberties than standing armies. ~ Thomas Jefferson, 3rd U.S. President

"The financial industry grew rapidly in recent decades, as did the sums of money with which its players speculated on the prices of stocks, commodities and government bonds.

The products they developed to turn money into even more money become more complex.

At the same time, the risks they were willing to accept became incalculable." ~Der Speigel

The sector’s high salaries tend to attract the best and brightest university graduates. The members of this youthful elite don’t devise new products that make people’s lives better, nor do they found new companies that further progress.

Instead, these young financial wizards invest a great deal of money and effort to develop sophisticated financial products, the sole purpose of which is to generate more profit for both their employers and, ultimately, for themselves — sometimes at the expense of other market players or even their customers.

Many things that happen on Wall Street and in London’s financial district are “socially useless,” says Lord Adair Turner, chairman of Britain’s Financial Services Authority (FSA). The values that are created there are often not real or of any use to society, Turner adds. 

Paul Volcker, the former chairman of the US Federal Reserve, once remarked that the only truly useful financial innovation in the past 20 years is the cash machine.