As the Nobel prize winner economist Paul Krugman said it well:
“More than that, reform actuallyshouldhurt the bankers. A growing body of analysis suggests that an oversized financial industry is hurting the broader economy. Shrinking that oversized industry won’t make Wall Street happy, but what’s bad for Wall Street would be good for America.”
In many developed economies, the financial industry is generally oversized. Too many people and mouths are being fed by staying employed in this sector. I was one of them, naturally. It was easy money for a job well done. Wall Street and the rest of the world, including countries like China which is now discovering the lucrative aspect of this sector, is content to be there and to grow. Now, there is nothing wrong in doing so if indeed there is real productivity and goods manufactured or services rendered. Those in the finance industry loves to complicate things so that no one understand the process involved and thereby created some fancy jobs for new graduates and those in the industry. It worked for the longest time but there comes a time even people who are involved in the industry are coming to their senses. Money is NOT the only thing in life and accumulating wealth is NOT simply one’s only goal in life!
Let me put it simply. It has come to a time in history and the world that people are only in business to make profits. Period. They don’t quite care what business they are in, much less how they come to earn those profits. As long as those money can be made with minimal risks and the chances of making them are great. In the beginning, they channelled those funds into projects, ventures and even businesses. These are real things. But now, these investors and businessmen are getting so greedy that they don’t often question where the money goes. All they want is profits. Enter the financial industry with intelligent capable officers and managers (maneuvers more like it) who claimed to manage these funds with the least efforts required on the investors’ part. That’s when things begin to spiral out of context. Investment companies which compete with one another for resources and profits and reward its employees based purely on bottom lines. More and more derivatives & fanciful instruments are being created and they are known as financial innovations. Some, no one could understand how they work other than those few people who are known to be managing them while others are out to “trap”.
Ultimately, what happened is an industry so specialized that few could even begin to phantom what’s happening within. The derivatives itself is worth even more than the actual investment (like stocks and houses, for example). It’s a case of the milk is worth more than the cow. People get caught up with it just as they once did the tulips. Loan for factories or real businesses are harder to get than loans from venture capitalists or loans for speculating. Something is not right and people choose to look another way instead because of the tremendous opportunity for fat profits. You’d think many would begin to question but no. People in the industry chose to be blind instead. “Greed is good”. That becomes a motto for many, despite knowing that it is not right. No matter, because their neighbours are making it. Everyone needs to compromise, they figure. If they don’t do it, someone else will. That’s always their reasons for doing something. I heard it over and over again. Until I got tired of hearing the same old “logic”. I quit.
Good luck to anyone who tries to reform Wall Street. It is an industry that’s so big and old that the resistance is immense. Think about trying to take away a piece of cake or sweet from a 5-year old kid! That’s just a simple but effective illustration. No, something catastrophe has to happen before you can bring people down from the clouds they are now floating on. Back down to earth where things are real. Perhaps some kind of acid rain will do the trick. I don’t know. All I know is that history is set to repeat itself. This time round, the casualties even bigger than the past. We got ahead of ourselves way too much for the last century. When that day comes, the world will see something akin to a World War. It will be a time when you can’t get any money out of the ATMs machine (like that 3-day event in Iceland where Icelanders have no access to their money in end 2008). The day when you will not be paid your salaries and when the shops are all closed. Yes, I do think if indeed there’s a World War III, it might just originate from Wall Street. Unless… America manages to regulate and down-size it in the very near future to a level which is manageable. We don’t have much time left as it is.
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About the reviewer
I'm a traveler at heart & have been nicknamed Travel Queen by friends & colleagues alike. Traveling has been my life passion for the last decade or so. As we enter a new decade, I'm excited … more
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Wall Street is a street in Lower Manhattan, New York City, New York, United States. It runs east from Broadway to South Street on the East River, through the historical center of the Financial District. It is the first permanent home of the New York Stock Exchange; over time Wall Street became the name of the surrounding geographic neighborhood. Wall Street is also shorthand (or a metonym) for the "influential financial interests" of the American financial industry, which is centered in the New York City area.
Several major U.S. stock and other exchanges remain headquartered on Wall Street and in the Financial District, including the NYSE, NASDAQ, AMEX, NYMEX, and NYBOT.