nab2807

Why Capping Pay Is Likely to Work

Well you do not need to set prices for products if they no longer exist, the likes of CDOs and CMOs serve no other purpose than to transfer risk from banks to unknowing investors.

This madness of trying to securitise everything under the sun needs to stop. I am all for a market for futures, options and even certain credit derivatives. However they should all be exchanged based and not reside in the Wild West aka the OTC market.

On Feb 04 05:00 PM Robert Perrego wrote:

> So you do not believe in the the trading function at all? How do
> you propose to set prices then?

Why Capping Pay Is Likely to Work

Sether I completely agree! How do you think i-banks make money out of "trading"? That's just a euphemism for screwing over other market players by taking advantage of informational asymmetry. Ultimately i-banks serve absolutely no economic purpose except to transfer wealth from the pockets of the consumer to that of the i-banker.

The vast majority of financial innovation such as credit and mortgage derivatives came along purely in response to finding new means of screwing people over. Once a product became sufficiently understood by market players, the margins which i-banks could charge on them shrank hence providing the incentive to create ever more complex products. This ensures that only the initiated can understand them so it's perfectly easy to embed within them massive profit margins. The average company utilising these derivatives cannot even begin to fathom the ways that they are being screwed over by i-banks.

Personally I would scrap all structured products and all derivatives should trade on exchanges with tight margins. What's so wrong with that, derivatives should be meant for risk mitigation not risk taking, leave that to the cowboys who want to do it with their own money.

I totally agree that the current incentive packages attract the wrong type of people. The average person on the street has never been on an i-bank trading floor, the animal instinct that drives these individuals is to screw over their fellow man and personally I wouldn't want to hand my money over to such a person. These "brilliant" execs have overseen this mess and have been largely powerless.

The balance of power in i-banks is not with management, it's with the sales people and traders because they are the ones who generate profit for the bank. If the exec asks them to cut down on expenses, they would say F* off because they know who pays whose wages.

If this salary cap drives away these execs, I have two words for them "good riddance"!