Bloomberg News: Did Psychopaths Take Over Wall Street?

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Interesting debate, but it doesn't have much bearing on the fact that since everyone and every nation in the west owes colossal amounts of cash to banks, the banks are, in a broad sense, within their rights to demand all their money back in the full knowledge that all the repaying of debts will shrink the amount of money available to pay them. Thus, within a few years, ONLY BANKERS WILL HAVE MONEY, and the rest of humanity will be obliged to go hungry. The bankers, now in direct control of the world's arsenals, will nuke anyone and everyone at the first sign of trouble, and -although dissappointed to go back, inevitably, to living in the jungle within a short time once humanity proper is as dead as a dodo- will continue to use their guile to adapt to wherever they find themselves, surviving for a while on human flesh while they learn how to hunt and gather from other sources.

When I told my dad this he joked that they'll be using chimps as butlers, lol_

The Bankers are only one Bad Deed away from having their bank accounts seized by the government.

ruveyn

Psychopaths are very good at working with people who they deem useful to them. If they're talking to clients or co-workers they can appear to be the most charming people in the world. Then, when their usefulness of outlived, they're fair game for whatever. It is for this reason they can often become really rather successful.

I'd say that the article is a bit generalised in saying that they're all psychopaths, but I'd also say it'd be quite accurate to suggest that many people in high places are more psychopathic than most.



Indeed, an environment in which everyone is there to make as much for themselves as possible without concern for others is an environment in which psychopaths likely thrive quite easily.

As a final statement, I'll say this: given how obvious of a bad idea subprime mortgages were, it was likely that a lot of the guys selling them knew full well that they'd collapse. They may not have predicted the scale of the resulting damage, but they damn well knew the ending wouldn't be happy. But they continued to drum up hype and make short term profit from it all because the bankers knew that they'd get to keep their money and they also knew the government would bail them out if needed. Some banks, however, evidently knew this better than others and hedged themselves well enough to be able to make pure profit from the resulting downfall. Those were the really smart ones, and let's face it, if you could get away with doing that and making billions of dollars profit, you would. I sure would anyway.

Final final statement: this only applies to a very small number of people working right at the top of investment arms. Most people working in banks are just like any other normal people working in any other company. It's important, with all the media hatred of bankers, that we keep a distinction between the rich investment managers and the people who happen to be working in accounts. You should all know this anyway, I'm just reminding everyone.

At a time when bankers bring down governments the way you'd swat flies? I think not somehow_

a.) People owe money to banks. Banks owe money to people. The point of being a bank is to borrow at 1% and loan out at 2%, that's how they make money.

b.) No, they are not within their rights to demand all their money back, because an amortized loan is an amortized loan. Once the contract is signed, there's nothing that can be done. Anyway, bankers are not primarily in the business of taking money in. There's no point taking everybody's money and then burying it under the mattress. They're in the business of loaning it out.

The reason why the crisis happen is simplistically because they lent out too much while keeping too little in their vaults as an insurance buffer. I wouldn't be worried about them demanding all their money back, I'd be worried about a frenzy of loaning out.

c.) The phrase "all the repaying of debts will shrink the amount of money available to pay them" is ambiguous because the different levels of money supply in an economy do not correspond with the usual way individuals look at money. The amount of money available to pay them won't change at all; there'll just be less M3 and above, and more M1. That's sort of what's happening now, by the way - no, banks are not suddenly demanding repayment, but they're lending out less while taking in the same amount as before, so it's a net decrease in credit. Bad news for the Western economies.



I can't speak for you specifically, but I think it's not obvious. Hindsight bias is always an issue. If it was obvious, there would have been enough people to see it and short the market so that they can make money off diving interest rates.

Most people didn't think it was obvious because most people don't keep up with complex financial instruments until it's all over the news, but think about it: the banks lent large amounts of money to people with no assets. How could that not fail?

And quite a few investors and hedge fund managers did see it and did indeed start shorting subprime mortgages using credit default swaps. One of them was an Aspie, in fact! Click here for more information on him.

You're right. I don't think most people even knew what CDS stood for before 2007.
People who were able to short the rates are in the minority, though. If they could, and made money off it, more power to them.



Yeah, double quote, but this is a particularly tricky issue. "Everybody knows" it's "obvious" that a scheme that loans out large amounts of money to people with no collateral is doomed to fail. But there's also an ongoing scheme now, where the debt/asset ratio is 2:1 - it's the American economy. Before the doomsayers jump in now to say things like "that's why America is doomed" and so on, it's still not entirely clear how the economics of debt works.

That aside: I still stand by my point is that it wasn't obvious. There are statistics and physics phDs for whom it wasn't obvious, and I personally know that till today, they're willing to admit that it wasn't obvious. It's easier on the ego, but more foolish, to say that "it's obvious" and go on as per normal, rather than admit that it's not and have a serious re-examination of the way banks go about managing risk.

The point of being a bankER, at any level, is to get as much money as possible, by any relevant means, RIGHT NOW. There was a flaw in the system that was never exposed until recently, which is that bankers made a culturally-driven choice to act responsibly that wasn't made necessary by evolved capitalism alone - until the culture changed and any government regulations put in place to pre-empt this were scrapped_



I didn't mean in the sense of following the exact letter of the law but rather in the sense of following its spirit as seen from the apex of society; contracts can in any case always be successfully disputed, I understand, if you pay your lawyers enough_ Further, regulation was loosened and muddied, and bankers themselves - rather than outsiders - were the regulators of bankers.



This may be so in the long term, but we're not exactly being flooded with offers of *cheap* loans any more, are we?



Having kept too little by, in order to maintain -let alone raise- their high incomes they have no choice but to simply demanding all their money back - and then some.



Lacking a so-called special interest in economics or any googleable search terms, I've no idea what you mean by M3 or M1 (they're also the names of two major British roads and, it seems, much else besides). I take your point, but the net decrease in credit means that nations and individuals have less cash to make repayments with, hence my theory that all money will soon pass to banks, and from there to nowhere but the luxury goods market.



Given the need for mathematicians to devise financial 'instruments', some of our people are also 'to blame', and there's an obvious likelihood that misunderstanding occurred between them and the traders due to the vast differences in mental processing between the two types involved in the respective roles - Either party may not have understood enough about the other's work to fully understand the risk.

Having said that, Bankers even now use the line "it's all too complex for anyone but us pro's to understand", suggesting that they were dimly aware of the risk but didn't care, given that the short-term gains outweighed potential long-term 'gain decreases' for them. Their cageyness about making any attempt to explain or even summarise their work can be explained as a way of putting off outside investors, as well as as a way of hiding their own lack of technical understanding. So as long as the mathematicians made money for their banks and everything was kept very obscure, few had any means or inclination to predict when the system would collapse.