Money, Power & Making The World A Better Place

Posts tagged Banksters

Darwin, The Market Whiz

Who would have thought that a couple of head-butting animals could so accurately describe the folly of arms races and the woes afflicting developed world economies?! 

Who was the greater economist — Adam Smith or Charles Darwin?

Since Darwin, the pioneering naturalist, never thought of himself as an economist, the question seems absurd. Yet his understanding of competition describes economic reality far more accurately than Smith’s. Within the next century, I predict, Darwin will be seen by most economists as the intellectual founder of their discipline.

Smith is renowned for his “invisible hand” theory. According to his modern disciples, it holds that unbridled market forces harness self-interest to serve the common good. Darwin understood that individual and group interests sometimes coincide, as in Smith’s framework. But Darwin also saw that interests at the two levels often conflict sharply. In those cases, he said, individual interests trump.

A spectacular example from nature illustrates his point. The massive antlers of bull elk are often four feet across and weigh more than 40 pounds. Why so big? Darwin’s explanation began with the observation that bull elk, like males in most vertebrate species, take more than one mate if they can. If some succeed, others end up with no mate at all, making them the ultimate losers in the contest to pass along their genes. So bulls fight bitterly for females, and mutations coded for larger antler size help them win. That arms race has produced the gigantic antlers we see today.

As a group, bulls could better escape from wolves in densely wooded areas if their antlers were smaller, yet any individual bull with relatively small antlers would never win a mate. So bull elk are stuck with unwieldy antlers.

Many 19th-century social Darwinists mistook Darwin’s message to be that whatever emerges from the struggle to survive is morally praiseworthy. But Darwin believed no such thing. He understood that competition often favored traits that brought misery to all, and he knew animals like elk could do nothing about it. But human beings, who face similar conflicts, have better options.


The Great Bank Robbery

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For the American economy – and for many other developed economies – the elephant in the room is the amount of money paid to bankers over the last five years. In the United States, the sum stands at an astounding $2.2 trillion for banks that have filings with the US Securities and Exchange Commission. Extrapolating over the coming decade, the numbers would approach $5 trillion, an amount vastly larger than what both President Barack Obama’s administration and his Republican opponents seem willing to cut from further government deficits.

That $5 trillion dollars is not money invested in building roads, schools, and other long-term projects, but is directly transferred from the American economy to the personal accounts of bank executives and employees. Such transfers represent as cunning a tax on everyone else as one can imagine.
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The Great Bank Robbery

For the American economy – and for many other developed economies – the elephant in the room is the amount of money paid to bankers over the last five years. In the United States, the sum stands at an astounding $2.2 trillion for banks that have filings with the US Securities and Exchange Commission. Extrapolating over the coming decade, the numbers would approach $5 trillion, an amount vastly larger than what both President Barack Obama’s administration and his Republican opponents seem willing to cut from further government deficits.

That $5 trillion dollars is not money invested in building roads, schools, and other long-term projects, but is directly transferred from the American economy to the personal accounts of bank executives and employees. Such transfers represent as cunning a tax on everyone else as one can imagine.


I don’t understand banks. Why do they attach chains to their pens. If I’m trusting you with my money, you should trust me with your pens.

Source most-awkward-moments


Cry Me A River, Ralph

So, new banking regulations are costing the banking industry $500 million a year, are they, Mr CBA CEO?

In Mr Norris’ own words:

"The amount of regulatory change is staggering, and so is the cost."

That may well be the case, and I fully expect that regulatory changes such as the (misguided) exit fee ban will have unintended (negative) consequences that far outweigh any benefits consumers might enjoy.

But don’t frame your complaints in the context of the costs that such changes impose on your banking peers’ bottom lines (and, implicitly, your bonuses), Ralph… After all, one might reasonably argue that the extent of reckless banking practices and the support you enjoy from (ridiculous) taxpayer subsidies like negative gearing and FHOG/FHOB - not to mention abuse of the Federal Government’s implied backstop of our banks’ manifestly excessive wholesale funding - are similarly staggering, and costly.