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I'll explain it to you simply .... The reason everything is so messed up now is because everything was driven by "THE DEAL"
When you make a deal a transaction occurs ... people were being rewarded for making a transaction. If you sell houses for a living it doesn't matter whether the family can afford it or not - you get commission for making the deal happen.
If you are a stock brokerage firm you get commission on everything - whether it's someone buying or selling shares - they get a commission and a fee either way.
People weren't rewarded by profits - they were rewarded by making deals happen - everyone is on commissions these days for making the deal happen. Plumbers get commission for selling boilers whether it's actually best for the customer there's money to be made. Even post office workers are constantly trying to sell you things when all you want to do is post a letter.
What's happened is all because people were being rewarded for making deals happens regardless if they were good long term deals or not.
As an example I just recently earned £65 commission for signing up for a particular car insurance policy through a certain cashback commission website. If I'd gone direct to the insurance company the price would be exactly the same - but £65 is what they pay to make the deal happen.
If you sell mobile phones the networks will pay hundreds of pound in commission to the shop if you get them to sign a contract. The shop doesn't care of the customer can afford £30 or £40 a month or not, they'll make their money on the commission.
Ebay, Google, PayPal, etc all make Billions every year not by selling you a real tangible product you can hold in your hands but by facilitating transactions online.
When you have a culture of making money based on commissions people aren't taking the time to look at things like long term profit and loss.
What alternative is there?
the world is going to the shits my poor wretched friends.
It is doable. But just won't happen because money has the unique properties of turning decent human beings into greedy bastards
How about Communism?
We're going to give it a go in Iceland now that the Russians are here to help.
But even if we are stuck with capitalism, the point is there ways and ways of running a capitalism-based society and economy. There is nothing that stops companies and their CEOs and directors from sharing dividends more equally with their workforce. There is nothing that stops companies from offering better services and products, instead of creaming every last penny of profit for theemselves and their shareholders.
Suggestions that this is not really doable and that the system would collapse are complete bollocks. It's just a case of greedy bastards not wanting to share and pocketing everything they get their hands on.
And who invented money? Lets face it there are a significant % of humans who just dont give a damn about other people. And in reality on the broadest scale that does include most of us really. How many of us volenteer our time to help those less fortunate for example?
Broad statements about people being less greedy are pointless, we just need tighter rules on how finance is governed. But I'm not overtly convinced that allowing the government to run everything would make it better.
There are exceptions of course but the bulk of people who moan and moan and moan about taxes are those who are the least affected by them. Why should this be so, if not because money does tend to have the effect of making people avaricious and dehumanising them?
The legislators are the ones that allowed paper money by law.
There is more to come.
"It is the policy of the federal government to use all resources at its disposal to make our financial system stronger," Mr.Paulson said. "We will use all of the tools we've been given to maximum effectiveness, including strengthening the capitalization of financial institutions of every size."
My experience is that those who have the least money show unwillingness to part with it (for obvious reasons) those with the most (Bill Gates, JK Rowling, warren Buffet) show an absolute willingness to do so.
To blame money for the world's ill is as stupid as blaming oxygen. People have been blugeoning other way before money was invented - in fact money reduces violence as an effective method of exchange. After all why go and beat up the neighbouring tribe for their pots when you can buy them instead.
I think the problem is that people want nice pure answers for the world's problems, when actually most of the pure answers don't work and the solutions aren't pure.
I recently met someone who works for a phone company and she was complaining that she spent two hours with a customer in store and finally signed her up to something and earned £7.50p commission - but that was better then signing someone up with an iPhone because they get zero commission on iPhone sales .. because the iPhone sell themselves.
Profit related pay used to be a long term incentive in the past but that has now been replaced a lot by commissions, instant results = instant rewards. But the long term stuff gets shelved as an after thought.
Part of the problem is most people I know live far beyond their means and are all too happy to spend now - put it on a credit card and end up paying much more over the long term for the things they simply cannot wait and save up for.
Think about it, they invested billiions of money into other companies and other banks, and then making billions of profit of those investments, then they continue to give non-payable loans and mortgages to people, whilst continuing to make millions from investing peoples' money, then they fuck it up and the government pays for the downfall of it all, whilst the bankers are still living it large with their millions of pounds.
Well that's £500bn down the drain then...
Seeing as much of the continuing problems are said to be caused by speculators and short term gamblers (who surely are the dictionary defintion of a good-for-nothing parasite who contributes absolutely fuck all to society), wouldn't we be a lot better off putting them against the nearest wall and having them shot?
(Not literally, before anyone starts).
I've never been much of a fan of capitalism (shock news to you all I'm sure) but I do have a particular problem with the stocks and shares side of it, and specially with those fucking glorified gamblers who specialise in capitalising on the misery of others, and indeed sometimes they are the cause of financial hardship for millions as they actively work to undermine institutions and bet against them.
Worse than paedos if you ask me.
If that mechanism wasn't there companies wouldn't innovate / profit maximise as much - basically they'd act wastefully like the government. It's the same with the whole economy, people will invest in currencies that are stronger than others so there is a direct consequence of letting inflation spiral out of control, rich people will pull out of that currency.
I agree some do abuse it but it's part of the automatic checks and balances system integrated into capitalism. The successful and 'best' at doing something thrive whilst those who aren't as good fall over and have the money that was invested in them, reinvested somewhere else that is more successful.
I thought that was one of the big selling points of capitalism anyway: competition on the street between companies helping the consumer, keeping prices in check and promoting innovation and better products. All this gambling and speculating is certainly not needed for competitiveness to take place.
I still fail to see any redeeming features or positive contributions of such practices for anyone- other than for the people doing it of course.
And when things go a bit wrong, suddenly it's panic selling and herd mentality, without any logic or rational thought whatsoever, like a herd of lemmings.
Its interlinked, the whole point of issuing shares is that you get money for them to invest in the business.
How well you then run the business is then reflected in the price.
What I think we can agree on is the practice of shorting and its destructive effects. However that also depends on how much damage you think that shorting has done, many people see it as the canary in the mine shaft.
Surely the "Credit Crunch" as it has been called for some reason, is down to the banks themselves making a hash and bollocks of everything? They offered and gave 110% loans (WTF?), They pushed credit card use on people and card banking over money and book banking. They are the ones who begin interest on debts the moment a statement is issued NOT when it is recieved by the customer, so if they pay off a credit card bill in full they then still owe some interest so they have to over pay bills to make sure they dont maintain an accumulative debt. Banks were the ones who tagged on ridiculous charges on every little thing to hoarde our money greedily for themselves and throw around lending to one another in a showy way while executives gave themselves MASSIVE Bonuses in the tune of Millions of pounds (£££).
Essentially, the Banks and big investment banks and money lenders and insurers and so on are the reason this "Credit Crunch" became a "slump" that became a "Recession" that is teetering very much on the knife edge of "Depression"! If they hadnt thrown around money carelessly wanting to lend and borrow this would only be a down turn in the economy not a DISASTER the likes of which not seen in... well, decades!
France had limits on lending and borrowing and they are weather the storm, other Governments are guaranteeing 100% savings of its people, banks are been bailed out left and right and tax payers money is being used to pump what is now Hundreds of Billions of Dollars and Pounds into economies the worlds over, in the desperate hope that the money will trickle back to tax payers in years to come... yeah, not happening, not going to happen for a VERY long time, oh and thanks to Government recommendations into using Icelandic banks... Local Councils are in the shit now too!
What a fucking Genius Gordon Brown was as Chancellor to leave the British Economy in such an exposed position and now as Prime Minister he is going back on everything he ever said because it was all bollocks he made up to sound important as Chancellor...he had no clue then and just was lucky to be chancellor at a time things were easy and he has no clue now things are hard! Fuck Him!