Saturday, Feb 27, 2010
Finding the real enemies of the people
AlterNet: Exposing the Great American Bubble Barons: Join Us in the Investigation
We need a British version of this
Posted by the number cruncher @ 12:12 PM (729 views) Add Comment
4 Comments
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1. paul said...
The FSA responds decisively:
2. paul said...
Oops that was meant to be for the Russian money laundering thread.
3. icarus said...
We associate Wall Street with housing and other bubbles but we should take a look too at the companies they bring to market - loads of duds that get delisted from markets like Nasdaq (down 60% from 10 years ago) and end up on the Pink Sheets trading for pennies, or mergers that are just debt-laden conglomerates that are too bloated to assess their own balance sheets. Wall Street investment banks make as much by putting lipstick on a pig and dumping it on the public as they do by bringing proper companies to market. In fact brokers' commissions are usually higher for the risky stuff - 'misaligned incentives' mean there's often a disconnect between how well clients' portfolios perform and how much the Wall Street firm makes, and it's the latter that decides the broker's remuneration and status.
The opacity to which the article refers means that there's a mish-mash of Other People's Money behind the deals, and the entities that float companies are usually located within a too-complex-to fail Frankenbank. The private partnership that put its own money at risk, and therefore performed proper due diligence, when bringing companies to market is largely a thing of the past.
This is before we even go on about CDSs that give bondholders incentives to bring down viable companies temporarily wounded by the recession.
So much for the 'efficient allocation of capital'. 'This little piggy went to market' says it better.
4. rumble said...
http://community.nasdaq.com/News/2010-02/Something-Very-Strange-Is-Happening-With-Treasuries.aspx