I wish I could find it but the other day I saw a chart that showed a breakdown of how the 1% earned their money. What really struck me is that only about 2% were entrepreuners. The vast majority were corporate and fiancial top execs, with a sprinkling of high-earning doctors and lawyers.
I think that's interesting, as well as suggestive.
I'm not part of OWS - but I think there's some sentiment that it's wrong to get rich off of someone else's money. Athletes, doctors, entrepreneurs - generally get rich off of their own abilities. I'd guess the OWS feel that's fine (my neighbor Charlie Daniels is fairly well off - but he's talented).
Bankers get rich off of other people's money (although the do it with their consent).
Let's think up a scenario:
I manage 10 million in assets for some individuals, and charge 1 percent --- my management fee is $100,000.
I invest my clients' funds, earning them $500,000 (5 percent). My management fee is gobbles up 20 percent of their earnings, but only 1 percent of the asset base. Most people would figure that's okay.
Now imagine this - I use my clients' $10 million to fund high-risk jumbo mortgages that pay a higher interest rate - but don't hold the mortages --- I immediately bundle the high-risk assets, and sell them off to a secondary market (state pension board), generating $11 million --- or $1 million in profits for my clients. This time, my compensation is equal to half of the profits, (my clients get $500,000 in gains - more than they would have, otherwise). I suspect more people would feel this arrangement is exploitive. My clients don't really mind, though - I made them more money than they would have, normally.
I suspect the bigger problems come with retirement funds and pensions - where large amounts of money are involved --- and opportunism is pervasive.
And let's say you use your client's assets to create some exotic fund that you know is worth zip, and you sell it to other institutions as something that is falsely rated "AAA", and behind the scenes you are buying an insurance policy that will pay you a HUGE amount when (not "if", but WHEN) it goes belly up...
And let's say that when it goes belly-up, you go to the government and cry that you are "too big to fail", and taxpayer money is needed to cover your losses... (Socializing the risk); and if by some miracle they make money before they crash, you get to keep all the profits... (Privatizing the rewards)...
And let's say you get the taxpayer money to cover your losses, and you put the money into your company's slush fund; pay the morons that came up with the scheme millions of dollars worth of "bonuses" for their "performance", and tell the clients that you're "sorry, but they lost their investment."
And let's say that when it goes belly-up, you go to the government and cry that you are "too big to fail", and taxpayer money is needed to cover your losses... (Socializing the risk); and if by some miracle they make money before they crash, you get to keep all the profits... (Privatizing the rewards)...
And let's say you get the taxpayer money to cover your losses, and you put the money into your company's slush fund; pay the morons that came up with the scheme millions of dollars worth of "bonuses" for their "performance", and tell the clients that you're "sorry, but they lost their investment."
This is called fraud- knowingly mismanaging money (OPM)- there are laws to address this- and they should be prosecuted. The government who bailed out these corporations are also corrupt- they have comitted a crime against all taxpayers. This is not capitalism. They violated the cardinal rule of capitalism- moral hazard.
Also- we taxpayers should never again accept the premise of "too big to fail"- which has never existed in the vocabulary of the free market before 2008.
It was made up out of thin air (and this too was a crime)- the free market never bails out a loser! Ever.
2wlady wrote: Still waiting for someone in the banking fiasco to get charged and convicted under Sarbannes-Oxley.
Never will happen (IMO) just read this sentence?
An Act - To protect investors by improving the accuracy and reliability of corporate disclosures made pursuant to the securities laws, and for other purposes
http://www.sox-online.com/soxact.html#sec1
What accuaracy? What realibility? What other purposes? Is this not the job of the SEC?
When was the last "commission something" to ever produce something for our protection? When in fact all commissions are politically driven. Kind of like the pot calling the kettle black. All it did was create another dam agency or I should say "Public Company Accounting Oversight Board" @ [url=http://pcaobus.org" onclick="window.open(this.href);return false;]http://pcaobus.org[/url] which to me looks like another agency referred to as the GAO.
AspenValley wrote: I wish I could find it but the other day I saw a chart that showed a breakdown of how the 1% earned their money. What really struck me is that only about 2% were entrepreuners. The vast majority were corporate and fiancial top execs, with a sprinkling of high-earning doctors and lawyers.
I think that's interesting, as well as suggestive.
Can you recall where you may have seen or found the data? Did you do a search under something, because it does have my interest now that we are all getting knee deep into the education side of things....
bailey bud wrote: What's the problem with bankers on Wall Street?
I'm not part of OWS - but I think there's some sentiment that it's wrong to get rich off of someone else's money. Athletes, doctors, entrepreneurs - generally get rich off of their own abilities. I'd guess the OWS feel that's fine (my neighbor Charlie Daniels is fairly well off - but he's talented).
Bankers get rich off of other people's money (although the do it with their consent).
Let's think up a scenario:
I manage 10 million in assets for some individuals, and charge 1 percent --- my management fee is $100,000.
I invest my clients' funds, earning them $500,000 (5 percent). My management fee is gobbles up 20 percent of their earnings, but only 1 percent of the asset base. Most people would figure that's okay.
Now imagine this - I use my clients' $10 million to fund high-risk jumbo mortgages that pay a higher interest rate - but don't hold the mortages --- I immediately bundle the high-risk assets, and sell them off to a secondary market (state pension board), generating $11 million --- or $1 million in profits for my clients. This time, my compensation is equal to half of the profits, (my clients get $500,000 in gains - more than they would have, otherwise). I suspect more people would feel this arrangement is exploitive. My clients don't really mind, though - I made them more money than they would have, normally.
I suspect the bigger problems come with retirement funds and pensions - where large amounts of money are involved --- and opportunism is pervasive.
We don't need to imagine anymore now do we Seems you are not the only one that can make it wiggle :thumbsup:
I often wonder whether or not SS actually does exist? With an IRA or Roth I can at least take back even if there is a penalty.
Seems you are not the only one that can make it wiggle :thumbsup:
