22 Dec 2011
“The point is, ladies and gentleman, that 'greed' -for lack of a better word- is good.
Greed is right. Greed works. Greed clarifies, cuts through, and captures the essence
of the evolutionary spirit. Greed, in all of its forms -greed for life, for money, for love,
knowledge- has marked the upward surge of mankind. And greed -you mark my words-
will not only save Teldar Paper, but that other malfunctioning corporation called the USA.”
- This is the famous quote from the fictional character Gordon Gekko in the motion picture Wall Street. Because of Gordon Gekko people actually think everybody involved in the financial industry is rich, slick and not bound by any moral awareness. When in fact 90% of the people working in the industry would remind you more of the cast of Revenge of the Nerds……
At this point in time working at a financial institution makes you about as popular as an arms dealer. When in fact all we do is provide services that are wanted by the market, the products created are created because of the market’s demand for them. Financial institutions have not created the current crisis, they have just serviced them!
Don’t get me wrong, financial institutions have made huge mistakes and their greediness is at the base of what is elementarily wrong in the current system. But everybody should remember what their individual contribution has been to what’s wrong in the system. Maybe your own greediness made you unaware of risks you were taking when investing, or made you buy your house at the top of the market, because you believed you could flip it in the next couple of years making 15% a year. Just remember nobody was holding a gun to your head. At the end of the day one is responsible for his own actions and decisions. And if there is actual fraud or deception believe me the ones guilty will be held accountable. The financial market is the most regulated and frowned upon market in the world. When abuses occur in this market and are not penalized, maybe governments are to blame.
You can’t blame companies trying to make money, if a bakery would charge you €10,- for a normal whole wheat bread you also wouldn’t buy it now would you? Same goes for financial institutions, the only difference is their products are more complicated.
One of these complicated products that made the market go bust in 2008 was the infamous CDO (Collateralized debt obligation), in which many mortgages were wrapped to take down their individual risk. We all know how that turned out.
But if CDO’s would not have existed many people would not have been able to own a house in the first place. It was not just the banks who believed it was important that everybody should own a house – it was the government. One of the major goals of first the Clinton and later the Bush administration was boosting the rate of home ownership. The CDOs where simply made to meet a demand in the market. In hindsight it is easy to see numerous flaws of the product, but when they were being traded nobody saw them, maybe everybody’s glasses were fogged up with greed? - Since the 2008 crisis public opinion of financial institutions has taken a turn for the worse, in some cases this is justified in others not. The ones that got away with major flaws are the rating agencies. In the week before the collapse, Lehman Brothers was rated A by S&P, one of the big 3 rating agencies. CDOs were rated incorrectly as well, yet still the market listens to these agencies, who are far too influential if you ask me. When they downgrade a country or financial institution the consequences are immense. Do not forget these are commercial companies, I believe such responsibility should be held by institutions like the IMF for instance.
A more recent phenomenon is the occupy movement who as the name suggests occupy for instance Wall Street in a nonviolent protest against the inequality of the distribution of wealth. A noble cause and even though I believe they are barking up the wrong tree, I have great respect for the perseverance these protesters show. As it is with most things it has sailed across the ocean and we have our very own Occupy protest in Amsterdam! Not as impressive as the one on Wall Street but still. The only difference is that a large part of the protesters in Amsterdam have no idea why they are protesting and forget that the distribution of wealth in the Netherlands is not half as bad as it is in the U.S.
To unveil how evil the financial industry really is Foodwatch has now published a report that shows how financial institutions by trading commodities are enriching themselves on the backs of starving people. They however have forgotten that there are many factors that influence the food problem, such as:
• World population growth (currently 7 Billion
9.1 Billion expected before 2050)
• Increasing meat demand in Asia (1 kg of beef requires
7 kg of feed grain)
• Effects of price increases in oil
• Devaluation of the US Dollar
• Declining world food stockpiles
• Food used for producing Biofuel
• Etc.
Again I am not saying that financial institutions have no impact on food pricing (I believe they make the prices much more volatile, not more expensive), but it seems to be a trend to blame the financial industry for everything that is wrong in the world.
