Why are investment banks casinos? what's so terrible about derivatives? They're not "pseudo" products, or any more "dangerous" than say a stock.<p>Firstly derivatives have been in use for thusands of years - first employed to lock in prices for future crop harvests. Now millions of businesses rely on derivatives to manage fx exposures, commodity exposures, interest rate exposures and so on. Without recourse to such products companies future cash flows would be much less predictable and expose companies to material risks. Contrary to what you might hear, derivatives ARE socially useful (e.g think the S.Korean business who hedges his USD-denominated payroll liabilities).<p>Secondly, IBs are not casinos. They take risks, but so do retail banks (they borrow short and lend long so you have a duration mis-match leading to credit, liquidity and interest rate exposures). The financial crisis was born out of over-enthusiastic mortgage lending - i.e your basic retail product. Even lehman brothers, a classic IB, went down due to it's large commercial property portfolio which tanked in the crisis (again, nothing to do with derivatives).<p>In all crises governments and the media need someone to blame. IBs are the scape goat this time. But the reality is a heck of a lot more complex than a simplistic "greedy IB assholes running amoke and stealing the world's wealth with nasty derivatives".<p>Indeed all the regulation that's now been implemented is incredibly counter-productive. It doesn't make banks safer (people can and will always make stupid business decisions no matter how much regulation you deploy), it increases costs and restricts lending - the very opposite of what's needed to finance a return to, or increase in growth.
Google cache works - <a href="http://webcache.googleusercontent.com/search?q=cache%3Awww.gregpalast.com%2Flarry-summers-and-the-secret-end-game-memo%2F&oq=cache%3Awww.gregpalast.com%2Flarry-summers-and-the-secret-end-game-memo%2F&aqs=chrome..69i57j69i58j69i60.2226j0" rel="nofollow">http://webcache.googleusercontent.com/search?q=cache%3Awww.g...</a>
The discussion of the vice post from yesterday:<p><a href="https://news.ycombinator.com/item?id=6260126" rel="nofollow">https://news.ycombinator.com/item?id=6260126</a>
Apologies, I didn’t find this discussion from yesterday: <a href="https://news.ycombinator.com/item?id=6260126" rel="nofollow">https://news.ycombinator.com/item?id=6260126</a> where the article is on vice.com.
> <i>But Lula's refusenik stance paid off for Brazil which, alone among Western nations, survived and thrived during the 2007-9 bank crisis.</i><p>I guess Australia doesn't exist in conspiracy theories.