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[Dishevelled Den]

I dont know why you're so pro-banker Albs, if as you say it was all big, bad, Gordon Browns fault then you're agreeing with me, Opti and birthday boy Cem because of GB's "light touch" he believed the bankers who promised they'd behave in the best interests of the city, the government and business - that was the mistake he made - he foolishly and naively believed they wouldn't act like the greedy, selfish spivs they are and always were. dont put a fillet steak in front of a dog and leave the room.....unless you dont want the steak back 

not all of them can be motivated by greed.......some are far too wealthy to care anymore 

Yes, in general terms I would agree with that BJ but I would stop short of condemning an entire industry.

I think the trading floors (and ancillary arms) of this incarnation of the Stock Exchange have indeed shown us how many working within their portals (and financial sector in general) deviated from sound responsible activity when the prospect of great wealth was apparent and regulation lax.

We must never forget that we need a sound, imaginative financial sector but common sense dictates that this must be well regulated.

[Banjax]

I dont know why you're so pro-banker Albs, if as you say it was all big, bad, Gordon Browns fault then you're agreeing with me, Opti and birthday boy Cem because of GB's "light touch" he believed the bankers who promised they'd behave in the best interests of the city, the government and business - that was the mistake he made - he foolishly and naively believed they wouldn't act like the greedy, selfish spivs they are and always were. dont put a fillet steak in front of a dog and leave the room.....unless you dont want the steak back 

not all of them can be motivated by greed.......some are far too wealthy to care anymore 

Yes, in general terms I would agree with that BJ but I would stop short of condemning an entire industry.

I think the trading floors (and ancillary arms) of this incarnation of the Stock Exchange have indeed shown us how many working within their portals (and financial sector in general) deviated from sound responsible activity when the prospect of great wealth was apparent and regulation lax.

We must never forget that we need a sound, imaginative financial sector but common sense dictates that this must be well regulated.

they cant all be irresponsible i agree, Z and no doubt many are highly intelligent financial wizards - but in general they've shown they cant be trusted so their industry needs to be heavily regulated for their own good - we cant afford another bailout and we need to ensure banks keep large stashes of cash instead of constantly gambling with everything - yes they maybe wont make as much money, but they'll be far safer.   

[Nickbat]

I think the trading floors (and ancillary arms) of this incarnation of the Stock Exchange have indeed shown us how many working within their portals (and financial sector in general) deviated from sound responsible activity when the prospect of great wealth was apparent and regulation lax.

We must never forget that we need a sound, imaginative financial sector but common sense dictates that this must be well regulated.

The original Financial Services Act was introduced in 1986 to counter an element of unregulated trading on the market floors. However, trading in those days was very simple...and thus easy to police, once the law was enacted.

Ironically, it was not market floor trading that created the current problem but rather its successor - electronic trading. Once computers became widespread, trading became much cheaper (no need to pay commissions to "real people" on the trading floors), and much more accessible. Business thus mushroomed. On top of this, computing power enabled much easier and faster credit transfers around the world which, in turn, also led to increased business. Furthermore, derivative contracts - which (pre-computer days) would have required the establishment of a new trading floor - could now be set up cheaply within a short time frame on a server. Additionally, the old commodity futures markets - which featured contracts based on physical supply - soon became eclipsed by new cash settlement contracts in financial securities; initially gilts, bunds and the like, but latterly in debt instruments.

Around the turn of the millennium, banks and non-banking financial institutions began to hire "geeks" to devise computer trading programs which analysed risk/return characteristics and effectively did the necessary buying/selling without human interference. Indeed, it has been suggested that one such algorithm, used on Wall Street, had a defective risk element which contributed to the credit crunch.   

IMHO, it was not greed that caused the problem, but rather the technological explosion. The industry became too vast, and too complex, to be adequately controlled using the methods envisaged by the FSA, the SEC and other regulatory bodies.

The endless polemics on here, based as they are on a class war against 'upstart bankers greedily fleecing the people' neatly avoids a harder, more complex and more thought-provoking analysis of the situation.   

[cem_devecioglu]

I dont know why you're so pro-banker Albs, if as you say it was all big, bad, Gordon Browns fault then you're agreeing with me, Opti and birthday boy Cem because of GB's "light touch" he believed the bankers who promised they'd behave in the best interests of the city, the government and business - that was the mistake he made - he foolishly and naively believed they wouldn't act like the greedy, selfish spivs they are and always were. dont put a fillet steak in front of a dog and leave the room.....unless you dont want the steak back 

not all of them can be motivated by greed.......some are far too wealthy to care anymore 

Yes, in general terms I would agree with that BJ but I would stop short of condemning an entire industry.

I think the trading floors (and ancillary arms) of this incarnation of the Stock Exchange have indeed shown us how many working within their portals (and financial sector in general) deviated from sound responsible activity when the prospect of great wealth was apparent and regulation lax.

We must never forget that we need a sound, imaginative financial sector but common sense dictates that this must be well regulated.

they cant all be irresponsible i agree, Z and no doubt many are highly intelligent financial wizards - but in general they've shown they cant be trusted so their industry needs to be heavily regulated for their own good - we cant afford another bailout and we need to ensure banks keep large stashes of cash instead of constantly gambling with everything - yes they maybe wont make as much money, but they'll be far safer.   

they cant.. else you need to pay double interest rates in any kind of credit..

[Dishevelled Den]

I think the trading floors (and ancillary arms) of this incarnation of the Stock Exchange have indeed shown us how many working within their portals (and financial sector in general) deviated from sound responsible activity when the prospect of great wealth was apparent and regulation lax.

We must never forget that we need a sound, imaginative financial sector but common sense dictates that this must be well regulated.

The original Financial Services Act was introduced in 1986 to counter an element of unregulated trading on the market floors. However, trading in those days was very simple...and thus easy to police, once the law was enacted.

Ironically, it was not market floor trading that created the current problem but rather its successor - electronic trading. Once computers became widespread, trading became much cheaper (no need to pay commissions to "real people" on the trading floors), and much more accessible. Business thus mushroomed. On top of this, computing power enabled much easier and faster credit transfers around the world which, in turn, also led to increased business. Furthermore, derivative contracts - which (pre-computer days) would have required the establishment of a new trading floor - could now be set up cheaply within a short time frame on a server. Additionally, the old commodity futures markets - which featured contracts based on physical supply - soon became eclipsed by new cash settlement contracts in financial securities; initially gilts, bunds and the like, but latterly in debt instruments.

Around the turn of the millennium, banks and non-banking financial institutions began to hire "geeks" to devise computer trading programs which analysed risk/return characteristics and effectively did the necessary buying/selling without human interference. Indeed, it has been suggested that one such algorithm, used on Wall Street, had a defective risk element which contributed to the credit crunch.   

IMHO, it was not greed that caused the problem, but rather the technological explosion. The industry became too vast, and too complex, to be adequately controlled using the methods envisaged by the FSA, the SEC and other regulatory bodies.

The endless polemics on here, based as they are on a class war against 'upstart bankers greedily fleecing the people' neatly avoids a harder, more complex and more thought-provoking analysis of the situation.   

Yes, I can see much of that however I would say irrespective of the technology introduced to exploit trading and financial dealings based on the instant analysis afforded by those new systems, button pushers were required to make the system work.

The entire sector was much more organically orientated with individuals deciding whether or not to make deals, shape future trends, bet on variables and so on, the technology simply allowed them to do this more conveniently.

The spur for this aggressive attitude, in my view, was the desire by many in the industry to make money not only for their employers but for themselves.

With regulation being so poor it was inevitable that many would push the boat out too far so I don't blame the machines, I blame the people using them for doing exactly what they did.

Any system that depends on what essentially is gambling faces potential difficulty and this industry, as a result, now faces the harvest of those bitter seeds.

There was obviously a fundamental disconnect between those looking at the computer monitors and making the decisions and the reality of their actions as experienced by many people on the streets outside those august establishments.

I did say in an earlier post that these were indeed complex issues and I certainly agree that no amount of ‘bank bashing’ will rectify the problems we now face.

I would still maintain however that throughout this whole sorry episode we witnessed human excess and incompetence at its worst.

[Nickbat]

Yes, I can see much of that however I would say irrespective of the technology introduced to exploit trading and financial dealings based on the instant analysis afforded by those new systems, button pushers were required to make the system work.

The entire sector was much more organically orientated with individuals deciding whether or not to make deals, shape future trends, bet on variables and so on, the technology simply allowed them to do this more conveniently.

The spur for this aggressive attitude, in my view, was the desire by many in the industry to make money not only for their employers but for themselves.

With regulation being so poor it was inevitable that many would push the boat out too far so I don't blame the machines, I blame the people using them for doing exactly what they did.

Any system that depends on what essentially is gambling faces potential difficulty and this industry, as a result, now faces the harvest of those bitter seeds.

There was obviously a fundamental disconnect between those looking at the computer monitors and making the decisions and the reality of their actions as experienced by many people on the streets outside those august establishments.

I did say in an earlier post that these were indeed complex issues and I certainly agree that no amount of ‘bank bashing’ will rectify the problems we now face.

I would still maintain however that throughout this whole sorry episode we witnessed human excess and incompetence at its worst.

Have to disagree somewhat, Zoo-Lou. Of course, humans set the systems up, and, yes, they were designed to make money. But substantial trading decisions were taken by computer programs. That's the point I am making.

Furthermore, I still don't get this human excess angle. Practically everyone wants to better themselves. A corner shop owner will buy a new product at the cash-and-carry in the hope and expectation that someone will pay him more than he paid for it - and he will charge as much as the market can, in his estimation, bear. It's a gamble. All he does is take it back to his shop and place it on his shelf! Is that a gamble? Yes, of course it is.

Bankers buy things, be it debt or assets, in the hope that, at some point, someone will pay more than the original paid price. Is that a gamble? Yes, of course it is.

Either way, the corner shop owner and the banker both have a role to play in society. 

[Dishevelled Den]

Have to disagree somewhat, Zoo-Lou. Of course, humans set the systems up, and, yes, they were designed to make money. But substantial trading decisions were taken by computer programs. That's the point I am making.

Furthermore, I still don't get this human excess angle. Practically everyone wants to better themselves. A corner shop owner will buy a new product at the cash-and-carry in the hope and expectation that someone will pay him more than he paid for it - and he will charge as much as the market can, in his estimation, bear. It's a gamble. All he does is take it back to his shop and place it on his shelf! Is that a gamble? Yes, of course it is.

Bankers buy things, be it debt or assets, in the hope that, at some point, someone will pay more than the original paid price. Is that a gamble? Yes, of course it is.

Either way, the corner shop owner and the banker both have a role to play in society. 

I would be very surprised (and disappointed) should these computer programmes have been autonomous, surely there must have been some requirement for people to analyse their performance or develop the programme to further suit their requirements?  Should this not have been the case I would suggest that that omission was recklessness in the extreme.

I think the scenes played out by many of those wide-boy types typified this excess and it appeared to me, at least, that many in the 'City' existed in a bubble while being divorced from reality when attempting to experience a level of ‘living’ few had witnessed up to that point.

If gambling is/was such an intrinsic part of commerce I have to say that, in the case of the financial sector, it's very much a case of the 'beaten docket' being the victor.

[Nickbat]

Have to disagree somewhat, Zoo-Lou. Of course, humans set the systems up, and, yes, they were designed to make money. But substantial trading decisions were taken by computer programs. That's the point I am making.

Furthermore, I still don't get this human excess angle. Practically everyone wants to better themselves. A corner shop owner will buy a new product at the cash-and-carry in the hope and expectation that someone will pay him more than he paid for it - and he will charge as much as the market can, in his estimation, bear. It's a gamble. All he does is take it back to his shop and place it on his shelf! Is that a gamble? Yes, of course it is.

Bankers buy things, be it debt or assets, in the hope that, at some point, someone will pay more than the original paid price. Is that a gamble? Yes, of course it is.

Either way, the corner shop owner and the banker both have a role to play in society. 

I would be very surprised (and disappointed) should these computer programmes have been autonomous, surely there must have been some requirement for people to analyse their performance or develop the programme to further suit their requirements?  Should this not have been the case I would suggest that that omission was recklessness in the extreme.

I think the scenes played out by many of those wide-boy types typified this excess and it appeared to me, at least, that many in the 'City' existed in a bubble while being divorced from reality when attempting to experience a level of ‘living’ few had witnessed up to that point.

If gambling is/was such an intrinsic part of commerce I have to say that, in the case of the financial sector, it's very much a case of the 'beaten docket' being the victor.

Let's be honest. An element of gambling is everywhere. If you had control over your pension, you'd gamble by placing your fund wherever you thought you'd get the best return. Indeed, you'd be foolish not to!

"Computer selling/buying" is not an unknown reason for market movements. Essentially, in fast moving markets, buying and stop-loss triggers are placed which are automatically activated at certain price levels. These could be missed by mere humanoids. As far as the faulty risk algorithm is concerned, I used to have a link but I think it is sadly long gone.

[cem_devecioglu]

I think the trading floors (and ancillary arms) of this incarnation of the Stock Exchange have indeed shown us how many working within their portals (and financial sector in general) deviated from sound responsible activity when the prospect of great wealth was apparent and regulation lax.

We must never forget that we need a sound, imaginative financial sector but common sense dictates that this must be well regulated.

The original Financial Services Act was introduced in 1986 to counter an element of unregulated trading on the market floors. However, trading in those days was very simple...and thus easy to police, once the law was enacted.

Ironically, it was not market floor trading that created the current problem but rather its successor - electronic trading. Once computers became widespread, trading became much cheaper (no need to pay commissions to "real people" on the trading floors), and much more accessible. Business thus mushroomed. On top of this, computing power enabled much easier and faster credit transfers around the world which, in turn, also led to increased business. Furthermore, derivative contracts - which (pre-computer days) would have required the establishment of a new trading floor - could now be set up cheaply within a short time frame on a server. Additionally, the old commodity futures markets - which featured contracts based on physical supply - soon became eclipsed by new cash settlement contracts in financial securities; initially gilts, bunds and the like, but latterly in debt instruments.

Around the turn of the millennium, banks and non-banking financial institutions began to hire "geeks" to devise computer trading programs which analysed risk/return characteristics and effectively did the necessary buying/selling without human interference. Indeed, it has been suggested that one such algorithm, used on Wall Street, had a defective risk element which contributed to the credit crunch.   

IMHO, it was not greed that caused the problem, but rather the technological explosion. The industry became too vast, and too complex, to be adequately controlled using the methods envisaged by the FSA, the SEC and other regulatory bodies.

The endless polemics on here, based as they are on a class war against 'upstart bankers greedily fleecing the people' neatly avoids a harder, more complex and more thought-provoking analysis of the situation.   

Nickbat, imo no need for detailed analysis.. in the final case humans take the money, not the computers

[Dishevelled Den]

Let's be honest. An element of gambling is everywhere. If you had control over your pension, you'd gamble by placing your fund wherever you thought you'd get the best return. Indeed, you'd be foolish not to!

"Computer selling/buying" is not an unknown reason for market movements. Essentially, in fast moving markets, buying and stop-loss triggers are placed which are automatically activated at certain price levels. These could be missed by mere humanoids. As far as the faulty risk algorithm is concerned, I used to have a link but I think it is sadly long gone.

Sadly I don't think we'll ever agree on this Nick.

With all the sophistication of the electronic systems used within the industry and the regulatory bodies and legislation used to govern it we are left with legacy of what was, in my view at least, a fundamental breakdown in the financial sector.

I would maintain that this was a result of the desire to amass wealth/improve the trading position/enhance the bottom line by many of those involved in the industry (from clearing banks to market traders, credit providers, building societies and so on)  - irrespective of the consequences or reckless nature of their actions.

[Banjax]

so wait a second Nickbat, they're not financial geniuses after all, just drones sitting at dumb terminals having tough decisions spoon-fed to them based on algorithms they have no idea about and less control over?

i'm confused now...so are these "masters of the universe" just really greedy or really stupid? 

[Nickbat]

so wait a second Nickbat, they're not financial geniuses after all, just drones sitting at dumb terminals having tough decisions spoon-fed to them based on algorithms they have no idea about and less control over?

i'm confused now...so are these "masters of the universe" just really greedy or really stupid? 

Not what I said, or implied.

An analysis of the banking crisis requires thought, research and the ability to present a serious critique.

On the other hand, you can just bandy words like "greedy" and "stupid" around, if that's all you can manage.

[Banjax]

so wait a second Nickbat, they're not financial geniuses after all, just drones sitting at dumb terminals having tough decisions spoon-fed to them based on algorithms they have no idea about and less control over?

i'm confused now...so are these "masters of the universe" just really greedy or really stupid? 

Not what I said, or implied.

An analysis of the banking crisis requires thought, research and the ability to present a serious critique.

On the other hand, you can just bandy words like "greedy" and "stupid" around, if that's all you can manage.

i've said plenty on the subject - i'm boring myself now