Here's what I don't get. Why are US Investment Banks so inbred?

[Barack_America]

Why are they so heavily invested in one another?

Granted, I've not been blessed with money to invest, but it seems pretty obvious that this practice just sets up the domino effect that we're now seeing. When one fails, it pretty much sets up the others to do the same.

It's funny, all of the financial commercials I hear talk about the necessity to "diversify your portfolio". Is this the best that the investment banks could themselves do in this regard?

I'd love to hear input from someone who knows more than I do about this (which means someone who knows ANYTHING about this, lol.)

[quartz]

1. It´s not investing,

it´s "preying on one another"

[Barack_America]

7. More like failed symbiosis.

There may have been a predatory event, but it seems the predator became far too reliant on the prey's continued function for their own survival.

[billyoc]

2. Concentration of wealth is not without it's drawbacks.

There are only so many people who can sit in on a billion dollar poker game.

[EmeraldCityGrl]

3. So can we expect some of them to start diving off of buildings in

the Financial District?

[billyoc]

5. Keep hope alive!

:rofl:

[RaleighNCDUer]

16. ...and where do we get tickets? nt

[EmeraldCityGrl]

22. No tickets required. Just bring your lounge chairs and your

"WE TOLD YOU SO...VOTE FOR CHANGE...VOTE OBAMA/BIDEN" signs

:toast:

[magellan]

4. Is this anything to do with the repeal of Glass-Steagall? n/t

[TexasObserver]

6. It's because the GOP has not controlled concentrations of power & money.

In the 1980s, under the Reagan administration, all the governmental limitations on the concentrations of ownership, all the anti monopoly provisions, were dealt set backs, as the GOP pushed its agenda that the market should not be bridled so much by government.

That trend has continued severely under the Bush administration, and for the past 8 years, there has been no effort at all by anyone in the Bush administration to assure that economic power is not concentrated. Bigness has the rule of the day. The top banks, the top accounting firms, the top investment firms, the top law firms - merger city under Reagan and under Bush, because no is saying "hey, that's not such a great idea."

As these giants fall, the wisdom of requiring diversified ownerships is borne out, yet again.

Democrats always have to clean up Republican messes in the economy.

[Barack_America]

10. I get that there should be govt. regulations about this sort of thing.

But it just seems to me that it's such a piss-poor business model that I don't see the temptation to do it in the first place.

[bemildred]

8. Think of it as financial masturbation and incest.

That is not far off the mark.

[Orsino]

9. Because their boards of directors are. n/t

[Barack_America]

15. That seems to make sense.

In the sense to explain the situation, not to justify it as a reasonable business model.

[SoCalDem]

11. Musical chaiirs, hot-potato, ponzi schemes

they all play those games with each other..using OUR money..

[Barack_America]

13. Why? For easy profit?

I just don't see how any sound business model could include such things. Surely they must realize that smoke and mirrors will inevitably be realized to be just that.

[RaleighNCDUer]

17. But up to the point when it all falls apart,

what a RUSH.

People who are no smarter than you or I making our lifetime salaries in a week.

That's why it happens.

[Barack_America]

18. It's pretty shocking. And here I was thinking that Wall Street was full of Warren Buffet types...

Disciplined, shrewd and philosophical about business. Certainly doesn't seem to be the case. You kind of wonder how these people even climb the corporate ladder to begin with. Connections, I guess.

Yeah, when I do get out of school and make some money, I'll be steering clear of the stock market. Gold and Treasury Bonds, here I come! ;)

[SoCalDem]

19. My guess is that they think they can "quit" in time

and bank their own "winnings"...It's human nature..everyone who "wins" in Vegas, conveniently omits the money it took for them to "win"...but with these scheme-bankers, they are not using their own money.:(

when I go to vegas and "win" $500, after "investing" $400, I won, but I risked my own money..and the times that it ended up the other way, only I "lost".. It cost you nothing :)

[endarkenment]

12. Capitalism naturally consolidates control.

Democratic social regulation of financial and industrial systems introduced by the two Roosevelts, but mostly in the reform era of the new deal, restricted and regulated this consolidation in order to promote the general welfare by constraining the damage done by any single failure. The corruption of our republic by a clique of extremely wealthy and powerful corporations and individuals, initiated during WWII and culminating in the Bush Cabal now in power, has swept away much of that regulation through a combination of corrupt non-oversight and outright legal repeal.

We are once again, as in the late 20s, in peril of the complete collapse of a tightly integrated interlocked and monopolistic financial sector. The rolling disaster continues. Nervous backers of the out of control US treasury are watching and wondering when to finally pull the plug. The curse: 'may you live in interesting times' is in play.

[radfringe]

14. check out THEY RULE

They Rule
www.theyrule.net

Please note that you will need Flash Player 7.

A Brief Explanation
They Rule allows you to create maps of the interlocking directories of the top companies in the US in 2004.
The data was collected from their websites and SEC filings in early 2004, so it may not be completely accurate - companies merge and disappear and directors shift boards.

[Cleita]

20. Just an observation.

Back in 1961 when I got my first grown up job, it was at the Bank of America. Back then banks and savings and loans were distinct and separate and by law served different functions in the banking arena. Also, banks could only be chartered in one state. So Bank of America then was the largest and richest bank in California, period, but no where else. National banks were not even heard of with the exception of some large NYC based banks that served as transfer agents and dealt with international banking. Even so the prosaic banking functions of those institutions were confined to the state of New York. It seems that back then the economy was flourishing and the system with regulation and keeping corporations within the confines of their speciality worked. Industries could not pollute each other by buying out companies that had nothing to do with their base so companies like General Electric a manufacturing company of electrical and electronic goods couldn't become the parent company of a broadcasting company like NBC.

I can't comment on whether the regulations were maybe too strict because I don't know, but I do know that the deregulation that lead to the laissez faire economics of today is definitely not a good idea.

[Barack_America]

21. That's a very interesting perspective.

Thanks for posting it.

I think the problem with deregulation seems to be that it assumes that the industry will operate in the best interests of the industry. But this year (and back in 1987) has shown that doesn't seem to be the case. Industry big wigs will act in their own best interests, their businesses and the industry as a whole be damned.

It's a shame to see that so many who have risen to great power in this country seem to have so little common sense and senses of responsibility.

As a nation, we had better start getting more disciplined and educated in ALL fields or we are soon going to find ourselves on the sidelines. We've gotten about as dumb and selfish as we can afford to get.