The Perversity Of Bank-Driven Policy Response
by ilene - May 12th, 2010 7:15 pm
The Perversity Of Bank-Driven Policy Response
Courtesy of Karl Denninger, The Market Ticker
If you’re wondering why the big banks have "captured" the political environment in every nation of the world, you need only look at the Goldman results through a somewhat-different lens.
See, it wasn’t just Goldman - it was also Bank of America, Citibank and JP Morgan who scored "perfect quarters."
Now if Goldman’s record was predicated on the outcome of a game of chance set of odds and had an 8.67 x 10-19 probability of occurring, for four of these institutions to do so would be that to the 4th power, or something approaching 5.65 x 10-73.
As pointed out in the forum by Tsberts, there are fewer than this many particles (atoms, etc) in the known universe.
Now it is certainly true that trading activities are not a pure game of chance, and that most of the trading profits are generated from "market making" (that is, earning a spread.)
But that makes the performance even more outrageous, because these "market making" activities are claimed to be something that provides net benefit to market participants and thus the economy as a whole.
That claim looks awfully hard to sustain when the book-maker never loses – not even once on a daily aggregate basis.
Indeed, this puts into stark relief the nature of "banking" these days in the Wall Street context, which is increasingly nothing more than an activity intended and executed to skim off profits for the banksters at the expense of literally everyone else in the economy.
They seem to be doing a good job of it too, if these results are any indication.
Here’s the problem with this, assuming you’re not a bank executive:…