Wednesday, June 10, 2009

Rent seeking

Too bad, we don't see heroes (oops, wrong, see Remarks below about Michael Milken. I'll, most likely, find more on proper search.) in finance. We get a lot of negativity with a little back-slapping (enough to bring on hubris, such as this graphic depicts).

The Economist, recently, had a special report on business in America which included some discussion of the future for the financial types that we have all come to just love so much, of late. Figure 6 above shows the big pay increase that was associated with the madness before the crash.

But, we need finance as a means to facilitate the flows of the economy (several aspects to this that will be re-addressed). But, this discipline need not think that they are it (rather, they're mechanics). Gosh, where did that type of hubris arise?

So, as an opinion in the WSJ ("There Is No Upside to a Down Economy") discusses, we have progress when people strive whether they do it in a mature way or in the adrenaline enhancing manner. Progress can be described, partly, by wealth creation which makes the game non-zero sum, yet, closer to near-zero [to be updated]. Supposedly, everyone benefits in this game.

Why near-zero? With a nod to Adam Smith, we can describe it as some partaking in 'rent seeking' which tends (it will be shown) to have the Minsky property which leads to states of undue speculation and ponzi/madoff, almost as if by necessity. There are ways to measure this, such as the efficacy of moving monies into the pockets of the few from scores of hapless.

Consider that this concept will be added to the basics on money and truth.


02/05/2012 -- Time to update the theme of the best and brightest.

11/27/2011 -- Labor, and those who do it, have much more value than has been allowed.

04/03/2011 -- Need to look at some background. Too, tranche and trash.

12/02/2010 -- Banking is a utility (but we also need plumbers - a few, not an army).

11/30/2010 -- Finance and pay, always problematic.

12/01/2009 -- Some rent is okay.

11/08/2009 -- The gigantic chimera needs proper attention.

09/24/2009 -- Things looking up for those who churn.

08/10/2009 -- As promised, FEDaerated is here.

07/22/2009 -- We need to look at economic causes and their consequences.

06/17/2009 -- We may not have heroes in a general sense, but we have people who are idolized (and more), such as Milken whom we'll use as a focal point to discuss several things. Milken, evidently, is not a fan of Modigliani's opinion. Mike says that structure counts (see WSJ article). By the way, Mike's comments on myths about him will be part of the discussion. His comment #13 makes him out almost to be stockholders' Robin Hood.

Remember, the theme here is that a lot of securitization is bunk, many times. Sheesh, talk about a perpetual motion machine, always moving monies from the pockets of the hapless to that of the fat cats. We need a fresh look.

Modified: 02/05/2012

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