A billionaire explains the middle class

A most reasonable and prudent point!!!!!

I would suggest an even more through survey to determine the overt and implicit banking policies worldwide and their apparent effects, both good and bad, e. g. Malta. This is what business does in their "best practices" surveys, which seem to have had a beneficial effect.

Canada seems to have done well in avoiding the asset bubble "busts" by not allowing bank funds to be used to inflate the asset bubbles in the first place. Although there are a limited number of banks in Canada

Why are the savings we will rely on for retirement or our childrens' education any less of a public health problem than the food we eat?

In most areas of the US, we have restaurant inspections to minimize food born illness, and at the national level we have the FDA to limit injurious additives, and force recalls in significant cases of Ecoli, salmonella and listeria contamination, as well as periodic inspection of our food processing plants, which have resulted in criminal prosecution.

While the FDA and USDA are not perfect [and IMNSHO should be expanded], they are much better than nothing.

Why do you feel it would be necessary to annalize *ALL* investments? For many years the Pareto Principal of "the vital few and the trivial many" has been widely known and taught in Quality Control, and should be applied to the financial markets. History clearly shows which areas are a serious danger.

One example is "auction rate securities." Given the catastrophe these caused for many municipalities, and the widely available alternatives, why are these still allowed, or at the very least, why is the interest income still exempt from federal taxes?

We do not have to prevent every possible scam before we act, enough is known now to minimize/eliminate the major scams.

If we wait for perfect information and complete solutions, we will never act.

Continuing problem in many professions. Is the person paying a customer that gets what they *WANT*, or a patient that gets what they *NEED*?

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Try to find the terms for "rent seeking" and "market manipulation" in the standard economic models. Where's the row and column for the Mafia in the Input/Output matrix?

Many misplace their trust in stockbrokers simply because learning enough to invest wisely is a job in itself, one the stock broker is supposed to do.

I had the good fortune to participate in an investment club which had a requirement of Mensa membership. I learned a lot about investment and also how Ms interact.

One thing I learned was that I would never been able to do well by myself without devoting more time than I could spare.

I also made some money, but the pursuit of wealth has never been a prime motivator for me.

The wealthy Ms I know got it more or less offhandedly, as some of their activities turned out to be very lucrative. Even those considered the pursuit of wealth trivial.

David

Yet the banksters will tell you much different.

Your words, not mine.

I wouldn't mind a system where the banksters have as much to lose as those they exploit. If the investor takes a bath because of chicanery, the bankster shouldn't get a multimillion dollar bonus.

David

Marx stated "From each according to his ability, to each according to his need" and although the concept actually originated with an earlier

anything that left out the first part of the quote :-)

If the savings are held in a government regulated bank or invested in govt backed securities your money will be safer than the food you eat.

But investors wanted to gamble in the hope of getting big fat returns on investment. The idea was the more risky the investment the fatter the returns.

Are you proposing that the govt outlaw all risk in investment?

Should the govt outlaw anything that has the slightest whiff of being a gamble?

Where did I suggest the government outlaw all risk in investment, speculation, or anything else?

What is suggested that the issuers of a security be forced to back up their claims and meet the conditions of the security.

While it is true that depositors in an FDIC insured bank in insured accounts are "safe," it is only because the losses are spread. In other cases, the depositors were flim-flammed into putting their money in non-FDIC/FSLIC insured instruments sold by an insured institution [savings and loan] and lost everything when the S&L cratered.

After the mid 80's crash:

"I talked with my broker today. I said "Hey, Waiter!"

Didn't you experience that yourself in the Air Force?

When the State owns you it can define your needs and your abilities to its own advantage.

-jsw

When you buy something using cash and you get change back, do you count the change? I think that most people do count their change. Not because we t hink the vendor is out to get us, but because it is a prudent thing to do. The same applies to stock brokers. Do you blindly accept the brokers reco mmendations , or do you try to determine if the advice is good. I think tr ying to determine if the advice is good is the prudent thing to do.

It is not hard to do well in the stock market, and does not really take a l ot of time. The book that has what I think is the best on investing is " A Random Walk on Wall Street ". Another book that is probably lighter read ing is Jonathan Clements Money Guide 2015 . I have not read it , but I used to re ad Clements columns in the WSJ and found them excellent.

Dan

Sounds good , but companies that issue stocks do not make any claims beyond that if you buy the stock , you own part of the company. And that is how is should be. The company is in the business of making or selling things. It is not in the business of providing investment opportunities. Granted o n the initial stock offering, they do provide information about the company , but are very careful to state that things can change.

Dan

When did you write anything else?

Where is your evidence that did not happen with private label mortgage backed securities sold to private investors?

Here is the story of one investor who did read the prospectus and determined that the securities were guaranteed to fail at a certain point in time and he made billions on this knowledge that was lying in plain sight for everyone to see.

It is not just that they have insurance protection, deposits are safe because they are set up exactly the way you outlined a safe investment needs to be. A depository institution is required to have sufficient capital to cover losses. If the capital falls below the required level the regulators liquidate the facility and the owners lose everything. In addition deposit taking facilities are severely limited in what they can do to risk deposit money.

In other cases, the depositors were

Keating and others went to jail for the fraud they committed 30 years ago.

After the 2008 debacle private investors have had little luck in the courts because it was the investors that were clamoring for the riskiest loan backed securities. The investors haven't had much luck convincing the courts that the issuers of the securities lied.

The only successful prosecutions have been for bad loans sold to Freddie and Fannie. That is because F&F required that the loans they purchase or guarantee be warranted to meet their rigorous standards.

The securities sold to private investors are a different matter. The private investors were seeking out the securities that contained the riskiest loans because that is where the biggest financial gains could be made. There was no reason for the securitizers to misrepresent the quality of the loans, because loans made to people with no down payment, no income and bad credit scores was a much sought after feature not a flaw. Those were the loan tranches that were producing record profits as long as house prices were increasing.

He is not talking about stocks. He is talking about Asset Backed Securities (ABS).

The difference between an ordinary corporate security and ABS is that when a corporate bond fails the issuer of the bond is a loser along with the investors. In the case of ABS the issuer of the security has no skin in the game and that is what George thinks is some sort of scam.

The fact is the nature of ABS is well understood by investors (i.e. is well explained to investors). The fact that the investor is directly connected to an income stream of a pool of assets is the selling feature of this type of investment.

To the degree that higher ranking officers don't go on the record to disagr ee or interfere, yes.

changes because you ( and the world ) now have a new idea of what will happ en.

Well that's a demand-side leftist social-worker-friendly explanation of it. A *good republican* supply side view would be that some unknown excective (s) of some corporation getting a related contract would, as a result, be d enied incentive/bonus payments from those billions because of that research .

===================== Two other books that I found helpful were

and

most any of John C. Bogle's books. I particularly like his _The Battle for the Soul of Capitalism_