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Casino Banking
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Is seems that most, if not all, of the traders in these banks are wildly successful making mega millions in the process. As no new money is involved in most of these processes who are the losers? Stew
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Let's pare the situation down to a minimum.
The bankers involved decide to invest their companies money in assets. These assets are valued periodically. If the assessed value is greater than that originally paid by the bank, a gain on paper has occurred, Bonuses have traditionally been assessed on the paper gain.
But the gain is only on paper- the real gain only occurs when the asset is sold.
If value of the asset falls, the gain can turn into a loss. But the bonus has long since been paid to the individual.
The losers are the owners (shareholders) of the bank, whose investment declines sharply. The losers MAY also be any new investors (aka Government using taxpayers' money) who take a stake in the bank by injecting new capital into it. But those new investors may also take a handsome gain if the value of the bank (reflected in its share price) rises.
The bankers involved decide to invest their companies money in assets. These assets are valued periodically. If the assessed value is greater than that originally paid by the bank, a gain on paper has occurred, Bonuses have traditionally been assessed on the paper gain.
But the gain is only on paper- the real gain only occurs when the asset is sold.
If value of the asset falls, the gain can turn into a loss. But the bonus has long since been paid to the individual.
The losers are the owners (shareholders) of the bank, whose investment declines sharply. The losers MAY also be any new investors (aka Government using taxpayers' money) who take a stake in the bank by injecting new capital into it. But those new investors may also take a handsome gain if the value of the bank (reflected in its share price) rises.
So if big losses are made the bill is paid by the banks investors which include pension funds, insurance companies etc. and moving further back in the investment line ultimately to the man and woman in the street. If the trader's gamble comes off and a large profit is made and the chancellor takes his cut , this tax take comes ultimately from the man and woman in the street. So the massive amounts of money that were paid to the chancellor by the investment banks over the past decade or so really were a hidden tax on the working population of the country. Is this correct?
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