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China Sums Up US Financial Innovation: "Smart Kids Picking People's Pockets Is Not Very Good"

Tyler Durden's picture





 

When fringe-blogs highlight the reality of the US banking system and its financial engineering as nothing but overly complex three-card-Monte, it can be shrugged off; but when the head of China's sovereign wealth fund (yes the same one that will bail the world out) notes that the JPMorgan loss highlights a system that has become too complex, perhaps some should listen. As Bloomberg BusinessWeek reports, Gao Xiqing of CIC stated that "I think we do need to slow down a little bit instead of rushing up to all these fancy derivatives." The fact that the 'whale' loss was not a rogue trader but a systemic decision gone wrong on weak risk management of an overly-complex position was "the single most revealing thing" to Gao as he expressed concern about a society in which "all the best engineers are engineering financial products." Summing up the entire ethos of US financial innovation he concluded: "You have all the smartest kids to design these products, the only purpose of which is to get money out of other people’s pockets, that is not very good."

 

Via Bloomberg BusinessWeek:

JPMorgan Chase & Co. (JPM)’s $5.8 billion trading loss this year showed that the financial system is getting too complicated for even respected institutions, the president of China’s sovereign-wealth fund said.

 

You are creating a system that very few people understand, much less the regulators because the regulators haven’t the incentives like the bankers,” Gao Xiqing, president of China Investment Corp., said today at a lunch hosted by the Economic Club of New York. “As a former regulator I think we do need to slow down a little bit instead of rushing up to all those fancy derivatives.”

 

Gao, who said he was speaking in a personal capacity and not in his role at the CIC, said the loss attributed to a trader known as the London Whale was especially instructive because it happened at a bank he holds in high regard and wasn’t the result of a rogue employee. New York-based JPMorgan, the biggest U.S. bank by assets, lost the money because of derivatives held by its chief investment office.

 

“That single thing was most revealing to me at least because I respect this institution JPMorgan very much,” he said. “We believe in their risk management, we believe in the fact that they’re being cautious.”

 

He expressed concern about a society in which “all the best engineers are engineering financial products.”

 

“You have all the smartest kids to design these products, the only purpose of which is to get money out of other people’s pockets,” he said. “That is not very good.”

 

Gao said he tries to avoid relying on financial models in his own investments because he doesn’t trust them.

 

CIC is an investor in Morgan Stanley (MS), the sixth-biggest U.S. bank, which competes with JPMorgan.

 


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Mon, 10/08/2012 - 10:05 | Link to Comment mrktwtch2
mrktwtch2's picture

"there is a sucker born every minute"..pt barnum..

Mon, 10/08/2012 - 10:10 | Link to Comment GetZeeGold
GetZeeGold's picture

 

 

 

Getting schooled by China.......this truly is rock bottom.

 

No problem....we'll send our kids to China as foreign exchange students....get some Timmy.

 

Mon, 10/08/2012 - 10:10 | Link to Comment john39
john39's picture

The U.S. is a couple hundred years old... China is several thousand years old...  these games have come and gone many times in China, and enough of them know their history to know this time is not different, only bigger in scale.

Mon, 10/08/2012 - 10:14 | Link to Comment greased up deaf guy
greased up deaf guy's picture

the truth hurts... especially when it comes from the epicenter of truthiness.

Mon, 10/08/2012 - 10:21 | Link to Comment malikai
malikai's picture

I was totally with him until this line:

CIC is an investor in Morgan Stanley (MS), the sixth-biggest U.S. bank, which competes with JP Morgan.

Mon, 10/08/2012 - 10:37 | Link to Comment imaginalis
imaginalis's picture

Oh, and like the Chinese banks don't know how to steal money. Although, perhaps they don't rate as bad as some of the other thieving cooperatives like found in Burkina Faso, London and New York.

Mon, 10/08/2012 - 10:50 | Link to Comment Urban Redneck
Urban Redneck's picture

Hey, leave my buddies in Burkina Faso out of your evil spawn of satan banker rant, they're HONEST THIEVES, unlike the City or NY banker varietals.

Mon, 10/08/2012 - 11:09 | Link to Comment derek_vineyard
derek_vineyard's picture

collective insanity.....intelligence gone destructive, again

 

a breathe of fresh air would be a movement for the the young minds to try to create something constructive---lets say alternative energies.  what if................what if people actually wanted to create something useful and society backed them?

fairy tale....wake up, derek

Mon, 10/08/2012 - 12:24 | Link to Comment economics9698
economics9698's picture

Those fucking Chinese are like the Borg, they keep getting smarter.  

Mon, 10/08/2012 - 16:47 | Link to Comment Panafrican Funk...
Panafrican Funktron Robot's picture

"lets say alternative energies"

The energy companies are pretty awesome at buying up alt energy patents and stuffing them on the shelves, never to be used.

Mon, 10/08/2012 - 13:50 | Link to Comment TheFourthStooge-ing
TheFourthStooge-ing's picture

Urban Redneck said:

Hey, leave my buddies in Burkina Faso out of your evil spawn of satan banker rant, they're HONEST THIEVES, unlike the City or NY banker varietals.

How true, indeed. Besides, all of that bad stuff happened when they were called Upper Volta.

When you change the name, you change the game. I mean, look at GMAC. They were as rotten as they come, but now that they're called Ally, they are honest, caring, and profitable.

Mon, 10/08/2012 - 10:38 | Link to Comment ParkAveFlasher
ParkAveFlasher's picture

This is an extremely astute analysis that critiques the society in a nutshell.  Our best minds do not design, produce, maintain, and perfect real engines, they manufacture financial calculations with the only goal of delaying the inevitable.  

Mon, 10/08/2012 - 11:33 | Link to Comment NotApplicable
NotApplicable's picture

Confucius said, “The fish rots from the head down.”

Government corrupts. Absolute government corrupts absolutely.

Mon, 10/08/2012 - 10:48 | Link to Comment True.North
True.North's picture

CIC is too large to be a muppet, but I lost it around here -- “We believe in their [JPMorgan] risk management, we believe in the fact that they’re being cautious."

JPMC is Too Big To Manage, but they believe in its risk management? That doesn't even make sense, not to mention implying Morgan Stanley somehow has better risk controls is totally nuts. See: Howie Hubler's $9 billion loss.

Mon, 10/08/2012 - 11:14 | Link to Comment Dexter for President
Dexter for President's picture

He's handing JPM a shit sandwich but trying to be nice about it - of course he doesn't mean the nice statement.

Mon, 10/08/2012 - 14:01 | Link to Comment TheFourthStooge-ing
TheFourthStooge-ing's picture

.

He's handing JPM a shit sandwich but trying to be nice about it - of course he doesn't mean the nice statement.

Exactly. What you are seeing here is similar to damning with faint praise. The public face put forward by Chinese officials is polite, refined, and diplomatic. It would be highly irregular, almost scandalous, for one to engage in direct criticism.  In comparison, the conduct of many western officials has a crudity which verges on the cartoonish.

Tue, 10/09/2012 - 05:06 | Link to Comment matrix2012
matrix2012's picture

hi john39 - you make a sound and valid point!

 

Take a look at folowing research works of Charlotte Harris Rees.

 

The Asiatic Fathers of America  -  http://www.asiaticfathers.com/

“In 2006 Charlotte Harris Rees published an abbreviated edition of her father’s The Asiatic Fathers of America. Through her painstaking research she went on to publish two more books of her own - 'Secret Maps of the Ancient World' and now 'Chinese Sailed to America Before Columbus: More Secrets from the Dr. Hendon M. Harris, Jr. Map Collection'.

Both of these books are the results of much more evidence that was gathered by the author in her extensive research and tireless scholarly pursuit. These books are recommended reading for all who are interested in revisiting world history in a new light.”

Dr. Hwa-Wei Lee, Former Chief, Asian Division, Library of Congress (Retired);  Dean Emeritus, Ohio University Libraries

 

Secret 4000 year old Maps of The Ancient World

Published on Sep 25, 2012 by DiscloseTruthTV

Researcher Charlotte Harris Rees discussed Asian maps (see below) dating as far back as 4,000 years ago that show the coastlines of the Americas. Picking up on the work of her father who collected these maps, she suggested that the ancient Chinese were seafaring and traveled to America far before Columbus' arrival. As further evidence, she cited genetic markers that are shared only by Asians and Native Americans.

Background

Charlotte Harris Rees, author of 'Secret Maps of the Ancient World' embarked on an exciting journey of discovery after finding out that her late father, Dr. Hendon Harris Jr. (the author of The Asiatic Fathers of America), had been right: the Chinese were in America thousands of years before Columbus. Charlotte's book lays out overwhelming evidence (including DNA tests) in support of her father's conclusions.

For years after his death in 1981, Dr. Harris' map collection lay forgotten in a box under his son's bed. Hoping to verify their accuracy, Charlotte and her brother took the maps to the Library of Congress in 2003, where they have been studied for the last few years.

In this exciting segment, Charlotte tells us how DNA sampling can reveal the entire migration history of a people, recounts her experiences with the Library of Congress, and shares her thoughts on why this startling discovery has been overlooked despite having been in plain sight. This is a great time to rethink history and to step into the thrill of discovery. Join us in this modern-day adventure!

https://www.youtube.com/watch?v=6hGBody_c-g&feature=related

 

"I never said that my family's maps are 4000 years old but that they are copies of copies of copies of maps that date back 4000 years. They are related to a Chinese geographical account that old. Our particular maps are Ming dynasty. Still old, but that would date back almost 500 years."

           - Charlotte Harris Rees ~ http://www.harrismaps.com

replying at http://www.explorers-journal.com/did-the-chinese-discover-america-first/

 

Other links:

-Reviews of “Secret Maps of the Ancient World” | Gavin Menzies

http://www.gavinmenzies.net/media/reviews-of-secret-maps-of-the-ancient-...

This website serves as a focal point for ongoing research into pre-Columbian voyages to the New World. Our research team was set up to receive and disseminate all information received via this website.

 

-Secret 4000 year old Maps of The Ancient World — State of Globe

http://stateofglobe.com/2012/09/26/secret-4000-year-old-maps-of-the-anci...

by Hans Christian Faerden on September 26, 2012

Secret 4000 year old Maps of The Ancient World – YouTube. –

The longer we study the REAL history of this world, not only the history of the WINNERS, the more we will understand how much NO ONE EVER TOLD US. I do not know the truth about this map, but there is a lot of info available suggesting that there must have been very special cultures here on earth back then.

 

 

Mon, 10/08/2012 - 10:14 | Link to Comment Bananamerican
Bananamerican's picture

"You have all the smartest kids to design these products, the only purpose of which is to get money out of other people’s pockets"

 

"well......there it is"  -Amadeus

Mon, 10/08/2012 - 10:33 | Link to Comment Gully Foyle
Gully Foyle's picture

mrktwtch2

https://en.wikipedia.org/wiki/There%27s_a_sucker_born_every_minute

"There's a sucker born every minute" is a phrase often credited to P. T. Barnum (1810–1891), an American showman. Though this phrase is often credited to Barnum the actual authorship is unclear.

...

When Barnum's biographer tried to track down when Barnum had uttered this phrase, all of Barnum's friends and acquaintances told him it was out of character. Barnum's credo was more along the lines of "there's a customer born every minute" — he wanted to find ways to draw new customers in all the time because competition was fierce and people could become bored easily.[citation needed]


photo of P T Barnum by Charles Eisenmann

Some sources claim the quote is most likely from famous con-man Joseph ("Paper Collar Joe") Bessimer,[1] and other sources say it was actually uttered by David Hannum, spoken in reference to Barnum's part in the Cardiff Giant hoax. Hannum, who was exhibiting the "original" giant and had unsuccessfully sued Barnum for exhibiting a copy and claiming it was the original, was referring to the crowds continuing to pay to see Barnum's exhibit even after both it and the original had been proven to be fakes.

In turn, Barnum's fellow circus owner and arch-rival Adam Forepaugh attributed the quote to Barnum in a newspaper interview in an attempt to discredit him. However, Barnum never denied making the quote. It is said that he thanked Forepaugh for the free publicity he had given him.[citation needed]

Another source credits late 1860s Chicago "bounty broker, saloon and gambling-house keeper, eminent politician, and dispenser of cheating privileges..." Michael Cassius McDonald as the originator of the aphorism. According to the book Gem of the Prairie: Chicago Underworld (1940) by Herbert Asbury, when McDonald was equipping his gambling house known as The Store (at Clark and Monroe Streets in Chicago) his partner Harry Lawrence expressed concern over the large number of roulette wheels and faro tables being installed and their ability to get enough players to play the games. McDonald then allegedly said, "Don't worry about that, there's a sucker born every minute."[citation needed]

The phrase is the title of the opening song in the Broadway musical Barnum, about P.T. Barnum's life.

Mon, 10/08/2012 - 12:17 | Link to Comment Itch
Itch's picture

The irony is that you dont even need to be a sucker to get sucked these days. The amount of smarts needed to compete head on with the dealer is probably enough to get you thrown in jail.

Mon, 10/08/2012 - 10:07 | Link to Comment CommunityStandard
CommunityStandard's picture

Pot and kettle.

Mon, 10/08/2012 - 10:08 | Link to Comment lolmao500
lolmao500's picture

In two words : HFT and corruption.

In other news, Syria artillery falls for 6th straight day in Turkey.

Romney to do speech on foreign policy at 11.20AM EST on CSPAN (the BS and warmongering will be epic on this one)

Mon, 10/08/2012 - 10:12 | Link to Comment GMadScientist
GMadScientist's picture

Curious for Syrians to be using US issue rounds instead of Ruski, but OK.

What happens in the Mormon Temple, stays in the Mormon Temple. ;)

Mon, 10/08/2012 - 10:49 | Link to Comment JustObserving
JustObserving's picture

Quick, give that man a Nobel Peace Prize:

Mitt Romney: arm the Syrian rebels

Republican presidential candidate is to call for an escalation of the conflict in Syria in a major foreign policy address

 

Mitt Romney will call for an escalation of the conflict in Syria by arming rebels with the heavy weapons needed to confront president Bashar al-Assad's tanks, helicopters and fighter jets.

Romney is to make the proposal on Monday in what his campaign team has billed as a major foreign policy speech in Lexington, Virginia.

 http://www.guardian.co.uk/world/2012/oct/08/mitt-romney-arm-syrian-rebelsarm-syrian-rebhttels

 

Mon, 10/08/2012 - 11:58 | Link to Comment Bicycle Repairman
Bicycle Repairman's picture

I'm going to file this under "Mitt so dumb"

Mitt wants to give a foreign policy speech on national (cable) TV.  Polls show the American people prefer Obama's foreign policy.  So why give a speech and alienate people?  The people who own Mitt already know his foreign policy.  They gave it to him.

Mon, 10/08/2012 - 14:58 | Link to Comment Totentänzerlied
Totentänzerlied's picture

"Polls show the American people prefer Obama's foreign policy."

Hahahahahahahahahaha - It's win-win because, Romney or Obama, the American people get exactly what they deserve in leadership and foreign policy. A breathtaking embarassment to free humankind.

Mon, 10/08/2012 - 15:48 | Link to Comment Bicycle Repairman
Bicycle Repairman's picture

Yeah, I'm just talking inside baseball here, not big picture stuff.

Mon, 10/08/2012 - 12:52 | Link to Comment GeezerGeek
GeezerGeek's picture

I thought that we/NATO were already helping the rebels. Just like we did in Libya, and we all know how well that turned out.

Tue, 10/09/2012 - 05:15 | Link to Comment matrix2012
matrix2012's picture

one nobelized piss prize is being ordered... whether rommey be or be not, he's gonna get such bestowment, in 2013.

Mon, 10/08/2012 - 10:09 | Link to Comment LawsofPhysics
LawsofPhysics's picture

LMFAO!!!  Coming from the head of a wealth fund in a state-run, centrally planned, communist country, the irony is thick (could this guy compete in a free market without his state cronies picking the winners for him?).  Wake up sheeple, Chinese wages are your future otherwise.

Mon, 10/08/2012 - 12:02 | Link to Comment Bicycle Repairman
Bicycle Repairman's picture

"could this guy compete in a free market without his state cronies picking the winners for him?"

No he could never do that like .... who?

Mon, 10/08/2012 - 10:10 | Link to Comment Zola
Zola's picture

China is taking the torch from the US, they do have a number of challenges to face, true, but you can prepare to ship the statue of liberty over there if they manage to surmount them.

Mon, 10/08/2012 - 10:37 | Link to Comment Oh regional Indian
Oh regional Indian's picture

The Statue of Lib. is actually a freemasonic symbol of ISIS. 

ISIS = $ (supposed to have two lines).

Trapped. It's the hotel california check in point. ;-)

ori

Mon, 10/08/2012 - 11:07 | Link to Comment pepperspray
pepperspray's picture

Like a Chinese MBA student stuck at RPI

Mon, 10/08/2012 - 11:34 | Link to Comment Oh regional Indian
Oh regional Indian's picture

Too funny pepperspray, it's where I got my US degree.

Go Reds....etc.... :-)

ori

Mon, 10/08/2012 - 10:13 | Link to Comment JustObserving
JustObserving's picture

If the Federal Reserve can pick your pockets with infinite QE, so will the smart kids with financial engineering.  There is no money like free money.

 

Mon, 10/08/2012 - 10:20 | Link to Comment GFKjunior
GFKjunior's picture

Can you really blame us? I'm in my mid twenties and went from tech companies to writing security software for banks.

 

Worse environment and people but the paycheck lets me buy 3oz of gold a month and plenty of ammo, might as well get it while I can. The end is near.

Mon, 10/08/2012 - 10:24 | Link to Comment LawsofPhysics
LawsofPhysics's picture

Classic.  Now all you need is a canoe.  be sure to file you lost or stolen report as soon as you have your accident.

Mon, 10/08/2012 - 10:41 | Link to Comment ParkAveFlasher
ParkAveFlasher's picture

3oz a month!  Salud!

Mon, 10/08/2012 - 12:08 | Link to Comment Bangin7GramRocks
Bangin7GramRocks's picture

You are in your mid twenties and have $5,000 per month after all of your bills to buy gold. I CALL BULLSHIT! Stop trying to impress people with your "stack" skippy! You will never get laid that way.

Mon, 10/08/2012 - 12:27 | Link to Comment Yen Cross
Yen Cross's picture

 I also call "Bullshit"! The only 3 TOZ he's getting is on paper, from the "ghost bank"he's writing P/M management software for!

Mon, 10/08/2012 - 13:00 | Link to Comment GeezerGeek
GeezerGeek's picture

Maybe he is employed and also lives in his parents' basement and brown bags PB&J for lunch each day. Reduce expenses and stack the bulk of one's income.

Mon, 10/08/2012 - 10:16 | Link to Comment Gandalf6900
Gandalf6900's picture

this from the #1 corrupt country in the WORLD, not good...

Mon, 10/08/2012 - 10:28 | Link to Comment Dr. Engali
Dr. Engali's picture

As far as being the #1 corrupt country in the world, I'd say we have that title pretty well locked up.

Mon, 10/08/2012 - 15:12 | Link to Comment Totentänzerlied
Totentänzerlied's picture

Shame and Honor-based societies are on another level entirely. Westerners could not compete with that level of corruption, which they do not even view as corruption.

When's the last time you had to bribe someone face to face?

Mon, 10/08/2012 - 13:02 | Link to Comment GeezerGeek
GeezerGeek's picture

What Americans may call corruption is, in China and many other places, simply a cost of doing business. At least that's what my (Chinese) wife says, as do her (Chinese) friends.

Mon, 10/08/2012 - 17:07 | Link to Comment earleflorida
earleflorida's picture

'the student has now become the master'

Q___       kung fu

Mon, 10/08/2012 - 10:17 | Link to Comment Dr. Engali
Dr. Engali's picture

If I didn't know any better I would swear that Mr. Gao has been reading the Hedge.

Mon, 10/08/2012 - 10:19 | Link to Comment magpie
magpie's picture

AnAnonymous ? Noooooo

Mon, 10/08/2012 - 10:22 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

I suspect there is a LOT of stealth reading of the Hedge in many supposedly brain dead circles. Many so-called mainstream money managers seem to be coming to their senses. The PTB is terrified of this.

First that laugh at you, then they fight you, and then they join you. But all along this path they read/watch you.

Mon, 10/08/2012 - 11:02 | Link to Comment CPL
CPL's picture

ZH is one stop shop to see what people with skin in the game are saying.  We aren't particularily good at sugar coating problems either, although unlike Bloomberg or the rest of the market fish wrap, we'll actually break down the problem into something readable to the layman.  Sometimes the hive mind comes up with some good ideas, once a day or more, that stick to the KIS principle.

 

Like Mr. Gao states.  The process, operational and political spaghetti mess contributed by design committees is far to complex to deal with something as simple as buying and selling something.   He might be beginning to understand the Yeats poem the Second coming.

 

Turning and turning in the widening gyre
    The falcon cannot hear the falconer;
    Things fall apart; the centre cannot hold;
    Mere anarchy is loosed upon the world,
    The blood-dimmed tide is loosed, and everywhere
    The ceremony of innocence is drowned;
    The best lack all conviction, while the worst
    Are full of passionate intensity.

    Surely some revelation is at hand;
    Surely the Second Coming is at hand.
    The Second Coming! Hardly are those words out
    When a vast image out of Spiritus Mundi
    Troubles my sight: a waste of desert sand;
    A shape with lion body and the head of a man,
    A gaze blank and pitiless as the sun,
    Is moving its slow thighs, while all about it
    Wind shadows of the indignant desert birds.

    The darkness drops again but now I know
    That twenty centuries of stony sleep
    Were vexed to nightmare by a rocking cradle,
    And what rough beast, its hour come round at last,
    Slouches towards Bethlehem to be born?

Mon, 10/08/2012 - 11:56 | Link to Comment illyia
illyia's picture

Wow.

Mon, 10/08/2012 - 12:34 | Link to Comment CPL
CPL's picture

Old dead poets kicking ass 100 years after the fact.

Mon, 10/08/2012 - 12:01 | Link to Comment williambanzai7
williambanzai7's picture

Let's just say they would be foolish not to look here.

Mon, 10/08/2012 - 10:19 | Link to Comment GMadScientist
GMadScientist's picture

Yeah, somehow I managed to avoid getting my pocket picked.

Magic? Or just not bending over while naked in certain company?

Mon, 10/08/2012 - 10:22 | Link to Comment midtowng
midtowng's picture

We've all had out pockets picked. You too.

Mon, 10/08/2012 - 12:36 | Link to Comment CPL
CPL's picture

Is that a banana in your pocket or are you happy to see me?

Mon, 10/08/2012 - 21:56 | Link to Comment goat
goat's picture

Yes we have no bananas.

Mon, 10/08/2012 - 10:20 | Link to Comment larz
larz's picture

Well it took these so called "smart" kids less than 10 years to pilfer and ruin a system that ran fine and made vast fortunes for over 200 years - yea real smart

Mon, 10/08/2012 - 10:33 | Link to Comment exi1ed0ne
exi1ed0ne's picture

The system went broke a long time before this, but the economic momentum and deficit spending kept the party going.  It's been nothing but financial games since the 60s - 70s and earlier.

Mon, 10/08/2012 - 10:53 | Link to Comment larz
larz's picture

I understand but irregardless of the corrupt politcal class the rest of us could use the capital markets to forge careers and design our own investement portfolios - not any more - like i said REAL smart

Mon, 10/08/2012 - 14:33 | Link to Comment silverserfer
silverserfer's picture

wrong, the System of power had been here all along, they are just exploiting technology to do what they have been doing for 100 years even more. These "Kids" are getting a taste of the good life. The Fat cat elites are doing much better.  Zuckerberg being a new invite to the Bilderberg confrence a couple years ago. Thats entry level.  Prime example of how there is "rich people and then there are those that are off the grid as in above being publicly recognized as rich. Super rich are not on the list of worlds richest induviduals because they are part of " families". They are the ones who run these gambits.

Mon, 10/08/2012 - 15:15 | Link to Comment Totentänzerlied
Totentänzerlied's picture

So America was fine prior to Monday, October 8th, 2002? I think about 90% of American wars, scandals, human rights violations, warcrimes, etc. occurred prior to that date but don't quote me on it - the percentage is shrinking constantly and at an accelerating rate!

Mon, 10/08/2012 - 10:21 | Link to Comment midtowng
midtowng's picture

So is the problem our society corrupting the economic system, or the economic system corrupting our society? Either way they are both sick.

Mon, 10/08/2012 - 10:25 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

Both.......but with the flow back and forth varying depending upon who is more frightened/dependent of whom at any given moment.

Mon, 10/08/2012 - 10:29 | Link to Comment cherry picker
cherry picker's picture

Capitalism is simple.  Provide a service or make a product, pay your expenses and the money made from the sale minus expenseses is yours and the governments, depending who is smarter gets the most cash.

Derivatives on the other hand are not simple  Even those selling and providing those products often do not understand how they work or their complexity.  Thats worse than gambling as craps and black jack or poker are easy enought to understand.

Mon, 10/08/2012 - 12:23 | Link to Comment Zero Debt
Zero Debt's picture

There is a big demand for derivatives and many buyers are not gamblers but want to lock in prices to be able to plan, such as with futures.

However, more systemically, derivatives just treats the primary symptom of fluctuating exchange rates, which is price volatility.

With stable prices under a commodity money, price insurance will be less valuable and the need for derivative will diminish.

Mon, 10/08/2012 - 10:38 | Link to Comment onebir
onebir's picture

 

“You have all the smartest kids to design these products, the only purpose of which is to get money out of other people’s pockets,” he said. “That is not very good.”

 

I guess at least the frauds in China don't occupy too many engineers and physicists...

 

Mon, 10/08/2012 - 10:38 | Link to Comment Ignorance is bliss
Ignorance is bliss's picture

I had my pocket picked. The guy is doing 20 years after stealing over 200 million. After a time he will be paroled and will eventually head to wherever he stashed his escape cash. Crime pays...even when justice prevails. Just ask Corzine and crew.

Mon, 10/08/2012 - 10:41 | Link to Comment Schmuck Raker
Schmuck Raker's picture

Dear InAneMouse:

Why can't you be more like your brother Gao Xiqing, and talk some sense?

Mon, 10/08/2012 - 10:42 | Link to Comment Omen IV
Omen IV's picture

the american emperors have no clothes !

the chinese are laughing all the way to the bank as their electrical /computer /mechanical -engineers, physicists, mathematicians are turned out by the millions to their nationalist cause - the development and advancement of their people - while the USA pursues their FIRE based economy.

 The Chinese mercantilist world strategy is taking over production from the west and using their liquidity to then secure long term natural resources in Africa and SA, hand in hand with private industry - Germany is doing the same cooperative strategy with business to advance their citizens welfare and geo-political interests.

all the while the USA's main focus is producing a trillion dollar war machine and a pick pocket financial system which the world sees clearly as supported by the twilight dollar world currency. 

the USA Vampire Capitalism strategy will take the USA off the air in the next 20 years

Mon, 10/08/2012 - 10:46 | Link to Comment Inthemix96
Inthemix96's picture

Anyone of you lot got an idea when the music stops?

Spoke to a few folk over the weekend and I get the feeling, just from talking to a few friends and customers that it could be as soon as december?

Who wants off this ride?  Fuck you bernank you filthy little dwarf ridden cunt

Mon, 10/08/2012 - 11:23 | Link to Comment Overfed
Overfed's picture

I for one, hope it's gonna go on a little longer. I'm not gonna have my microfarm up and going until next year.

Mon, 10/08/2012 - 17:12 | Link to Comment Diogenes
Diogenes's picture

Are you kidding? The music stopped in late 2007.

Mon, 10/08/2012 - 10:46 | Link to Comment Mad Mohel
Mad Mohel's picture

So does that make Dimon, Fagin? And the Bernank must be Artful Dodger.

Mon, 10/08/2012 - 10:47 | Link to Comment blindman
blindman's picture

there seems to be an inclination to idolize a
certain mentality at this time and place in
the ongoing evolution of memes of control,
influence and perceived personal power. a convergence
on the global scene between east and west, so where
is the common ground, the domain of the globalists,
and is it recognizable? where we could understand the
meaning of the word "smart"?
.
07 October 2012
Weekend Reading - Ode to Financial and Political Narcissists
.
http://jessescrossroadscafe.blogspot.com/2012/10/weekend-reading-ode-to-...
.
"..Power attracts certain personality types, and organizations that value power, or ruthless determination to achieve results at any cost, often end up being run by people with the mentality of predators. And the predatory environment can become self-reinforcing and self-sustaining given time." .. jca
.
" what is a psychopath? "
.
Thursday October 4 9:00am
public affairs, first voices indigenous radio.
http://archive.wbai.org/#ankor71

Mon, 10/08/2012 - 12:16 | Link to Comment Oh regional Indian
Oh regional Indian's picture

well said bm.

the culture vultures are the meme carriers. 

Holly B Wood and Johhnny B Goode.

ori

 

wbai/kpfa, quoted by me on another thread 

Mon, 10/08/2012 - 19:52 | Link to Comment blindman
blindman's picture

crazy, how since c. columbus thought he found
india but decidedly initiated rock and roll
and genocide, all in one moment of insane deterministic, by author(ity)-ship implying "divine", clarity.
is that clarity? wow, not so or really.
.
so we have this to love. best to u/ i
.
jimi hendrix johnny b goode
http://www.youtube.com/watch?v=G6OedBFkxWU
.
not to mention chuck, where and where i was born
better or worse.
Chuck Berry - Johnny B. Goode (Live 1958)
http://www.youtube.com/watch?NR=1&v=6ofD9t_sULM&feature=endscreen
.
it was like a psalm or a sutra
.
better or worse that was the way it was and will
always be.
.
sentient beings converging on technological advancements,
if that can be called that? the tech knows, the artists, the politicos, the merchantos, the survivoros, th observers... etc..
the children of advancement, influence and opportunity
converge on the dream of the future fertilized by the
bones of the despised and left overs and left unders.
dancing in the digital and virtual mud of now-here, ongoing. but, there is life ! if not respected,
denied, perhaps. hope but still a hope !
.
listen here?
.
James Blood Ulmer - Black Rock Experience feat. Queen Esther
http://www.youtube.com/watch?v=rhiL8Moq8-c&feature=youtu.be
.
sneaked in clips ! yes, there is life here and
on earth. the remnant remains
..... everywhere !

Mon, 10/08/2012 - 10:49 | Link to Comment 3ringmike
3ringmike's picture

not much of a future in picking empty pockets.

just saying.

Mon, 10/08/2012 - 10:51 | Link to Comment Temporalist
Temporalist's picture

I wish I wuz a smart kid.  The culture of fraud runs deep and the irony of the class topic should not be lost on ZHers.  Forward! [through the revolving door of banksters and politicians]:

 

"Harvard would not name the course, but several of the students who were accused identified it as a government course, Introduction to Congress, with 279 students, meaning that well over 100 were under suspicion, making this the university’s largest case of cheating in memory."

http://www.nytimes.com/2012/09/12/education/harvard-cheating-suspects-go...

Mon, 10/08/2012 - 11:29 | Link to Comment sethstorm
sethstorm's picture

As opposed to the theft by not-so-smart people in China that can't think with originality - opting for the copy of a Western product? 

Mon, 10/08/2012 - 12:14 | Link to Comment ghostfaceinvestah
ghostfaceinvestah's picture

What he observes is nothing but a side effect of a pure fiat money system.  Hate the game, not the players.

 

"One of the evils of paper money is that it turns the whole country into stock jobbers. The precariousness of its value and the uncertainty of its fate continually operate, night and day, to produce this destructive effect. Having no real value in itself it depends for support upon accident, caprice, and party; and as it is the interest of some to depreciate and of others to raise its value, there is a continual invention going on that destroys the morals of the country."

Thomas Paine

Mon, 10/08/2012 - 12:48 | Link to Comment epwpixieq-1
epwpixieq-1's picture

Best engineers ?????

You must be kidding me.

There is very little engineering in a branch of social conceptualization where the fundamental law is based, fundamentally, on one number ( in this case, limx->inf(1+1/x)x or 'e'), and in addition, all of the laws supposedly governing the interconnections in the system, ARE manipulated in favor of the biggest players. Imagine the black holes being able to change the laws of the Universe, on monthly or daily base, what a fun we would have had, just imagine ...

Try, best gamblers, that will nail it.

Every GOOD engineer, by its nature, can not survive mentally/physiologically in a such gambling environment, where the "laws of the Universe" are being changed on a daily basis.

The only exception from this maxima is that, one reasonably intelligent person will preserve it sanity, in this insane enthronement, by taking the LONG view, and with simple extrapolation to realize that ON LONG RUN, the laws of Nature prevail, no matter what.

 

 

Mon, 10/08/2012 - 13:32 | Link to Comment Maghreb
Maghreb's picture

Imagine the black holes being able to change the laws of the Universe, on monthly or daily base, what a fun we would have had, just imagine ...

Genius.

Mon, 10/08/2012 - 14:36 | Link to Comment Dre4dwolf
Dre4dwolf's picture

You could invest in this healthy over-complicated derivatives, what a derivatives you ask? well sir have you ever taken apart a jet engine?

Sir: stop right there, how about investing in gold

 

GOLD! hahaha why would you want to do that? thats not a "real asset".

 

 

Mon, 10/08/2012 - 17:29 | Link to Comment amadeusb4
amadeusb4's picture

And by "products" he means contracts. These are services. And now we're going to call bankers engineers? It used to be that products were the result of... umm.... production! If you're going to confound tangibles and intangibles this way and now equate employees providing services with employees manufacturing goods then you're just stuffing the tertiary sector into the second for some reason.

Finally, STAY OFF MY LAWN!

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