This is a failure by the owners of the banks to hold the top employees to account.
It is not failure. The top employees in the banks act upon direct instructions of the owners of the banks! 
Topic: An Annoying Market Failure - page 4. (Read 3886 times)
Markets don't fail. People fail. If people refuse to make informed rational choices, they'll get poor results.
And people can absolutely be trusted to consistently make poor, irrational choices, which is why unhindered markets can be trusted to fail consistently.
The puzzle is why they have stopped for 1 industry since 2008.
It's not really a puzzle. Shareholders having a voice and effect is a myth. The executives run these companies in whatever way they see fit and shareholders can't do a damn thing about it. Dryships is my favorite example of this, as the CEO who is widely hated by shareholders for his stupid decisions and poor choices has actually come out on multiple occasions and straight up told the shareholders to pound sand, he'll do what he wants and if they don't like it then can sell their stock.
Well isn't that interesting...
Because if they don't punish them then everything gets devalued and capital buys more and then the cycle starts all over again.
Markets don't fail. People fail. If people refuse to make informed rational choices, they'll get poor results.
Investment managers are employed to do just that. And for centuries they have done just that - capital markets have always been merciless when it comes to punishing failure.
The puzzle is why they have stopped for 1 industry since 2008.
Markets don't fail. People fail. If people refuse to make informed rational choices, they'll get poor results.
Markets are people, If people fail, markets fail.
No, your ideology is not pure and perfect, as much as you'd like to think it is.
Nassim Nicholas Taleb predicted the crash in 2008 and has a pretty good record since then. In his latest article, he points to one of the most bizarre aspects of the banking industry. Its top management has destroyed shareholder value yet salaries for management have not fallen. They get paid the same whether they destroy the bank or run it profitably.
http://www.project-syndicate.org/commentary/taleb1/English
Money quote: "A well-functioning market would produce outcomes that favor banks with the right exposures, the right compensation schemes, the right risk-sharing, and therefore the right corporate governance.
One may wonder: If investment managers and their clients don’t receive high returns on bank stocks, as they would if they were profiting from bankers’ externalization of risk onto taxpayers, why do they hold them at all?"
Its the same in the UK where there is no SEC type body so its not a regulatory failure. This is a failure by the owners of the banks to hold the top employees to account. Its as if the people who manage our pensions and savings are not even bothered that the funds have been devalued.
So, we are all free market enthusiasts. In any other market, failure would be punished by being fired with no bonus paid. Even in banks, a clerk who loses a few dollars in a branch will get fired. Why is it in the finance industry top management, failure is rewarded?
http://www.project-syndicate.org/commentary/taleb1/English
Money quote: "A well-functioning market would produce outcomes that favor banks with the right exposures, the right compensation schemes, the right risk-sharing, and therefore the right corporate governance.
One may wonder: If investment managers and their clients don’t receive high returns on bank stocks, as they would if they were profiting from bankers’ externalization of risk onto taxpayers, why do they hold them at all?"
Its the same in the UK where there is no SEC type body so its not a regulatory failure. This is a failure by the owners of the banks to hold the top employees to account. Its as if the people who manage our pensions and savings are not even bothered that the funds have been devalued.
So, we are all free market enthusiasts. In any other market, failure would be punished by being fired with no bonus paid. Even in banks, a clerk who loses a few dollars in a branch will get fired. Why is it in the finance industry top management, failure is rewarded?
Short answer: Markets, like the humans who participate in them, are not always rational.
Sometimes failure is intended, and therefore, for the bankers who fail and get raises, it is actually a job well done.
Markets don't fail. People fail. If people refuse to make informed rational choices, they'll get poor results.
Nassim Nicholas Taleb predicted the crash in 2008 and has a pretty good record since then. In his latest article, he points to one of the most bizarre aspects of the banking industry. Its top management has destroyed shareholder value yet salaries for management have not fallen. They get paid the same whether they destroy the bank or run it profitably.
http://www.project-syndicate.org/commentary/taleb1/English
Money quote: "A well-functioning market would produce outcomes that favor banks with the right exposures, the right compensation schemes, the right risk-sharing, and therefore the right corporate governance.
One may wonder: If investment managers and their clients don’t receive high returns on bank stocks, as they would if they were profiting from bankers’ externalization of risk onto taxpayers, why do they hold them at all?"
Its the same in the UK where there is no SEC type body so its not a regulatory failure. This is a failure by the owners of the banks to hold the top employees to account. Its as if the people who manage our pensions and savings are not even bothered that the funds have been devalued.
So, we are all free market enthusiasts. In any other market, failure would be punished by being fired with no bonus paid. Even in banks, a clerk who loses a few dollars in a branch will get fired. Why is it in the finance industry top management, failure is rewarded?
http://www.project-syndicate.org/commentary/taleb1/English
Money quote: "A well-functioning market would produce outcomes that favor banks with the right exposures, the right compensation schemes, the right risk-sharing, and therefore the right corporate governance.
One may wonder: If investment managers and their clients don’t receive high returns on bank stocks, as they would if they were profiting from bankers’ externalization of risk onto taxpayers, why do they hold them at all?"
Its the same in the UK where there is no SEC type body so its not a regulatory failure. This is a failure by the owners of the banks to hold the top employees to account. Its as if the people who manage our pensions and savings are not even bothered that the funds have been devalued.
So, we are all free market enthusiasts. In any other market, failure would be punished by being fired with no bonus paid. Even in banks, a clerk who loses a few dollars in a branch will get fired. Why is it in the finance industry top management, failure is rewarded?
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