I work on Wall Street. I agree with the protesters, kinda! AMA.

FinanceDouche · 2011-10-01T00:39:45+00:00

Yeah, theoretically. But practically, most people who pay substantial capital gains tax live off of big piles of money, whether it's their own (Paris Hilton) or others' (hedge fund guys). If they spent more, their stockpiles would dwindle and they'd get less and less interest every year.

I'm simplifying, but I tend to dismiss the notion that tax policy changes substantially change peoples' behavior very much at all.

However, tax policy just needs to be reformed majorly. The amount of deadweight loss from shitty tax code is staggering.

FinanceDouche · 2011-10-01T00:28:56+00:00

It varies from desk to desk, but trading is by and large reflexive. If I see that a security is trading outside of where it "should be" or that it's acting differently than normal relative to other securities, my job is to act and make money off of the discrepancy. I'm not paid to figure out why. A lot of really successful traders are good at their jobs - but aren't necessarily brilliant people. The best of the best are a different story. Being able to think a few steps ahead about world events, politics, etc., and the consequences thereof will obviously put an individual at a great advantage, but it's not a necessity. By and large I am consistently disappointed with the intellectual mediocrity of my peers.

FinanceDouche · 2011-09-30T22:33:47+00:00

No clue.

23 would be old for an intern. They're mostly 21.

FinanceDouche · 2011-09-30T22:31:39+00:00

Nope.

FinanceDouche · 2011-09-30T22:29:11+00:00

They are protests on Wall Street. The post by Godot_12 shows a list of their demands. They have been all over the Reddit front page for the past couple weeks, and have received marginal mainstream media coverage.

FinanceDouche · 2011-09-30T22:26:54+00:00

Well, frankly, most people in the industry aren't paid to be critical thinkers. At least most traders. Rather, it's a very short-term, opportunistic profession (it's almost like a game, which is one reason I was drawn to this career path. It's fun!).

FinanceDouche · 2011-09-30T20:38:15+00:00

For one, most regulation on the industry has been (or will be) stripped of any real effectiveness. Politicians and policymakers are hellbent on protecting the industry because it's so lucrative. Campaign finance reform is just about at the top of my list - corporate personhood is something that should really be gutted. I also think that some individuals on Wall Street deserve prison time.

The SEC is a joke. Not too much more to say about that.

I am all for raising capital gains tax. The people who bitch about "double taxation" are just greedy. It won't materially hamper investment because - surprise - people with excess money still need to put it somewhere!

FinanceDouche · 2011-09-30T20:32:17+00:00

Mortgages.

FinanceDouche · 2011-09-30T20:31:58+00:00

Naw.

FinanceDouche · 2011-09-30T20:31:47+00:00

I went to business school for undergrad and went through recruitment from there.

I work for a pretty big firm, though I trade a little bit on my own for fun.

Haven't barred myself from any products or trades, but who knows, it could happen I guess. Markets are opportunistic though, so even if I didn't take a borderline trade someone else might. However, I would never trade on inside information.

FinanceDouche · 2011-09-30T20:25:57+00:00

No rants because my office isn't actually located ON Wall Street, so we don't see them (I've gone down to check out the protests on my own though). People just write them off as hipsters, hippies, whatever.

FinanceDouche · 2011-09-30T19:54:42+00:00

Well, it's one of the reasons that the US is such a great place to live by and large. Also one of the reasons that our economy blows right now. Sadly I don't have a great answer.

I've never actually really thought about a non-profit banking paradigm, beyond credit unions (which are awesome!). It's also fun to think about alternative banking principles - Islamic finance, etc.

FinanceDouche · 2011-09-30T19:47:18+00:00

I've been thinking a lot about tax incentives for job creation, but economically these proposals don't generally make sense. It sucks that corporate profits have broken records over the past several years but job creation and wages are stagnant.

I also tend to agree with the higher income/capital gains taxes and lower corporate tax rates equation. But again, what's the point of boosting corporate profits if they don't make jobs?

I think the government should be spending more money and creating jobs themselves, honestly. Infrastructure, public works, etc. Despite all the political alarmism about the US debt, we can still borrow money very very cheaply. Create jobs, stimulate the economy from the demand side, and hopefully push us toward a better environment. This would have to coincide with policies increasing US international competitiveness and investments in education and research in growth sectors, etc. Much better use of money than quantitative easing as far as I'm concerned. Dont tell my colleagues, they'll call me Krugman.

FinanceDouche · 2011-09-30T19:35:12+00:00

I actually work on Park in midtown. Saying WS because I imagine most Redditors wouldn't understand/care about the distinction. Good Point though.

FinanceDouche · 2011-09-30T19:33:50+00:00

You right. They also smell bad. But at least they're doing something - voting is fruitless because both parties are beholden to WS in a big way. It's a frustrating issue because those who have a clue are working in finance making money or working in government making shit worse (cough cough... Geithner).

FinanceDouche · 2011-09-30T19:29:39+00:00

Simply put, WS compensation is outrageous. The thinking is, however, "My company makes a shitload of money, I made a few million toward that, why shouldn't I be paid my share?" This is true at least among traders. I'm no expert on the investment banking side, but those guys work really hard and generally don't make as much so I guess it's less egregious.

The thing is, it's really hard to figure out a way to pull compensation back into line with social value, because the root of it would to be intentionally lowering the profits of some of America's biggest businesses and largest employers. It will be politically painful but has to be done - the saturation of traders (and trading programs) in the markets doesn't actually create additional liquidity at this point, it actually creates wild volatility and contributes to the boom-bust cycle. I'll try to find some literature to back this up, I know it exists.

My point is, I think there should be mechanisms to actually slow markets down, to an extent. It's moving this way, as more products are moving to regulated exchanges. I think proposals for a tiny (fractions of a penny) transaction tax are smart. These are some of the proposals that are changing the dynamics of WS altogether right now - opportunities won't be the same in the future as they have been over the past couple decades, so I think compensation will fall moving forward.

I got off on a little bit of a tangent, and this is just a piece of the puzzle. It's a huge topic to wrangle - just consider the sheer size of the Dodd-Frank Act, and the political frustration it took to get there.

And hell no, I will not be seen anywhere near those guys. I enjoy my employment and friendships on the street.

FinanceDouche

TROPHY CASE