Thread: A bad week for the Democrats in The Economist

Originally Posted by kmiller1610

Private Equity investments can reach millions. I would hardly call those micro-loans.

Those are absolutely micro-loans!

I mean, hm... would it be easier if we did this in scientific notation, simply counted the number of zero's?

So like, you're talking about 6 zero's, and y'r average multi-national rakes in about 9 zero's per quarter, and if you're looking at the balance sheet of Citibank or the Fed you're seeing 12 zero's.

'Kay? So, relative to what I'm talking about, what you're talking is 6 orders of magnitude smaller.

And, um... what do you call 6 order of magnitude smaller? That's a "micro", right?

Originally Posted by kmiller1610

Individuals spending their own money to take a risk they believe in is pure, unadulterated capitalism. If you borrow the money, it's the same thing and it happens every day. The way you present it ignores the part of the economy that thrives on human ambition and talent and drive. And those things are alive.

No, listen, I love micro-loans. I love what you're talking about! I want to make every loan a micro-loan, or a collection of micro-loans. I want to restore the days when a "loan broker" could put together a package of loans for you, if you needed more than any single lender was willing to provide. You didn't used to need an investment bank for that, you could just go down the street to your local mom-n-pop loan broker. Independent people, kinda like insurance salesmen or something.

What you're talking about is enterpreneurship, what I'm talking about is the "extraction economy". It's something different. It's banks loaning piles of money to other banks so they can trade with it overnight, make a little money, and give it back. I mean, this is absolutely the pattern everywhere on Wall Street. No one uses their own money to trade, everyone uses's someone else's money! They borrow the money overnight or for a week or a month, they do their trade (and they try to lock in return and reduce risk with options and hedges and so on), and when it unwinds they pay back the loan.

This is the "liquidity" they're talking about, this is what they're so desperately in need of. The amounts of money we're talking about are staggering, hundreds of millions of dollars overnight. It used to be when GE or someone needed a hundred million bucks to build a reactor or something, it was a big deal, in fact it was such a huge deal that a single bank had a hard time doing it. They move the same amount of money overnight these days, as they used to use to build an entire reactor! And all this money is not being used for manufacturing and production, it's being used for extraction - arbitrage. Anything to shave the last remaining piece of headroom off the American economy.