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Comment by paxys | Hacker News Reader

Wall Street is a large scale gambling operation with a public-backed safety net. Apparently they don't like it when people call this out. And they definitely hate it more when outsiders start beating them at their game.

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> a public-backed safety net.

there is no safety net for hedge funds (or indeed, any investment company that's not a proper deposit taking bank). The GFC was an anomaly - and banks got bailed out for taking on risks that they shouldn't have been (and only some - lehmens got owned and they didn't get bailed out). The bailouts were more about stablizing rather than saving the gov't buddies, despite what the conspiracy narrative likes to make (of course, it _did_ save the banks, so believe what you will).

> Apparently they don't like it when people call this out.

Source? Clearly "they" dont like losing money but the rules are clear.

"Their" clients are a bunch of rich people who control media companies, donate to politicians, etc.

The Secretary of State of Massachusetts was on TV pushing a 30-day trading halt on GME. That doesn't strike me as something that particularly falls within his ambit, and I genuinely wonder what motivated his appearance there.

Nonsense

No, its not. Have you forgotten the bailouts already?

Equity holders of defunct financial institutions were not bailed out in 2009. They suffered massive losses.

That's a slimy way of summarizing the situation

Why?

What about equity holders of hundreds of close-to-defunct financial institutions who were able to bounce back only due to government intervention?

One of the roles of the fed is to prevent financial markets from suffering liquidity induced meltdowns. It’s a basic service that benefits everyone, like roads or the post office.

So to summarize – large, fully private financial institutions are so entrenched in the economy that them going under would be catastrophic for everyone. They also occasionally take massive risks with their money to make larger profits, and when those backfire the government has to bail them out with public money.

And all this is totally not a gambling operation with a public safety net?

The issues affecting liquidity were systemic - it did not just affect large institutions. And of course financial institutions are entrenched in the economy, that is the entire point of financial institutions. Capitalization requirements were too low and they are now much higher — but that meant bank shareholders on the whole did extremely poorly in the financial crisis. And unclear what you mean “bailout with public money” as direct investments in debt and equity instruments by the treasury in 09 were done on extremely favorable terms and were collectively quite profitable for government shareholders.

Did you forget about AIG and Merrill Lynch? BoA was "strongly encouraged" to buy Merrill. And the Fed just loaned AIG a boatload of money. All the banks got loads of direct (via capital infusions) and indirect support (the "Fed put" on steroids).

The owners of bank equity did fine while the working class got screwed. This is the environment the millenials started their investing opportunities in. That the game is rigged was made explicit early on in most millenials' investing career.

Owners of bank equity did not do fine in the global financial crisis

Which banks went out of business? Weren't many (all?) major banks about to be insolvent before getting saved by their buddies (aka, future bank Directors) in government?

They were illiquid not insolvent

Which hedge funds received bailouts? This insistence on viewing Wall St as a monolithic entity is just asinine. I can assure you the investment bankers at Goldman are not losing any sleep over GameStop.

Hedge funds didn't receive bailouts because they had all shorted the housing market. They instead made large profits while a large chunk of the country lost their jobs and homes.

Meanwhile hundreds of banks and other financial institutions did get public funds. The state did not take any ownership, and some of them still haven't paid back billions. The profits generated since then – all directly due to the bailouts – have been private.

The state did take ownership of entities that received direct bailouts - eg AIG, GM, Chrysler

2008 was the worst year by far in the history of hedge funds, almost all lost money and hundreds of funds closed. They certainly did not all short the housing market, in fact there's several books and a Hollywood film about the few outsiders who did.

It's pretty incestuous though. Mortgage backed security market got started at the Salomon Brothers before fumbling it to Morgan Stanley before GS ultimately decided when to pull the rug on it all. Citadel might not be a bank but market making is one of it's core functions much like them. Names might change but I bet many of the same players move between these firms.

Sounds about right to me.

Please don't post like this—it's against the site guidelines: https://news.ycombinator.com/newsguidelines.html

If you feel that another comment is wrong, the way to respond is to show how it's wrong, include additional relevant information, and avoid name-calling. Then we can all keep learning (and also kick the can down the road a bit regarding the part where we degenerate into flaming spears and tribal warfare).

I get that the GP comment was also a provocation without much information in it, but these things are matters of degree, and the right direction to go in response to provocation is exactly the opposite to the way your comment went.

These comments are groundless libel. Why your rules would protect them is beyond any explanation. I have never once been the person shoveling BS on this forum. But you treat your posters like a bunch of thin-skinned babies. Some deep self-reflection would do these passive-aggressive egomanics some good. I've been around the engineering community long enough to know how these self-important trolls work. You should know it by now as well Dang. I frankly don't know what you are trying to save them from except maybe you pity them.

We can all use some deep self-reflection.

I'm not trying to save anyone—just HN!

https://hn.algolia.com/?dateRange=all&page=0&prefix=false&so...

https://hn.algolia.com/?dateRange=all&page=0&prefix=false&qu...

If you know a better way to do that, I'm all ears. There are a lot of constraints on this problem.

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