Hacker News Reader

Comment by arethuza | Hacker News Reader

"How is humanity better off by investment banking?"

Their clients think they provide an economically useful function - otherwise they wouldn't use them. Do businesses really need more justification to exist than that?

Also:

- The bank wasn't directly interacting with the airline, they were buying bonds from other organisations who were holding them

- Lots of people risk other peoples money - fund managers, pension companies, VCs, hedge funds etc. - with varying degrees of risk and exposure by the people actually doing the investing.

View on HN

You're missing the point.

1) Money exists to serve humans. It doesn't exist for money's sake. The end goal is to help people. The airline helped people get from A to B. Dropbox helps people send files.

2) The people holding the bonds are still gamblers. Your example consists entirely of gamblers!

And how did the airline raise the money to buy its planes or Dropbox raise the capital it needed to expand?

Do you think the VCs who invested in Dropbox would do so if they knew that Dropbox would never allow itself to go public or be acquired?

By your definition, if I purchased Apple stock I would be "gambling" - Apple wouldn't see any of my money. In a certain respect I sort of agree with this, but it's also clear that when Apple went public the money raised was built on the expectation of future free trading in the stock so, as far as I can see, it is very difficult to divorce "investment" from "gambling".

Those are very good points.

So what do you think should be done about the present situation, if anything? I have no idea.

Someone on here suggested having an asset limit for banks relative to GDP - if you look at RBS (largest company in world by assets) at $3.5 trillion then that might look a bit uncomfortable in the UK which has a GDP of quite a bit less ($2.173 trillion).

http://www.scribd.com/doc/26993356/Worlds-Biggest-Companies-...

[NB As I write this I am maybe 100m from their old headquarters!].

Reply on news.ycombinator.com