• Sharebar

At the end of the day, its possible that no amount of ingenuity, tenacity, or greed can save Wall Street from the demagoguery of politicians. Whatever happened to all those connections Goldman was supposed to have, heh?

Even beyond the regulation, however, it is starting to seem as if much of the last decade in finance - not just Wall Street, all of finance- was built on unfounded optimism and unsteady economics. A bunch of rent-seeking, poorly researched casino gambling to exploit the few truly value added innovations for all they're worth. At the end of the day, I think investors coming to realize that they've been (and continue to be) played might be even more important than anything the government does.

With politics and economics conspiring to hack away at the big money gambling that makes Wall Street the place to be for the young, smart, and greedy, are the big money days gone? Is there enough dumb money out there to feed the beast? When can we bring the party hats out again?

Just read this .

The WSO Advantage - Investment Banking

Financial Modeling Training

IB Templates, M&A, LBO, Valuation + Learn More.

IB Interview Prep Pack

30,000+ sold & REAL questions Learn More.

Resume Help from Actual IB Pros

Land More IB Interviews. Learn More.

Find Your Perfect IB Mentor

Realistic IB Mock Interviews. Learn More.

Comments (30)

  • LIBOR's picture

    Dude, personally, I don't think the party is over just for Wall Street. The good times are over for everyone. The fiat/fractional reserve currency has failed. Banks won't lend. Borrowers won't pay back. A mix of our cultural attitude (our sense of entitlement) and poor fiscal choices have led us down an unsustainable path. The housing bubble crashes, and the government's response is to prop it up with a synthetic housing bubble. Transfer the bad loans to Fannie, Freddie, and the Fed.

    The fact is, at some point, some straw will break the camel's back. We have an entire system built on credit (Latin for Trust). At some point, if one person fails to make payments on their obligations, then the person who trusted them will also default, and the cycle continues.

    Take a look at unfunded liabilities. These are the real killers. US Gov won't be able to make Social Security payments, and state pensions will not be able to make the 8% returns each year to keep up with their liabilities. At the end of the day, someone has to get screwed. It may be the worker who slaved his whole life to earn his pension and the fund might not be able to pay it. Or it may be the young worker who is working hard each day who has his tax rate raised to 75% to cover the pension worker. In either scenario, consumption must decrease, since the old worker will have less money (since the pension defaulted) or the young worker will have less money (from high taxes).

    Perhaps I'm just a gloom and doom-ist. I just think the party is over for everyone. The system is built on trust, yet we've woven a web of lies to think we are living a life of prosperity. Buying a house with no down payment and no income is not prosperity. Buying a TV from a second mortgage you took out on the expected value of your house is not prosperity. Being levered 30 to 1 so your Bank can take on more risk making markets is not prosperity.

    We've gotten to that point in the night (at a good party) where you get a second wind, take a couple extra shots of Jack (or whatever you drink), then fuck some girl with an STD, piss on your friends rug, and drunk text your ex to tell her how much you miss her.

    Well tomorrow, we'll all wake up, and realize the mess we've made, and trust me, this hangover/clean up will be brutal.

  • Walkio's picture

    I'm glad I'm not the only one who drunk texts her ex (s).

  • Marcus_Halberstram's picture

    Are you seriously asking if politicians will cease to prostitute themselves?

    The party's not over, its just in a lull because the cops came and broke it up and when they came inside they saw a bunch of high school kids drinking and smoking and blowing lines and having all sorts of orgies. The parents of the house were out on a run to restock the quickly dwindling beer and drug and dildo supplies and when they got the phone call from the cops, they played dumb and acted as if they had no idea what was going on at their house. Well now all the neighbors are on alert and Social Services is keeping tabs on them, so the degenerate parents are on their best behavior.

    Sooner or later, the neighbors will go back to their oblivion, Social Services will stop paying visits, and Mom and Dad will get that itch to get to host a swarm of drunk and horny high school kids.

  • In reply to Marcus_Halberstram
    mr1234's picture

    Marcus_Halberstram:
    Are you seriously asking if politicians will cease to prostitute themselves?

    The party's not over, its just in a lull because the cops came and broke it up and when they came inside they saw a bunch of high school kids drinking and smoking and blowing lines and having all sorts of orgies. The parents of the house were out on a run to restock the quickly dwindling beer and drug and dildo supplies and when they got the phone call from the cops, they played dumb and acted as if they had no idea what was going on at their house. Well now all the neighbors are on alert and Social Services is keeping tabs on them, so the degenerate parents are on their best behavior.

    Sooner or later, the neighbors will go back to their oblivion, Social Services will stop paying visits, and Mom and Dad will get that itch to get to host a swarm of drunk and horny high school kids.

    ^^funny, but not exaclty a meaningful analysis.

    party isnt over, but it wont be as fun going into the future.

    ---
    man made the money, money never made the man

  • EnteringRealLife's picture

    hopefully, then the rents will fall

  • In reply to mr1234
    Marcus_Halberstram's picture

    mr1234:
    Marcus_Halberstram:
    Are you seriously asking if politicians will cease to prostitute themselves?

    The party's not over, its just in a lull because the cops came and broke it up and when they came inside they saw a bunch of high school kids drinking and smoking and blowing lines and having all sorts of orgies. The parents of the house were out on a run to restock the quickly dwindling beer and drug and dildo supplies and when they got the phone call from the cops, they played dumb and acted as if they had no idea what was going on at their house. Well now all the neighbors are on alert and Social Services is keeping tabs on them, so the degenerate parents are on their best behavior.

    Sooner or later, the neighbors will go back to their oblivion, Social Services will stop paying visits, and Mom and Dad will get that itch to get to host a swarm of drunk and horny high school kids.

    ^^funny, but not exaclty a meaningful analysis.

    party isnt over, but it wont be as fun going into the future.

    Um... I thought it was pretty obvious.... any politicians hob-knobbing with Wall Street or accepting their more than generous contributions will be hoisted on a sharpened stick by the media and public... thats why Wall Street connections are currently moot.

    And it was an analogy, not an analysis.

  • Seigniorage's picture

    I think the party won't be over until completely delibitating and permanent catastrophe strikes while any available government action (low FF rates, easy discount lending, bailouts) is anemic. I think Bernanke has shown us the new doctrine in US Economic Regulation: Everything can and will be done. This means a failure of the economic power/influence of the govenrment must be first.
    Plenty of doomsayers talking about the fall of the dollar and chromically unfilled treasury auctions but the reality is still very far away. Maybe not even in our lifetime.

  • In reply to Marcus_Halberstram
    mr1234's picture

    Marcus_Halberstram:
    mr1234:
    Marcus_Halberstram:
    Are you seriously asking if politicians will cease to prostitute themselves?

    The party's not over, its just in a lull because the cops came and broke it up and when they came inside they saw a bunch of high school kids drinking and smoking and blowing lines and having all sorts of orgies. The parents of the house were out on a run to restock the quickly dwindling beer and drug and dildo supplies and when they got the phone call from the cops, they played dumb and acted as if they had no idea what was going on at their house. Well now all the neighbors are on alert and Social Services is keeping tabs on them, so the degenerate parents are on their best behavior.

    Sooner or later, the neighbors will go back to their oblivion, Social Services will stop paying visits, and Mom and Dad will get that itch to get to host a swarm of drunk and horny high school kids.

    ^^funny, but not exaclty a meaningful analysis.

    party isnt over, but it wont be as fun going into the future.

    Um... I thought it was pretty obvious.... any politicians hob-knobbing with Wall Street or accepting their more than generous contributions will be hoisted on a sharpened stick by the media and public... thats why Wall Street connections are currently moot.

    And it was an analogy, not an analysis.

    i agree. somewhere in between the dildos, the beer, the drugs and orgies was a pretty obvious message.

    ---
    man made the money, money never made the man

The WSO Advantage - Investment Banking

Financial Modeling Training

IB Templates, M&A, LBO, Valuation + Learn More.

IB Interview Prep Pack

30,000+ sold & REAL questions Learn More.

Resume Help from Actual IB Pros

Land More IB Interviews. Learn More.

Find Your Perfect IB Mentor

Realistic IB Mock Interviews. Learn More.

  • In reply to Marcus_Halberstram
    mr1234's picture

    Marcus_Halberstram:
    mr1234:

    i agree. somewhere in between the dildos, the beer, the drugs and orgies was a pretty obvious message.

    There's the problem, you were entirely too fixated on the dildos.

    pretty sure it was you who brought the dildos into the conversation. youre just a never-ending-funny-internet cock-swallowing monster arent you? well, its a good thing youre funny. otherwise you wouldnt be very interesting. kidding. dont take this seriously.

    ---
    man made the money, money never made the man

  • In reply to Marcus_Halberstram
    mr1234's picture

    Marcus_Halberstram:
    mr1234:

    i agree. somewhere in between the dildos, the beer, the drugs and orgies was a pretty obvious message.

    I was talking about politicians.

    There's the problem, I'm sure you get this all the time, but you were entirely too fixated on the dildos.

    and whats up with the editing. this is the internet you dont need to prove anything.

    ---
    man made the money, money never made the man

  • dazedmonk's picture

    I hope Batrick Pateman's right b/c some of us were still observing curfews at mommy and daddy's house during the last party and would really really like to be at the next one.

  • In reply to dazedmonk
    EnteringRealLife's picture

    dazedmonk:
    I hope Batrick Pateman's right b/c some of us were still observing curfews at mommy and daddy's house during the last party and would really really like to be at the next one.

    The problem is you have speak Hindi, Mandarin, Zulu Warrior dance to get into the next one

  • TNA's picture

    Party is not over. Things move in cycles, whatever legislation the government puts in place will just cause an opportunity to be exploited. Rather than let market forces take care of things the ever so wise politicians think they can come in and mess with stuff. They wanted to promote minority ownership of housing and look at the tidal wave that set off (yes, I know there is more to it, but this is just a tiny example).

    I have now lived through a handful of booms and busts and nothing changes. I don't think this will be any different.

  • In reply to TNA
    prospie's picture

    AnthonyD1982:
    Party is not over. Things move in cycles, whatever legislation the government puts in place will just cause an opportunity to be exploited. Rather than let market forces take care of things the ever so wise politicians think they can come in and mess with stuff. They wanted to promote minority ownership of housing and look at the tidal wave that set off (yes, I know there is more to it, but this is just a tiny example).

    I have now lived through a handful of booms and busts and nothing changes. I don't think this will be any different.

    Exactly. Notice that the majority of posters here are young. I talked to a partner at a fund who has worked at places like DLJ and ML and also has made money off previous commercial real estate booms, and he said we're just in another cycle.

    Just like during the boom, when people think it will go on forever, during the bust people don't see the recovery coming.

  • eliteculture's picture

    exactly the mentality of a stupid investor. Buy high during boom period and sell low when bust has actually happened.

  • In reply to Marcus_Halberstram
    mr1234's picture

    Marcus_Halberstram:
    mr1234:

    and whats up with the editing. this is the internet you dont need to prove anything.

    Is that why you keep coming back to read the post I wrote over and over again?

    Get a hobby. Or a friend. Maybe even both.

    so says the guy with 2000 posts. you realize this is an internet circle jerk? i am done, you win, you can go ahead and pat yourself on the back now.

    ---
    man made the money, money never made the man

  • Ari_Gold's picture

    This beggars the question, which party are we referring to? The finance party? The Western dominated finance party? High wages party?

    There's always a partying going on. But the days of Anglo-Saxon debt driven model heyday definitely seems to have gone out of vogue. It's become the party of has-been. The previous popular high-schoolers that hasn't or can't move on.

    Economist: A special report on debt
    http://www.economist.com/node/16397110?story_id=16...

    Not basing all my assumption on an article and others from Economist. But a very interesting read nonetheless. I just don't understand how we can still be reaping the "ridiculously" high returns and bonuses without finding another "client/buyer" which inevitably seem to be moving Eastward. The covenant of Trust of smart Western style financiers and business leaders seem to have been broken. The debt level, as seen in Europe has finally reached almost unsustainable levels.

    Yet, all around I seem Joe Blow entitlements and demanding ever greater services while bemoaning more taxes. Please someone more on the inside and wiser than me, explain how this is to be "handled" and where's the next party is, because I'm always done.

    -----------------------------------------------------------------
    Hug It Out

  • In reply to TNA
    mr1234's picture

    AnthonyD1982:
    Party is not over. Things move in cycles, whatever legislation the government puts in place will just cause an opportunity to be exploited. Rather than let market forces take care of things the ever so wise politicians think they can come in and mess with stuff. They wanted to promote minority ownership of housing and look at the tidal wave that set off (yes, I know there is more to it, but this is just a tiny example).

    I have now lived through a handful of booms and busts and nothing changes. I don't think this will be any different.

    i would like to think this recession is just another business cycle. but with the amount of debt outstanding in virtually every level - both public and private - its hard not to be concerned. i see one of 3 things happeneing:

    *the US goes through a period of anemic growth. couple of yrs (or a decade) down the line, bad debt flushes out of the system. banks go back to lending, everybody is happy, all is well, business as usual.

    *financial apocalypse. losses oin real estate are realized on bank balance sheets, state and local govs default, consumer spends less, taxes go up, federal gov refuses bail out. prolonged depression. probably unlikely, but i think the possibilty exists.

    *or maybe something in between. or something totally different. there are a lot of moving parts.

    for the past couple of yrs or so, the main driver for growth has been easy financing. for better or for worse, the US economy is based on credit. there might be something wrong with that.

    ---
    man made the money, money never made the man

  • In reply to TNA
    mr1234's picture

    To unlock this content for free, please login / register below.

    Connecting helps us build a vibrant community. We'll never share your info without your permission. Sign up with email or if you are already a member, login here Bonus: Also get 6 free financial modeling lessons for free ($200+ value) when you register!

    ---
    man made the money, money never made the man

  • In reply to Stringer Bell
    mr1234's picture

    ---
    man made the money, money never made the man

  • In reply to TNA
    mr1234's picture

    ---
    man made the money, money never made the man