{"id":5069,"date":"2010-04-21T15:54:30","date_gmt":"2010-04-21T20:54:30","guid":{"rendered":"http:\/\/2parse.com\/?p=5069"},"modified":"2010-04-21T15:54:30","modified_gmt":"2010-04-21T20:54:30","slug":"wall-streets-enormous-profits-are-evidence-of-a-poorly-functioning-market-cont","status":"publish","type":"post","link":"https:\/\/2parse.com\/?p=5069","title":{"rendered":"Wall Street&#8217;s enormous profits are evidence of a poorly functioning market (cont.)"},"content":{"rendered":"<p>[digg-reddit-me]This is something that really <a href=\"http:\/\/opinionator.blogs.nytimes.com\/2010\/04\/19\/youre-welcome-wall-street\/\">needs to get more attention<\/a>. William Cohan in the <em>New York Times<\/em>:<\/p>\n<blockquote><p>The easiest and most profitable risk-adjusted trade available for the banks is to borrow billions from the Fed \u2014 at a cost of around half a percentage point \u2014 and then to lend the money back to the U.S. Treasury at yields of around 3 percent, or higher, a moment later. The imbedded profit \u2014 of some 2.5 percentage points \u2014 is an outright and ongoing gift from American taxpayers to Wall Street.<\/p><\/blockquote>\n<p>H\/t\u00a0<a href=\"http:\/\/voices.washingtonpost.com\/ezra-klein\/2010\/04\/heads_the_banks_win_tails_they.html\">Ezra Klein<\/a>.<\/p>\n<p>I also came across this from <a href=\"http:\/\/baselinescenario.com\/2009\/07\/30\/the-problem-with-profits\/\">James Kwak at the Baseline Scenario<\/a>:<\/p>\n<blockquote><p>[I]f you see a company that has very high profits over a sustained period, there are two possibilities: either it is benefiting from a non-competitive market (e.g., it is a monopoly), or it is simply exceptional at innovating and staying ahead of the competition for years on end. If you see a whole industry that has sustained high profits, however, the latter explanation cannot hold, and you should immediately suspect a lack of competition.<\/p>\n<p>[T]he thing that we should celebrate is not high profits, but competition. The\u00a0<em>pursuit<\/em> of high profits is what motivates competition; but if a whole industry\u00a0<em>achieves<\/em> high profits, then what you are seeing is not competition, but its opposite.<\/p><\/blockquote>\n","protected":false},"excerpt":{"rendered":"<p>[digg-reddit-me]This is something that really needs to get more attention. William Cohan in the New York Times: The easiest and most profitable risk-adjusted trade available for the banks is to borrow billions from the Fed \u2014 at a cost of around half a percentage point \u2014 and then to lend the money back to the [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_post_was_ever_published":false},"categories":[544,1032,4,458],"tags":[2768,93,1791,2767,148,128,2766],"class_list":["post-5069","post","type-post","status-publish","format-standard","hentry","category-economics","category-financial-crisis-economics","category-politics","category-the-opinionsphere","tag-baseline-scenario","tag-ezra-klein","tag-federal-reserve","tag-james-kwak","tag-the-new-york-times","tag-wall-street","tag-william-cohan"],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/p8qcx-1jL","jetpack_likes_enabled":true,"jetpack-related-posts":[],"_links":{"self":[{"href":"https:\/\/2parse.com\/index.php?rest_route=\/wp\/v2\/posts\/5069","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/2parse.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/2parse.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/2parse.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/2parse.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=5069"}],"version-history":[{"count":1,"href":"https:\/\/2parse.com\/index.php?rest_route=\/wp\/v2\/posts\/5069\/revisions"}],"predecessor-version":[{"id":5070,"href":"https:\/\/2parse.com\/index.php?rest_route=\/wp\/v2\/posts\/5069\/revisions\/5070"}],"wp:attachment":[{"href":"https:\/\/2parse.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=5069"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/2parse.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=5069"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/2parse.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=5069"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}