Why is the financial sector so widely disliked ?

[Swirlythingy2025]

Been watching the show Billions and from watching it seems Hedge funds, investment banks, and the stock market often face accusations of greed and serving only the elite.

Is the stock market rigged against ordinary people, or do we fail to grasp its complexities?

my personal view is society needs its Ax capital or its Bobby Axelrods of society

why are some people omg at insider information, if some can analyse the stocks better, some can guess correctly or some have friends that know things ?

@GasPanic You are economically illiterate. So what if it’s now a bouyant industry? Why cannot people earn well? They pay the majority of tax already. Why take that away? We do have a society that depends on banking. That’s why banks were rescued. The ordinary person working in any banking institution was not to blame. Plus a lot of issues were imported from the USA.

Insider trading relates to people making investment decisions based on information that’s not publicly available to all. It’s (quite rightly), illegal for example, if two CEO’s are discussing a potential merger that’s not in the public domain, to then try and make a profit on it.

I am not allowed to buy or sell any shares in the bank I work for, in the run up to our accounts/results being released. It would be immoral if bank accountants, (who know first how well a bank has performed that year), got to buy or sell their own shares, before the rest of the public know how well (or badly!) that bank has done.

If an analyst has made a better judgement call, or taken a different decision to other analysts using information that’s available to everyone, that’s fair enough. But you absolutely cannot profiteer on the back of knowledge you’ve acquired that the rest of the market doesn’t have. It’s incredibly tightly regulated and the implications of being caught are huge - struck off the professional bodies register (so you can’t work in financial services again), unlimited fines and going to prison.

It's not lack of knowledge that stops the ordinary person making money on the markets, it’s lack of a few hundred grand that they can afford to lose.

It can affect the stock price. Insider trading might force the shares up or down and someone buys low or sells high knowing that the price is wrong. People manipulate prices for their own gain

In terms of how they monitor it, I have to submit statements from my personal dealing account on an annual basis. I also have to submit statements from DH’s personal dealing account - to prevent me trying to get round the rules by dealing shares in his name. I have to ask permission from compliance before either DH or I buy/sell any shares at all - not just in my own bank and they have to be held for a minimum of 30 days.

Sure I am.

It's just that every 30 years or so banks bust up the economy in trying to make themselves a pile of cash and then expect me to pay for it. When I ask why apparently it's because "we need them".

Apologies that I might just sound a little bit sceptical about all this.

Sooner or later people might actually be smart enough to figure out they are being sold a pup.

We do need banks. Just not the sort of banks we have. Banks should be serving society in return for their priviledged access to the money supply. Not trying to get ever increasing profits from it and destabilising it in the process.

But don't worry. People seem to have pretty short memories. All the protective legislation that protects against instability will be quietly lobbied away over time without people noticing. And then we will end up back at square one.

Watch from about 1:52

They do of course make money but they are not charities. They operate to facilitate you getting your money and investing pensions etc. It does matter. We do not have banks going bust every 30 years or so. We had 08/09. What banks had gone bankrupt or been bailed out prior to that? There was Barings in 1995 but they were not investing for ordinary folk by and large. We need all business to make a profit. They are not charities (neither are we in a communist state) and they need very good people working for them. We know what happens without checks and balances but we are much tighter regarding regulation now.

If you are jealous of what people earn, and the jobs they do, why not join them? Could you do it?

Banks paid £24.9 billion in PAYE and £9.3 billion in corporation tax in the year 23/24. That’s a pretty big chunk of tax they’re contributing to the UK economy.

www.gov.uk/government/statistics/paye-and-corporate-tax-receipts-from-the-banking-sector-2024/paye-and-corporate-tax-receipts-from-the-banking-sector-2024#:~:text=Corporation%20Tax%20receipts%20from%20the,to%2025%25%20in%20April%202023

The banks which the government bailed out in 2008 have repaid almost all the money. £33 billion still remains to be paid, and probably will be. By extending credit - something only the government could do - the government stopped a huge collapse which would have cost the UK much more. It was worth doing.

The government also paid out billions to stop companies collapsing during Covid Furlough. That cost £70 billion. Much of it will never be repaid (unlike the bank bail outs), but despite that, it was still worth doing.

You really are missing quite a big chunk of understanding if you think we'd be better off without investment banks.

At it's simplest, without financial markets, companies wouldn't be able to take investment money from peoole who are willing to defer their spending (eg people saving for their pension) in order to invest in things like machinery which hugely increase their productivity. Companies being more productive means they are able to employ people and pay taxes. The taxes on all the extra stuff they make pays for hospitals, schools etc.

Without it being a market, those pension savings wouldn't be funnelled to the companies who can make best use of it. Ie have the biggest improvement in productivity for the amount of investment available. And hence pay the most extra taxes on the extra stuff they make. And get the most money into hospitals and schools.

Without currency and interest rate instruments, companies wouldn't be able to fix costs when fulfilling orders for customers abroad or eg a year in the future (to give time to build what they're selling). They would have to add a margin for that uncertainty, which would price out some potential customers and limit how much they can make. Which (you guessed it) would result in those companies employing fewer people and paying less tax which pays for hospitals and schools.

Without investment bankers, pretty much everyone in the UK would be poorer. And would have fewer hospitals and schools.

It really doesn't matter that paying for hospitals and schools isn't their aim. By doing what makes money, they also increase productivity across the economy so that the government can pay for hospitals and schools out of the increased taxes.

Those hospitals and schools would have much less funding without the work done by the Finance industry. Both sets of roles are needed. The doctors and teachers and also the people who increase UK productivity so that the government can pay for them.

Yes, I know that: but more than once I’ve heard people in that sector coming down hard on public sector staff. It’s not endearing.

As to why the finance sector is so disliked, I think it's down to:

• a serious lack of understanding about what it is and why it's important (as @Gaspanic has shown)

• and also tribal 'othering' based on inverse snobbery (similar to other anti-intellectual and anti-money dislike)

@TokyoKyoto You don’t have public sector staff without taxation. Millions of people in this country are not wealth creators. They spend what others have contributed. We all agree to that of course but everyone complaining about the goose that lays the golden eggs is farcical (even if it’s occasionally tarnished). Maybe schools should teach basic economics to everyone?

Without currency and interest rate instruments, companies wouldn't be able to fix costs

@strawberrybubblegum is spot on. If there were no interest rate swaps, there would be no fixed rate mortgages. Everyone would be on a variable rate mortgage. Interest rate swaps are the mechanism that allows banks to offer fixed rate mortgages.

This (excellent) news about fixed rate mortgages falling, is because interest rate swap rates have fallen post Trumps tariffs. Investment bankers (swaps traders in this instance) have locked into these lower swap rates, meaning lower fixed rate mortgages. Well done them I say.

https://www.bbc.co.uk/news/articles/cevdx7wyjvmo.amp

@TokyoKyoto well we know they are arrogant but they're not wealth creators.

would people be open about insider trading if it was happening ?

Yes it's all a bit ' heads, I win, tails, you lose'. They make money for themselves taking huge risks but when the risks don't pay off, they don't pay for their mistakes, we do.

I think the need to be bailed out by public funds in 2008 is a big part. They want the gains to be private but the risk to be public.
Also worth taking a read of the finance curse to show the damage the dominance of finance does the uk. https://www.theguardian.com/books/2018/oct/23/the-finance-curse-nicholas-shaxson-review

@tomatotater
@thinkaboutittomorrow

1.The banks have paid back almost all the bail out funds (unlike the Covid bailout which will never be paid back)

2.The gains are public too. The UK would be significantly poorer without the Finance sector. Ie fewer public services, lower standard of living for everyone

3.The hate far precedes 2008!!

tldr; you're deluding yourself if you think the 2008 bail out is why you hate them. It's simply tribalism and inverse snobbery.

@strawberrybubblegumthey’ve paid back ‘most’. The bail out will only cost taxpayers £37bn. Quantitative easing is another £150bn. And that’s before you think about the damage done by having £1 trillion in capital tied up in backstop protection. It’s all money that could have been invested in infrastructure to grow productivity and wages.

finance is an important sector but I think it is now too large and is damaging to the economy by the belief it is so important, more so than other investment.

I also think ‘finance’ is too broad a term. Private equity is largely damaging, stripping money and reducing the long term sustainability of businesses that are needed. Care homes owned by PE suck money out, leaving low wages staff to deliver substandard care to vulnerable people. they load debt onto viable and healthy businesses and weaken them, walking off into the sunset with the gains at the loss of jobs and long term business health and productivity. They are leeches and damaging. And yes, that was true long before 2008 but the expectation of bail outs from banks after they fucked up did shine a light on a mentality that’s not pretty & deserves condemnation.

I don't know enough about but is this about the all importance of shareholder profits? This seemed to take over in the last few decades. Whereas if we had companies that put communities and staff central, would that be better.

I think the huge explosion in population in the last 30-50 years has probably been the driving factor in market growth.

I don't hate them, but it's not as simple as the debt is paid.

That debt took resources away from ordinary people, and those ordinary people don't get that period of time back.

You're right: the asset stripping practices of some private equity is a separate issue. Regulation is needed to keep all sorts of unscrupulous practice in check - the Finance sector is certainly not unique in that. But perhaps the regulation is harder to design than eg employment rights, landlord regulations, safety regulations.

Completely free markets isn't an economic model anyone would want. But finding the sweet spot of effective capitalism with just the right protections is pretty hard.

It would be interesting to see some more analysis about what the cost to the ordinary people of not intervening would have been! Or not having financial instruments available for that matter.

Those who are so against capitalism would do well to look at how much lower the standard of living for everyone has been in every single communist regime without exception. And also speak to lots of people who have lived under those regimes. You will very quickly hear quite how awful they were to live in! It's very easy to have rose tinted spectacles when you live safely far away in a Western democracy with an exceptionally high standard of living for all (which is a direct result of our economic model, not some god-given right).

Comments such as those above saying that the Finance industry is "just moving money around" show a complete lack of understanding of the Finance industry which is wide-spread in the UK - and a contempt rooted in anti-intellectualism and tall poppy syndrome which are also unfortunately widespread.