So, since winamp, I now work for a european investment bank (which did not recieve a bailout) and I have a few thoughts on matters.
The real problems all happened in the most regulated parts of the financial services industry:
Mortgages (sub prime)
Firstly, politicians of all stripes were thrilled that anyone was able get a home loan. It's aspirational, and as property values go up people feel richer. This is great for politicians because they can take credit for people feeling good.
Where the money came from (CDOs, securitisation etc) is not really the issue, because all the money was sloshing around the system anyway, it was always going to end up funding loans.
The largest chunk was from Fannie and Freddie, which were basically government departments!
AIG was very poorly managed and very poorly (even though they were very heavily) regulated. They (management and regulators) didn't know what the fuck was going on, the full extent only became clear very near the end.
So, when politicans are saying "we need to regulate the banks", they're talking shit. They were already regulating, and they fucked it up. It's no coincidence that the most regulated parts got fucked up the most. By way of example, here are the two most de-regulated things that did not fuck up (but everyone is now saying we need to regulate)
a) Equity and sovereign CDS (it worked perfectly over lehman default)
b) Hedge funds (loads went bust, but there was basically no fallout [one ponzi scheme aside, which the regulators were warned about many times, but surprise surprise, did fuck all]).
I write risk management software for what could either be called prop trading or market making in derivatives contracts.
Our traders made huge amounts of money in 2009 which basically saved the bank. That's right, prop trading, saving banks and not causing the credit crunch. Not exactly what the establishment is trying to feed you, eh?
A trader will typically work 6am till late with and huge stress (and a burnout at 40). If he (or she) makes 100mil in cash for the bank, who the fuck are you to say the bank shouldn't give them a 7 or 8 figure bonus? It's not like they're flipping burgers. They've fucking earned it.
The departments which lost money? Whole sections of the office got cleared out, just like that. It's ruthless, but that's how it goes. How hard is it to fire a cop or a teacher?
So yeah, we've not been bailed out. But still people want to tax bonuses at 75% in the UK, and levy extra taxes in the US. Well fuck them. All they're going to do is force people over the Singapore where the tax is 17%.
If they wanted to do something good about the situation, they'd make it easier for people to set up new banks, and if needed break up the large banks in which they still have shareholdings, and get their fucking regulation sorted out. Not more regulation, just competent regulation would do the trick.
DO NOT PM ME WITH TECH SUPPORT QUESTIONS