With all the talk about the impending fall over the "fiscal cliff" (brought to you by the Congress and the US Financial Establishment) I've been thinking about how I was brought up .... you know; thrift, saving, careful purchases, etc. I never recalled the use of the term "fiduciary responsibility for shareholder equity." A company made something, they made a modest profit (5-7 % wasn't unheard of and was considered pretty good), reinvested profit in research and development, paid decent wages and just maybe paid a small dividend to stockholders. Hell, for years GM stock was considered safer than a savings account. Think about it, the US Auto industry began its descent when the finance guys took over from the car guys.
One thing I always believed was that "investment" was just that. It wasn't speculation or gambling. Sure I lost money in some companies, and made some in others; but I wasn't the "in 'n out" investor.
Now, our system of investment is nothing more than a bet .... and the house always wins (even when they lose).
The portion of our economy that is concerned with making "deals" as opposed to making "things" has grown totally out of proportion with the value it adds to the economy, and many of the "instruments" are totally undecipherable to the average investor.
Now even the banks have entered the fray (with your money). I think this would be a pretty easy way to put a stop to it. Another way would be to eliminate the Capital Gains Tax. NO, NO, not what you think ......... Make it a graduated repeal - 50% tax on assets held one year or less, and a 10% reduction for each year thereafter. This is probably too simple, but it would certainly cut down on speculation, Another means would be a minute tax (say .001%) on every transaction.
I certainly don't have the answers, but we need to do something before it becomes a question of running out of rope or lampposts.