The financial markets and the economy are powerful forces that shape our lives every day. The least we can do is try to understand them so we can better manage our lives and assets more effectively.
Friday, May 2, 2014
Michael Bloomberg's Take on Wall Street
On CNBC's Morning Show, Squawk Box, Andrew Ross Sworkin's prior day interview with Michael Bloomberg is excerpted, May 2, 2014.
Below is a rough transcript provided by CNBC:
yesterday i sat down and spoke with michael bloomberg as part of our 25 list. most impressive individuals over the last 25 years in business. what he thinks about the controversy over high frequency trading. i think there are too many events that have taken place where clearly people were breaking the law, where people were not looking out for their customers's best interests, where there was corruption scandal, theft, whatever. but generally speaking, in the aggregate, people that work on wall street are as good as people that work anyplace else. if it wasn't for wall street, commercial banks, investment banks, we would not have an economy. the average person that works on wall street makes $70,000 a year and lives on main street and shops on main street. we are all in this together. and i think most of these where we pile on and blame the ceo for some of these things, in retrospect i'm sure they look back and say i wish i had caught that thing before somebody was taking advantage of us or just doing something wrong. but the organizations are very big. the world is phenomenally complex today. and you can say, well, we have to simplify it. you can't. what do you make of the larger debate about in equality and capitalism as a businessman. one of the things you're seeing is the effect of the federal reserve pumping a lot of money into the system. i don't know whether it's created a lot of jobs. it's probably created some but not a dramatic number. but what it has done is it has inflated asset values. assets are held by the average person through their pension fund or the wealthy because they have the money to own assets. and so that has exacerbated the rich/poor top 20%, bottom 20% gap. the issue here is what do you do about it? and taking it away from the top and giving it to the bottom has been shown in history to not be -- think of the ussr. thatst does not work. you have to the make a fundamental decision, do you think it should be equal opportunity for everybody or equal results in and that's really the difference between those that the populus who think it should be equal reports. or those that think, you know, there's some luck involved in everything. but you dealt a set of cards. you have to play them. sometimes you win. sometimes you lose. but at least you are in charge of your own destiny. one of the things bloomberg lp did so many is bring transparently cy to the market. yes. what do you make about high frequency trading and the argument that the system is rigged. there is always abuse. the system isn't rigged. somebody is hacking into the computer system right now. somebody else is trying to trade given an edge on trading, that sort of thing. the world should be measured the following way. the commissions charge to do a transaction are so dramatically stronger today they are measures in thousands of a penny sometimes compared when i was in the securities business in 1966 on a $50 trade. $1.50 commission spread. and that's all gone. the public is better served by it. and if you want to make sure you get the best price today, if you want to, for example, sell 1,000 shares of ibm, there are 30 different changes in dark pools that list ibm. only a computer can do that. i would think you might be against dark pools given the transparency. no? no. you don't have to trade that there. you as an investor don't have to tell everybody what you want to do. if somebody comes to me with a bid, maybe i will hit it. maybe i won't. the other person doesn't have the right to know that. if you are making an offer, you should make it to everyone. dark pools you come in and say i want to do something and see if the other side is there.