>since most of it is just paperwork, how can a percentage measure that work, when the work is the same for a $2000 and $200000 loan?
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>Not quite... until very recently if you want to lend $200000 to somebody who can't possibly repay it, you need to get AIG to insure that loan to elevate it to investment grade so you can bundle a whole lot of similar loans together and trade them. The cleverness required to manage such a strategy is obviously worth multi-million dollar bonuses to the bankers responsible, as I'm sure most US taxpayers would agree at the moment.

The whole idea of buying someone's loans as if they were a commodity is outworldly to me. Probably the feel people get when I start talking maths... I may understand why would someone buy or sell a loan, and what may influence the price, but that's abstract enough for me. Now with the insurance thrown in it's getting quite complicated (as to motivations of each of three players), and with the repackaging it's completely out of whack.

It used to be people borrowed money from or to those they knew. Then from those they sort of knew - neighbors, or even the banks in the neighborhood. But at least they met, at least once. Now with all this redirection, you aren't even sure to whom do you owe. Which is more the reason why we paid off our 15 year mortgage in less than three years - we were told a posteriori that the debt may be sold. So I guess nobody had the incentive to trade a debt which will yield one tenth of the originally calculated interest.

But this is a good example of the alienation. Adam Smith's reason for capitalism as the best way was, in good part, based on the belief that an owner will take care of the property, make sure the enterprise runs smoothly and make smart decisions and think in the long run, because he's tied to the enterprise.

Well, stocks, portfolios, derivatives - they changed all that. You may own bits of this or that, and you may not even know, it's traded daily and your broker may have sold your bits of Google and bought a few seeds of Apple, and you may not even notice. Are you, in such a case, Smith's owner who has only the best interests of the enterprise in mind? Maybe you have put options (another thing that was hard to take under my hat), then the failure of the enterprise is in your best interest. That's probably what they thought when they said that what's good for Walmart street is good for Main street.

So instead of Smith's steward capitalist, who's on the spot and manages the things he knows in detail, you get several layers of managerial staff, whose best interest is to make a name and get rich, and if they can make big money by just making sure they (as a profession) get big money regardless of what happens, they'll just do it. The responsibilities are so spread, that for almost every aspect of the management you have a separate manager - a HR, a financial, an IT guy, a broker, engineers for this or that... and the board. Whereas they are all employees, they don't necessarily own anything, maybe they own bits of competition, and their particular interest is to be as teflon as possible when it hits the fan, shift the blame and have a spotless record, because their career is their asset. If welfare of the company coincides with the direction of that career, fine, but most often they are heading in the opposite directions, because of the mantra that the success is built on low paid labor and being cheap on safety and environment, and on being generous with the managerial class because they are the true geniuses and profit makers.

I see this remoteness and cross interests as the proverbial cutting of the branch on which capitalism is sitting. There's no steward, there's only take money and run.