A Daily Dish reader wrote that "the financial masters of the universe [...] truly believe that [...] the work they do is absolutely integral to a well-functioning capitalistic society." John Bogle describes such work as "the classic function of Wall Street" in noting how little of it firms still do:
The classic function of Wall Street is to direct capital to its highest and best uses. Well, let’s look at that. Last year [2011], Wall Street directed about $200 billion in capital to IPOs and other long- term investments. But Wall Street was also an intermediary for $40 trillion worth of trading volume. So only one-half of 1 percent of what Wall Street does is capital formation. Most of the rest is short-term speculation.
Wall Street has become a casino. I once asked a former Wall Street tax attorney why he thought this had happened and he pointed to the earnings incentives: performance is evaluated on a quarterly basis so it suits a financier to pursue short term gains rather than the sort of long-term growth that isn't really noticeable in three month windows.
