I know this is a little off my usual topic of health care and related stuff, but after last nights State of the Union address, and Obama's call for new taxes on big banks, I got to thinking.
What is this financial innovation thing that has so many financial pundits concerned that if we increase taxes on big banks it will stifle this very important financial innovation.
Now I realize we need innovation in manufacturing, and technology to improve the products we use every day, and to make the US more competitive with manufacturers around the world.
We need innovation in the energy sector to reduce our dependence on foreign oil, and reduce environmental pollutants.
There are also great benefits from innovation in health care, finding new drugs and treatments for diseases from which stand to reap huge benefits in the future. [Ok, there's the health care plug.]
But why do we need financial innovation? Why is it so important? And come to think of it, what exactly is financial innovation anyways?
Is it the design of new types of loans so more people can renege on paying them back? Or is it to design more innovative ways for investing in the stock market, to fleece the middle class out of their hard earned money, and pay out huge bonuses? Is this the transfer of wealth scenario so many people talk about in reverse?
I just don’t see the necessity for financial innovation. How does transferring money around, from one hand to the other, improve the quality of life for me or other Americans.
Will it make getting through an airport security line easier? Will it get me from point A to point B faster? Will my energy bills go down.
It seems to me, like the casino’s in Vegas, the only real winners are on Wall Street.
Maybe someone can enlighten me as to why we need to worry about being more innovative in the financial industry.