How Wall Street is Making its Billions

From Philip Greenspun:

Wall Street banks have had profitable quarters. JPMorgan Chase reported $3.6 billion in profit (more than $1 billion per month). Goldman Sachs was only slightly behind, at $3.2 billion. These profits supposedly came from “trading.” I asked a friend who has worked in the money business how this was possible. “For someone to make money trading, there has to be someone on the other side of every trade who is losing money. Where does each bank find someone who can lose $1 billion every month?”

He explained that “carry trade” would be a more accurate description of what they’re doing. Because of the Collapse of 2008 financial reforms, the big investment banks are able to borrow money from the U.S. government at 0 percent interest. Then they can turn around and buy short-term bonds that pay 2 or 3 percent annual interest. Now they’re making 2 percent on whatever they borrowed. They can use leverage to increase this number, by pledging some of the bonds that they’ve already bought as collateral on additional bonds.

(via Boing Boing)

US States Renamed For Countries With Similar GDPs

From Strange Maps.

The creator of this map has had the interesting idea to break down that gigantic US GDP into the GDPs of individual states, and compare those to other countries’ GDP. What follows, is this slightly misleading map – misleading, because the economies both of the US states and of the countries they are compared with are not weighted for their respective populations.

Pakistan, for example, has a GDP that’s slightly higher than Israel’s – but Pakistan has a population of about 170 million, while Israel is only 7 million people strong. The US states those economies are compared with (Arkansas and Oregon, respectively) are much closer to each other in population: 2,7 million and 3,4 million.

(via Information Aesthetics)