Once you account for this and other forms of derivatives-are-hard-to-count problems, it’s down to “only” a few trillion. I;m unable to find a good estimate regarding what fraction of the “financial system” (squares quotes indicating the term is not well defined here) that is.
WQ’s response was great. I have worked in “the financial system” for nearly 20 years and just in terms of real assets under management, most of the handful of large global firms are each managing assets in the low trillions, and those are “real” assets in the sense that they aren’t really anything you could say was being counted more than once due to arcane accounting rules or contractual obligations or whatever.
Back around 2007/2008 there were a few numbers in the mid-tens-of-trillions being tossed around in the news that were guesstimates of the total global net worth, and although I forget the numbers now, I would be very surprised if the sum of assets under management was not approximately equal to those numbers. Via trusts and so on, such firms even manage physical assets (paintings, yachts, diamond rings, office buildings) to varying extents that most people don’t think about as being managed by “the financial system.”
The only place where I’d change WQ’s response is to blame regulation more than legal costs. Not that legal is cheap for these firms, but regulation and compliance is the biggest cost-factor by such a large margin that everything else is nearly irrelevant (in fact, legal costs are just a side-effect, for the most part).
Once you account for this and other forms of derivatives-are-hard-to-count problems, it’s down to “only” a few trillion. I;m unable to find a good estimate regarding what fraction of the “financial system” (squares quotes indicating the term is not well defined here) that is.
WQ’s response was great. I have worked in “the financial system” for nearly 20 years and just in terms of real assets under management, most of the handful of large global firms are each managing assets in the low trillions, and those are “real” assets in the sense that they aren’t really anything you could say was being counted more than once due to arcane accounting rules or contractual obligations or whatever.
Back around 2007/2008 there were a few numbers in the mid-tens-of-trillions being tossed around in the news that were guesstimates of the total global net worth, and although I forget the numbers now, I would be very surprised if the sum of assets under management was not approximately equal to those numbers. Via trusts and so on, such firms even manage physical assets (paintings, yachts, diamond rings, office buildings) to varying extents that most people don’t think about as being managed by “the financial system.”
The only place where I’d change WQ’s response is to blame regulation more than legal costs. Not that legal is cheap for these firms, but regulation and compliance is the biggest cost-factor by such a large margin that everything else is nearly irrelevant (in fact, legal costs are just a side-effect, for the most part).