Communication in Economics - Article Example

Communication in Economics The realities of the banking sector in the U.S The banking industry in the U.S has recently been plagued by incessant backdoor deals that many economic analysts have criticized raucously, especially in the Wall Street journal. Banking is a vast industry that controls a significant portion of the U.S economy through lending, foreign exchange as well as creating the most convenient programs for companies and individuals to save. However, the reality behind the perceived success of banking in the U.

S is concealing some illicit deals that are perpetuated by the very bigwigs at the helm in the industry. The most masked illegal covenant that takes place in deep secrecy in the U.S banking trade is inaugurated as “dark pools”. “Dark pools” simply means the simulated exchanges that are created by banks through conjuring with big potential clients to buy or sell massive deals without changing the price as per the current financial market prices. These side deals are effectuated privately for the selfish benefits of the culprits in the banking industry and the deceitful clients.

The main purpose of this vice is to cushion the clients from the possible losses of the main exchanges in a quest to reap profits that are equally shared by both perpetrators (Iniman para 1).How does “dark pools” benefit these perpetrators”? The truth about dark pools is that it is a highly profitable venture. The illegality about it reveals that the sector is money-spinning occasioned by different transactions. The most predominant selling venture in “dark pools” is the attraction of massive share slugs that usually pools established shareholders into buying shares or trading their shares (Iniman para 3).

However, there are no legitimate standards that are followed in these transactions of shares. The financial data about these transactions is only relayed to the public after the business is completed. The opportune reporting, which is done after the completion of the transaction, is always a tactical move to ensure that the perpetrators are not affected by the price. This is because an early report about the shares transactions usually raises attention to the truthful stakeholders in the industry to fluctuate the price basing on the buyers and sellers willingness to transact (Iniman para 3).

The bigwigs who indulge in these illegal transactions are currently overriding in the U.S and Europe banking quarter. They utilize “dark pools” as a smokescreen on their way to raking millions of dollars from the shares business with no fear of making loses because of the nature of operations (Iniman para 3). Why are “dark pools” paralyzing the banking sector? It is palpable that most small investors in the banking industry are involuntarily incorporated into bearing the losses that the bigwigs who perpetuate “dark pools” would have incurred.

This is because the investors are left with no option than to trade normally, which greatly affects them because of the price fluctuation (Iniman para 7). This creates a pool of financial perils to these small investors. In the long run, they start sashaying away from investing in the banking industry and venture into other business. Consequently, the banking industry loses these investors to other industries. “Dark pools” also soil the reputation of good banks that do not associate themselves with it as well as creating abysmal losses.

For instance, Barclays bank has been so vocal in condemning this dishonest business since it is parasitic and retrogressive to the banking sector, especially in the U.S and Europe since it controls approximately 40% of the shares traded in these continents (Iniman para 7).Any interventions to stop “dark pools”? It is high time that the U.S government intervenes to stop this business and cushion the honest traders in the banking sector against unnecessary losses. One John Ramsay, who is formerly the head of the trading and markets division in the US Securities and Exchange Commission (SEC), articulated his opinions about the issue, terming it as a weighty concern (Iniman para 10).

He categorically mentioned about an intercession that would cut off such an illegal trade. However, the government must take the task buy the horns and kills the business quickly before the U.S and Europe economy plunges into unremitting financial crises. Work CitedIniman, Phillip. "Barclays allegations and inside the murky world of dark pools." The guardian (2014): n. pag. Web. 2 July 2014. Retrieved from: .