I just read this and it made me think about finance and investment in general

http://money.cnn.com/2012/05/10/news/companies/jp-morgan-losses/index.htm?iid=Lead

I don't like the idea of credit swaps, nor derivatives as I can't see any practical or "real" value in them, except as a complex vehicles that simply inflate the prices of what they hold.

Maybe, it's strange coming from an accountant, or not if you know the blood feud between the disciplines, but why can't finance be simple securities backed by realizable values?

A simple example from just the stock market just for layman reference, if my company is worth $1 billion, I have revenues of $200 million dollars, earnings of $100 million dollars, and 100 million shares of outstanding stock. Under practical projection, I could value my company at a multiple of say 2-3 times earning value.

My company minimum basis is $10 per share or equivalent to current value of my company, with a potential high of $12-13 per share based on profitability.

Doesn't that sound reasonable? You still make 20-30% profit and buyers know your are worth that value.

Today's stock values averages 22 times earnings on the US S&P, these values are not substantiated outside speculation. Yet, it is how the world lives in its own illusion that we are actually making money out of nothing.

This isn't about debt, nor about banking in general, but the principle at which finance is operating, money for money sake without any real values involved.

It's like I got a dozen water bottles, filled it with tap water through a purifier filter, then sold it to everyone for $5 a bottle, because it is "pure" water. Seriously, just because the tap water has gone through a simple filter, now it is worth 10 times what it was.