Deranged Rhino Posted February 3, 2016 Share Posted February 3, 2016 Goldman wrote: "We are always wary of guiding for mean reversion. But, if we are wrong and high margins manage to endure for the next few years (particularly when global demand growth is below trend), there are broader questions to be asked about the efficacy of capitalism." In other words, profit margins should naturally mean-revert and oscillate. The existence of fat margins should encourage new competitors and pricing cycles that cause those margins to erode; conversely, at the bottom of the cycle, low margins should lead to weaker players exiting the business and giving stronger companies more breathing space. If that cycle doesn't continue, something strange is taking place. http://www.bloomberg.com/news/articles/2016-02-03/goldman-sachs-says-it-may-be-forced-to-fundamentally-question-how-capitalism-is-working Link to comment Share on other sites More sharing options...
GG Posted February 3, 2016 Share Posted February 3, 2016 This is one of those times I wish I could slap the reporter. Which profit margins is he referring to? There are more than one, and depending on which he's talking about would be helpful in commenting on Goldman's questions on capitalism. Link to comment Share on other sites More sharing options...
B-Man Posted February 3, 2016 Share Posted February 3, 2016 Link to comment Share on other sites More sharing options...
Tiberius Posted February 3, 2016 Share Posted February 3, 2016 This is one of those times I wish I could slap the reporter. Which profit margins is he referring to? There are more than one, and depending on which he's talking about would be helpful in commenting on Goldman's questions on capitalism. Corporate profit margins Link to comment Share on other sites More sharing options...
Deranged Rhino Posted February 3, 2016 Author Share Posted February 3, 2016 More links about the same thing: http://dailycaller.com/2016/02/03/goldman-sachs-shocks-all-by-questioning-efficacy-of-capitalism/ http://www.theverge.com/2016/2/3/10904026/capitalism-goldman-sachs-analysts Link to comment Share on other sites More sharing options...
unbillievable Posted February 3, 2016 Share Posted February 3, 2016 So what Socialist regulation is causing the problems in Capitalism? Link to comment Share on other sites More sharing options...
Deranged Rhino Posted February 3, 2016 Author Share Posted February 3, 2016 So what Socialist regulation is causing the problems in Capitalism? ... Or, it could be that the system is rigged, always has been rigged, and continues to be rigged. Link to comment Share on other sites More sharing options...
meazza Posted February 3, 2016 Share Posted February 3, 2016 ... Or, it could be that the system is rigged, always has been rigged, and continues to be rigged. Rigged for who? The 1%? Link to comment Share on other sites More sharing options...
GG Posted February 3, 2016 Share Posted February 3, 2016 Corporate profit margins That's not one of the proper definitions, idiot. Link to comment Share on other sites More sharing options...
unbillievable Posted February 3, 2016 Share Posted February 3, 2016 The problem with capitalism is the uneven distribution of wealth. The problem with socialism is the lack of wealth to redistribute. Link to comment Share on other sites More sharing options...
Azalin Posted February 3, 2016 Share Posted February 3, 2016 The problem with capitalism is the uneven distribution of wealth. That's not a problem, it's a motivator. Link to comment Share on other sites More sharing options...
Deranged Rhino Posted February 3, 2016 Author Share Posted February 3, 2016 (edited) Rigged for who? The 1%? (Disclaimer: I'm not an economist IN ANY SENSE and welcome any discussion on the points I'm raising below, especially ones which tell my why I'm wrong) Saying it's rigged for the 1% has immediate class warfare connotations that change the tenor of the conversation. This isn't an issue about class warfare as much as it is a question of whether or not our current model is sustainable into the future on a national level, not an individual one. So I'll leave the pejoratives out of it for now and just focus on recent events: Start with NAFTA in '93, which cost almost 1 million US jobs and made outsourcing the corporate ethos of the 90s and early 2000s. NAFTA was billed as a plan that would save American jobs and improve the economy, it did neither, but large corporate interests profited greatly due to NAFTA's weakening of American unions and by creating a cheaper labor pool in underdeveloped nations around the world. NAFTA didn't benefit America's interests, it benefited corporate interests at the expense of working Americans. 1999: Glass Steagall is repealed by Clinton, deregulating the banking industry and paving the way for the future economic collapse less than a decade away. This was done, again, under the guise of helping the entire economy when in reality it was only going to put our economy at risk. This measure was pushed through by large corporate and banking interests who had the Clintons (and the government) in their pocket. 2000-2002: The tech-bubble burst, taking a sizable chunk of the American middle class's wealth along with it. Over $5 trillion (some reports say it was over $8) was taken out of the market when the bubble burst. The market crash was fueled by and large by corporations misreporting their earnings, which resulted in an overvaluation of many, many, companies. Fraud, some would call it, but it was the American investor who paid the price. With the bubble bursting, large corporations (like Time Warner) came in and began to acquire and gobble up the smaller startups and even larger tech companies like AOL. A number of banks folded, or merged, or were absorbed by larger banks during this downturn. Reforms were made to the system following the crash of 2000, but nothing really changed because it wasn't long before we were embroiled in war. The War on Terror broke out as the crash was winding down, distracting most Americans (and the world) from everything else going on. Spend more to fight terrorists became W's calling card, not just within his own administration but that was his message to the American people. Shop to show them you're not scared. Buy on credit, pay for it later -- became the unofficial motto for the working and middle class for the early oughts. People over extended themselves, with the helpful push of predatory lenders and the reassurance that the American economy would rebound as it always has. With almost a decade of deregulation behind them, even the biggest banks began to take unnecessary risks, which ultimately led to another major market crash in 2007/2008, the largest crash since the Great Depression. The 2007/2008 housing bubble, and ensuing market crash, assured that an entire generation of young Americans will never be home owners. An entire generation now faces the prospect of being renters for their entire lives. With the manufacturing base gutted since the late 90s, no liquidity, and rising debt, the means to "pull yourself up by your bootstraps" were systematically taken away for many, many, Americans. But not so for large corporations and banks who stayed true to the motto "when there's blood on the streets, buy property". Then, with the country in dire straights in 2010, the Supreme Court delivered what might become the final blow against the American public with its Citizens United decision. Equating companies to people and cash to free speech assured that the American people would no longer have a voice, a say, or really a vote on the matters of governance of this country. They started out by outsourcing jobs, then they took the wealth, now they're taking the vote and ability to change the system away from the people. People should have been outraged, but party politics and an ever divisive corporate media assured that no honest debate on this issue would ever be had in a public forum. In the interim 6 years, we've seen interest rates remain low in an effort to lessen the effects of the recession but in reality it just drove more money into the market. Despite record highs in the market for much of these years, there's been very little actual ROI for every day investors. The market is crashing once again, draining more wealth from the middle class who keep the bulk of their retirement and pension plans in the market, and bolstering the positions of the few companies and banks who have become "too big to fail" since the late 90s. TPP is coming next. Just as NAFTA did, it's promising to secure the American economy but for whom? It's been negotiated in secret by large corporate interests, pushed through with bribery and payouts across the globe. And like NAFTA it's not aimed to help blue collar or even white collar Americans, but a select few corporate interests who are railroading this thing through the government they've bought and paid for with our money. Edited February 3, 2016 by Deranged Rhino Link to comment Share on other sites More sharing options...
GG Posted February 3, 2016 Share Posted February 3, 2016 (Disclaimer: I'm not an economist IN ANY SENSE and welcome any discussion on the points I'm raising below, especially ones which tell my why I'm wrong) You really should have stopped right there. Link to comment Share on other sites More sharing options...
Deranged Rhino Posted February 3, 2016 Author Share Posted February 3, 2016 Good tip. Link to comment Share on other sites More sharing options...
Joe Miner Posted February 3, 2016 Share Posted February 3, 2016 Good tip. That's what she said. Link to comment Share on other sites More sharing options...
Deranged Rhino Posted February 3, 2016 Author Share Posted February 3, 2016 :lol: Link to comment Share on other sites More sharing options...
GG Posted February 3, 2016 Share Posted February 3, 2016 Good tip. There is a simple reason why postpartum analysis of any financial crisis will show the little guy getting hurt. The little guy shouldn't be in the financial markets in the first place. Financial markets aren't rigged against the little guy any more than the airline markets are rigged against the little guy. Financial markets are all about the quickest access to information. Nothing more, nothing less. One of these days I would like one of you to explain to me why its unfair for Goldman Sachs to have better information on the markets when they spend billions to develop their information networks, but not unfair for Boeing to have better capability to manufacture an airplane. Link to comment Share on other sites More sharing options...
Deranged Rhino Posted February 3, 2016 Author Share Posted February 3, 2016 There is a simple reason why postpartum analysis of any financial crisis will show the little guy getting hurt. The little guy shouldn't be in the financial markets in the first place. Financial markets aren't rigged against the little guy any more than the airline markets are rigged against the little guy. Financial markets are all about the quickest access to information. Nothing more, nothing less. One of these days I would like one of you to explain to me why its unfair for Goldman Sachs to have better information on the markets when they spend billions to develop their information networks, but not unfair for Boeing to have better capability to manufacture an airplane. Nothing of what I laid out was about the access to information being the key to successful investing. Link to comment Share on other sites More sharing options...
meazza Posted February 3, 2016 Share Posted February 3, 2016 Nothing of what I laid out was about the access to information being the key to successful investing. No but in most cases, the little guys getting hurt are the ones who overextended themselves. My mom is 71 years old and I can safely say that she has not lost a penny in the stock market, has never purchased something she couldn`t afford or gotten caught up in any of the hype. The little guys getting hurt are generally the ones who get caught up in whatever hype, trend, etc. Link to comment Share on other sites More sharing options...
GG Posted February 3, 2016 Share Posted February 3, 2016 No but in most cases, the little guys getting hurt are the ones who overextended themselves. My mom is 71 years old and I can safely say that she has not lost a penny in the stock market, has never purchased something she couldn`t afford or gotten caught up in any of the hype. The little guys getting hurt are generally the ones who get caught up in whatever hype, trend, etc. Yup Nothing of what I laid out was about the access to information being the key to successful investing. You didn't say it directly, but it's the root of all the "bad" things that you recounted, even the majority of the outcomes that you got wrong. Link to comment Share on other sites More sharing options...
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