Goldman Sachs questioning efficacy of capitalism

[Deranged Rhino]

 

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.

 

No argument. But again, that's not what's laid out above.

 

Issues such as NAFTA, TPP, Citizens United all impact the economy and fortunes of working Americans whether they're invested in the markets or not.

 

In just the past 16 years we've seen two major market collapses, a shrinking global and domestic economy, the loss of thousands and thousands of jobs, and the near complete gutting of America's blue collar manufacturing base and housing market.

 

Most of the wealth, jobs, property, and governmental influence in that same time period has been consolidated into the hands of a few very powerful corporations and banks at the expense of the American worker.

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.

 

Disagree entirely.

[meazza]

 

No argument. But again, that's not what's laid out above.

 

Issues such as NAFTA, TPP, Citizens United all impact the economy and fortunes of working Americans whether they're invested in the markets or not.

 

In just the past 16 years we've seen two major market collapses, a shrinking global and domestic economy, the loss of thousands and thousands of jobs, and the near complete gutting of America's blue collar manufacturing base and housing market.

 

Most of the wealth, jobs, property, and governmental influence in that same time period has been consolidated into the hands of a few very powerful corporations and banks at the expense of the American worker.

 

 

I'm not commenting on NAFTA, TPP or CU but all the phenomenons you are referring to all are related to people over extending themselves.

[Chef Jim]

 

Nothing of what I laid out was about the access to information being the key to successful investing.

 

If someone cannot take the ups and downs (tech bubble for example) of long term investing they shouldn't be doing it alone without someone to tell them that is what it's all about.

 

Kind of like the first time I dropped acid and there was not an experienced person to tell me "hey, what's happening is normal. Enjoy the ride"

 

I bet that's the first time someone equated investing to an acid trip. Or maybe not.........

[Nanker]

Sure, but what about Bob? He can't make as much money selling pot as a big-time wheeler dealer could - you know - somebody like Pablo Escobar or Obama. They're getting all the cash and taking little risk while the little guy grunts and schleps his stash wares all across town and The Man is gonna put the pinch on him long before they get to Mr. Big. It's not fair.

[DC Tom]

 

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.

 

"Insiders have better info" isn't actually one of Greg's empty memes...I think it's lybob's.

 

Most of what he recounted that was wrong was just misinformed. The tech bubble didn't burst because companies were overstating earnings. It burst because investors were irrationally stupid and overvaluing internet companies based on such measures as "eyeballs" or projections of future growth with absolutely no basis in reality. There's lots of little nuggets he put in there that make for awesome "alternative history," but don't structurally represent what actually happened.

[GG]

 

"Insiders have better info" isn't actually one of Greg's empty memes...I think it's lybob's.

 

I actually think it's birddog that owns that meme

 

Most of what he recounted that was wrong was just misinformed. The tech bubble didn't burst because companies were overstating earnings. It burst because investors were irrationally stupid and overvaluing internet companies based on such measures as "eyeballs" or projections of future growth with absolutely no basis in reality. There's lots of little nuggets he put in there that make for awesome "alternative history," but don't structurally represent what actually happened.

 

Very true. As for the free trade agreements, it's convenient to attach a trade deal to job losses and pretend that without NAFTA jobs would have stayed. I don't know how NAFTA explains the outsourcing wave of IT to India and manufacturing to China.

 

Maybe some day somebody will be brave enough (without hope of getting elected) to explain to people that US has less than 5% of the population, but accounts for over 20% of global economic output. That's not sustainable for a couple of generations. The fact that US has kept its economy growing despite global economic forces lining up against it, is in itself remarkable.

 

But hey, did you hear that great sucking sound?

[Tiberius]

 

Very true. As for the free trade agreements, it's convenient to attach a trade deal to job losses and pretend that without NAFTA jobs would have stayed. I don't know how NAFTA explains the outsourcing wave of IT to India and manufacturing to China.

 

Maybe some day somebody will be brave enough (without hope of getting elected) to explain to people that US has less than 5% of the population, but accounts for over 20% of global economic output. That's not sustainable for a couple of generations. The fact that US has kept its economy growing despite global economic forces lining up against it, is in itself remarkable.

 

But hey, did you hear that great sucking sound?

Free trade is knocking out un natural barriers where capital and goods would freely flow as the market dictated. Jobs were lost but jobs were created, also.

 

Anyway, have not seen any of you financial Poindexters analyze the main argument that GS is talking about. Do you know what they are talking about?

Hint: It's really a Bernie Sander's argument

[Deranged Rhino]

 

"Insiders have better info" isn't actually one of Greg's empty memes...I think it's lybob's.

 

Most of what he recounted that was wrong was just misinformed. The tech bubble didn't burst because companies were overstating earnings. It burst because investors were irrationally stupid and overvaluing internet companies based on such measures as "eyeballs" or projections of future growth with absolutely no basis in reality. There's lots of little nuggets he put in there that make for awesome "alternative history," but don't structurally represent what actually happened.

"As has been deduced by market experts, the corporate corruption is believed to be a major reason for the crash to occur. Lots of multinational companies had been drawing profits by engaging in illegal means and frauds. The accounts that they maintained had serious loopholes and the debts were not shown. The stock options that the officers took worked towards diluting the companies. Another probable reason for the 2000 stock market crash was the overvaluation of the stocks and the dot com bubble burst."

 

http://www.stockpickssystem.com/2000-stock-market-crash/

Free trade is knocking out un natural barriers where capital and goods would freely flow as the market dictated. Jobs were lost but jobs were created, also.

 

Anyway, have not seen any of you financial Poindexters analyze the main argument that GS is talking about. Do you know what they are talking about?

Hint: It's really a Bernie Sander's argument

 

There's zero need for name calling.

[DC Tom]

"As has been deduced by market experts, the corporate corruption is believed to be a major reason for the crash to occur. Lots of multinational companies had been drawing profits by engaging in illegal means and frauds. The accounts that they maintained had serious loopholes and the debts were not shown. The stock options that the officers took worked towards diluting the companies. Another probable reason for the 2000 stock market crash was the overvaluation of the stocks and the dot com bubble burst."

 

http://www.stockpickssystem.com/2000-stock-market-crash/

 

 

 

. Another probable reason for the 2000 stock market crash was the overvaluation of the stocks and the dot com bubble burst. Even the companies that had absolutely no hope of earning profits and were consistently loosing money had a market capitalization of more than a billion dollar. The stock trading was going on the P/E basis.

 

And that article is literally the only place I've ever seen accounting fraud blamed, and the only place I've ever seen that considers "stock option dilution" as fraud.

[Deranged Rhino]

 

 

 

 

And that article is literally the only place I've ever seen accounting fraud blamed, and the only place I've ever seen that considers "stock option dilution" as fraud.

 

There's no question there was overvaluation going on and that people overextended themselves. I'm not arguing there wasn't, just that there was more going on that simply that.

[GG]

 

 

 

 

And that article is literally the only place I've ever seen accounting fraud blamed, and the only place I've ever seen that considers "stock option dilution" as fraud.

 

They're conflating cause & effect. They are effectively saying that Worldcom's & Enron's accounting chicanery caused the crash. Which isn't really the case.

[Deranged Rhino]

 

Very true. As for the free trade agreements, it's convenient to attach a trade deal to job losses and pretend that without NAFTA jobs would have stayed. I don't know how NAFTA explains the outsourcing wave of IT to India and manufacturing to China.

 

 

"Contrary to the promises that NAFTA would create U.S. jobs, it made outsourcing to Mexico much more attractive for U.S. companies. Most of the jobs displaced by trade with Mexico—415,000 jobs, or 60.8 percent of the total 682,000 jobs lost—have been in manufacturing.

When the United States loses jobs due to trade agreements, a major misconception is that an American company has been out-competed by a foreign-company and simply could not make its products as efficiently. Since NAFTA, however, that has not been the case. Instead, NAFTA (and the NAFTA-style trade agreements that have followed) provided large corporations with special incentives to invest outside the United States. And many so-called “American” companies have done just that: shutting down U.S. manufacturing facilities and moving production—and jobs—offshore. "

http://www.aflcio.org/Issues/Trade/NAFTA/NAFTA-Made-Outsourcing-Easy

More here: http://www.epi.org/publication/briefingpapers_bp147/

"All 50 states and the District of Columbia have experienced a net loss of jobs under NAFTA (seeTable 2). Exports from every state have been offset by faster rising imports. Table 2 provides detailed estimates of job gains due to the growth in exports, job losses due to changes in imports, and the trade balance for each state. In every case, many more jobs are lost due to growing imports than are gained by increasing exports."

Snip

 

Finally, “threat effects” arise when firms threaten to close plants and move them abroad while bargaining with workers over wages and working conditions. Employers’ credible threats to relocate plants, outsource portions of their operations, and purchase intermediate goods and services directly from foreign producers can have a substantial impact on workers’ bargaining positions. The use of these kinds of threats is widespread. A Wall Street Journal survey in 1992 reported that one-fourth of almost 500 American corporate executives polled admitted that they were “very likely” or “somewhat likely” to use NAFTA as a bargaining chip to hold down wages (Tonelson 2000, 47). In a unique study of union organizing drives in 1993 though 1995, it was found that more than 50% of all employers made threats to close all or part of their plants during organizing drives (Bronfenbrenner 1997b). This study also found that plant closing threats in National Labor Relations Board (NLRB) union certification elections nearly doubled following the implementation of NAFTA, and that threat rates were substantially higher in mobile industries, where employers can credibly threaten to shut down or move their operations in response to union activity.

[truth on hold]

They should since they got rich arbitraging government funding, too-big-to fail bailouts, and exploiting their contacts in Washington

Edited February 3, 2016 by truth on hold

[Tiberius]

Who's in charge in corporate America and what are their goals?

 

With CEO pay tied to stock prices, the incentive to choose borrowing to pump up a stock prices could be a drag on the economy and a contributing factor in the increasing stratification of wealth

 

 

[meazza]

Who's in charge in corporate America and what are their goals?

 

With CEO pay tied to stock prices, the incentive to choose borrowing to pump up a stock prices could be a drag on the economy and a contributing factor in the increasing stratification of wealth

 

 

 

Tell me about how this process works.

[GG]

 

"Contrary to the promises that NAFTA would create U.S. jobs, it made outsourcing to Mexico much more attractive for U.S. companies. Most of the jobs displaced by trade with Mexico—415,000 jobs, or 60.8 percent of the total 682,000 jobs lost—have been in manufacturing.

When the United States loses jobs due to trade agreements, a major misconception is that an American company has been out-competed by a foreign-company and simply could not make its products as efficiently. Since NAFTA, however, that has not been the case. Instead, NAFTA (and the NAFTA-style trade agreements that have followed) provided large corporations with special incentives to invest outside the United States. And many so-called “American” companies have done just that: shutting down U.S. manufacturing facilities and moving production—and jobs—offshore. "

http://www.aflcio.org/Issues/Trade/NAFTA/NAFTA-Made-Outsourcing-Easy

More here: http://www.epi.org/publication/briefingpapers_bp147/

"All 50 states and the District of Columbia have experienced a net loss of jobs under NAFTA (seeTable 2). Exports from every state have been offset by faster rising imports. Table 2 provides detailed estimates of job gains due to the growth in exports, job losses due to changes in imports, and the trade balance for each state. In every case, many more jobs are lost due to growing imports than are gained by increasing exports."

Snip

 

Finally, “threat effects” arise when firms threaten to close plants and move them abroad while bargaining with workers over wages and working conditions. Employers’ credible threats to relocate plants, outsource portions of their operations, and purchase intermediate goods and services directly from foreign producers can have a substantial impact on workers’ bargaining positions. The use of these kinds of threats is widespread. A Wall Street Journal survey in 1992 reported that one-fourth of almost 500 American corporate executives polled admitted that they were “very likely” or “somewhat likely” to use NAFTA as a bargaining chip to hold down wages (Tonelson 2000, 47). In a unique study of union organizing drives in 1993 though 1995, it was found that more than 50% of all employers made threats to close all or part of their plants during organizing drives (Bronfenbrenner 1997b). This study also found that plant closing threats in National Labor Relations Board (NLRB) union certification elections nearly doubled following the implementation of NAFTA, and that threat rates were substantially higher in mobile industries, where employers can credibly threaten to shut down or move their operations in response to union activity.

 

Again, how does the unbiased article from AFL CIO prove that those jobs would not have left without NAFTA?

[Tiberius]

Tell me about how this process works.

 

Just google it, I'm not writing all that out for no reason.

If that's too much trouble then just consider it that I don't know. I don't care.

Again, how does the unbiased article from AFL CIO prove that those jobs would not have left without NAFTA?

Or that consumers would be paying more for goods

[/dev/null]

 

(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)

 

 

So you're not good with economics, writing, or science.

 

What is it exactly that you are good at?

 

[meazza]

Just google it, I'm not writing all that out for no reason.

If that's too much trouble then just consider it that I don't know.

 

 

Yeah I already came to that conclusion,.

[birdog1960]

 

If someone cannot take the ups and downs (tech bubble for example) of long term investing they shouldn't be doing it alone without someone to tell them that is what it's all about.

 

Kind of like the first time I dropped acid and there was not an experienced person to tell me "hey, what's happening is normal. Enjoy the ride"

 

I bet that's the first time someone equated investing to an acid trip. Or maybe not.........

yeah. i'm thinking that's not a ringing endorsement for your investment services. i always thought most of the big players in your field are cokeheads.