can we trust corperations at all?

[georgephillip]

Then there's the possibility our current economy is built on fraud instead of trust.

"Whoever pops this fraud bubble is going to have to escape on the next flight out, faster than the Bin Laden Bunch fled Kentucky in their chartered jets after 9/11."

The Private Equity partner who authored the above quote seems to have little patience with anyone concerned about trust.

"You don't get it...Even Khuzami, the SEC guy in charge of the Goldman case, is a fraud; the fucker was Deutsche's general counsel when they pulled the same CDO scam as Goldman.

"You have no idea how deep this goes."

 

[Skull Pilot]

Businesses, Like people are good and bad.

If you do not like the way any particular corporation runs, you have the choice not to do business with it. You have the option of choosing another corporation or even starting your own so as to do things the way you feel is right.

So do you trust all corporations? NO.
Just as you should not trust all people.
Just as you should trust no politicians.

 

[georgephillip]

Businesses, Like people are good and bad.

If you do not like the way any particular corporation runs, you have the choice not to do business with it. You have the option of choosing another corporation or even starting your own so as to do things the way you feel is right.

So do you trust all corporations? NO.
Just as you should not trust all people.
Just as you should trust no politicians.

What about the financial corporations at the top of our economic food chain?

If it's impossible to compete on the level of Lehman Brothers without engaging in systemic fraud, any government that tried to clean house on Wall Street would produce a level of panic that makes Lehman's collapse look like Happy Days.

So if some politician opens the can of worms labeled "Wall Street Fraud" does that collapse our entire economy?

"No one will know where the fraud investigation stops and who will be charged next--everyone will try to cash out, and the markets will tank to zero.

"And guess what happens when the markets tank to zero?

"Every fucking American with a retirement plant, or investment portfolio, or a 401k--every state pension plan in the country, every teacher's pension fund, every fireman's pension plan, every last one of them will be wiped out.

"That's what the Lehman collapse taught us."

 

[Skull Pilot]

Businesses, Like people are good and bad.

If you do not like the way any particular corporation runs, you have the choice not to do business with it. You have the option of choosing another corporation or even starting your own so as to do things the way you feel is right.

So do you trust all corporations? NO.
Just as you should not trust all people.
Just as you should trust no politicians.

What about the financial corporations at the top of our economic food chain?

If it's impossible to compete on the level of Lehman Brothers without engaging in systemic fraud, any government that tried to clean house on Wall Street would produce a level of panic that makes Lehman's collapse look like Happy Days.

So if some politician opens the can of worms labeled "Wall Street Fraud" does that collapse our entire economy?

"No one will know where the fraud investigation stops and who will be charged next--everyone will try to cash out, and the markets will tank to zero.

"And guess what happens when the markets tank to zero?

"Every fucking American with a retirement plant, or investment portfolio, or a 401k--every state pension plan in the country, every teacher's pension fund, every fireman's pension plan, every last one of them will be wiped out.

"That's what the Lehman collapse taught us."

The market won't ever be at zero. As long as there are people and goods are bought an sold, there will always be value in the market.

Believe it or not there are a lot of people who lost little or no money the last time the market tanked.

The problem is that people don't bother to learn about money and investing and they tend to trust their advisers too much.

 

[Neubarth]

The modern economy is based on trust. If everybody didn't trust anybody, we would collapse back into the Stone Age.

The modern economy is based upon massive corruption. We need to clean house.

 

[Madeline]

In the last two years we have seen two catastrophes driven by corperate greed and incompetance. The near collapse of the world's financial sector, and the present fouling of the Gulf of Mexico.

In both cases, the driving factor for the corperations was greed, irregardless of the consequences. The people in the financial corperations never considered the eventual impacts of their actions, just looked at the billions they were racking up daily. BP never even considered the possible cost of not installing that $500,000 dollar valve. Or the consequences of the many other shortcuts that were taken on that drilling rig. Enough shortcuts that the possibility of a disaster became a certainty of a disaster.

Is there any reason to allow any major corperation to operate without intensive oversight and regulations? Can we afford not to keep a short leash on these people.

Corporations are legal fictions, not humans. They have no "greed" nor any emotion of any other sort. They're a convenient way to organize and operate business.

The search for people to run corporations who have a strong sense of social justice will be fruitless. It is managment's job to maximize profits and growth, and very little if anything can restrain that, nor should it. We do have (mostly) adequate laws to reign in bad actions by corporations -- what we do NOT have is adequate enforcement of those laws.

Our regulators suck, to be blunt about it.

And this is what I think needs to be done about it:

http://www.usmessageboard.com/law-and-justice-system/118021-10-easy-steps-to-effective-regulation.html

 

[georgephillip]

Businesses, Like people are good and bad.

If you do not like the way any particular corporation runs, you have the choice not to do business with it. You have the option of choosing another corporation or even starting your own so as to do things the way you feel is right.

So do you trust all corporations? NO.
Just as you should not trust all people.
Just as you should trust no politicians.

What about the financial corporations at the top of our economic food chain?

If it's impossible to compete on the level of Lehman Brothers without engaging in systemic fraud, any government that tried to clean house on Wall Street would produce a level of panic that makes Lehman's collapse look like Happy Days.

So if some politician opens the can of worms labeled "Wall Street Fraud" does that collapse our entire economy?

"No one will know where the fraud investigation stops and who will be charged next--everyone will try to cash out, and the markets will tank to zero.

"And guess what happens when the markets tank to zero?

"Every fucking American with a retirement plant, or investment portfolio, or a 401k--every state pension plan in the country, every teacher's pension fund, every fireman's pension plan, every last one of them will be wiped out.

"That's what the Lehman collapse taught us."

The market won't ever be at zero. As long as there are people and goods are bought an sold, there will always be value in the market.

Believe it or not there are a lot of people who lost little or no money the last time the market tanked.

The problem is that people don't bother to learn about money and investing and they tend to trust their advisers too much.

True the market will never be at zero.

What if the DOW returns to 1960s levels of sub 1000?

Pension funds, 401ks, and 99.9% of investment portfolios will be valueless for all practical purposes.

 

[Skull Pilot]

What about the financial corporations at the top of our economic food chain?

If it's impossible to compete on the level of Lehman Brothers without engaging in systemic fraud, any government that tried to clean house on Wall Street would produce a level of panic that makes Lehman's collapse look like Happy Days.

So if some politician opens the can of worms labeled "Wall Street Fraud" does that collapse our entire economy?

"No one will know where the fraud investigation stops and who will be charged next--everyone will try to cash out, and the markets will tank to zero.

"And guess what happens when the markets tank to zero?

"Every fucking American with a retirement plant, or investment portfolio, or a 401k--every state pension plan in the country, every teacher's pension fund, every fireman's pension plan, every last one of them will be wiped out.

"That's what the Lehman collapse taught us."

The market won't ever be at zero. As long as there are people and goods are bought an sold, there will always be value in the market.

Believe it or not there are a lot of people who lost little or no money the last time the market tanked.

The problem is that people don't bother to learn about money and investing and they tend to trust their advisers too much.

True the market will never be at zero.

What if the DOW returns to 1960s levels of sub 1000?

Pension funds, 401ks, and 99.9% of investment portfolios will be valueless for all practical purposes.

There are other options than stocks.

 

[Madeline]

I happen to think we're about to see double-digit inflation; debt instruments like bonds are the very LAST thing I'd be buying and I do not fret that stock prices will go down. Their failure to increase enough to keep pace with inflation worries me, but not an overall downturn in the market.

I also look for gasoline to rise to over $3.50 a gallon and stay there; if I had loose change to invest I'd be buying the stock of an oil distributor (other than BP).

 

[Neubarth]

We need not see inflation if we do not want it. Remember the FED is an artificial make believe bank that exists only to serve the United States.

Lately they have been buying US Government Bonds and Notes on the open market so as to compete with the few countries that are buying bonds. Have you noted the interest rates falling?

The rest of the world accepts the FED as a legitimate bank in competition with them. It is important that we keep the world mentality that way.

The fact of the matter is that we can ask the FED to dispose of all of the bonds and notes that they hold and they will unless they think they can go rogue on us. That, of course will never happen. They are there to serve the United States and that they have done for nearly one hundred years and in the process converted this country into the greatest country on the surface of the Earth.

Idiotic nincompoops like Ron Paul do not understand the tremendous importance the FED has played in the growth of the United States into a global superpower.

 

[georgephillip]

I happen to think we're about to see double-digit inflation; debt instruments like bonds are the very LAST thing I'd be buying and I do not fret that stock prices will go down. Their failure to increase enough to keep pace with inflation worries me, but not an overall downturn in the market.

I also look for gasoline to rise to over $3.50 a gallon and stay there; if I had loose change to invest I'd be buying the stock of an oil distributor (other than BP).

In a spirit of "hope for the best but plan for the worst" there are at least two economic prognosticators expecting stocks to CRASH in the fall of 2010.

Harry Dent in his May 11, 2010 video sees a high of 11300-11800 for the DOW as late as August. He's predicting a four month slide that will bottom out at Dow 3800 by New Years 2011.

Hypothetically, if we're looking at Dow 5000 on Halloween, how would that change your vote on November 2nd?

Not so much from the standpoint of Republican OR Democrat, but, rather, from the perspective of neither Republican NOR Democrat...FLUSH as many incumbents of the Wall Street Party as possible from the US Congress and replace them with Greens and Libertarians?

 

[Madeline]

I wasn't speaking of the very near future, apart from gasoline prices. I am not an MBA and I have only a limited grasp of macro-economics. But it doesn't take a rocket scientist to see we are headed towards a period of terribly high inflation. When it hits, stocks may lose "real value" but the value of money itself will decline, and I don't expect that ON TOP OF THAT, stock prices will bottom out. For that to happen, the publically traded companies in this country would have to lose almost all real value -- I hardly think that's likely.

I am not like so many here, blaming the state of the economy entirely on the President. The best minds in economics STILL cannot agree whether FDR's New Deal alleviated the Great Depression or lengthened it. The President cannot control the factors that drive our economic engine; most likely, I will choose the candidate I vote for in 2012 on basises other than how my stock portfolio is performing.

 

[georgephillip]

I'm also far from an MBA.
I've never even taken so much as an introductory Economics class.

The principal reason Dent makes sense to me is his focus on our total debt overhead of $102 trillion, allegedly consisting of all individual, family, business and governmental debt including Social Security and Medicare.

Dent claims the largest single component of our total debt burden belongs to the financial sector: $17 trillion worth of leverage.

With many of our most dependable jobs given away to India and China, America's center can not hold. The miracle of compound interest can manufacture debt more efficiently than our middle class can produce goods and services.

If we see the Great Depression 2.0 we don't appear to have the manufacturing base anymore to work our way out of it.

 

[william the wie]

I'm also far from an MBA.
I've never even taken so much as an introductory Economics class.

The principal reason Dent makes sense to me is his focus on our total debt overhead of $102 trillion, allegedly consisting of all individual, family, business and governmental debt including Social Security and Medicare.

Dent claims the largest single component of our total debt burden belongs to the financial sector: $17 trillion worth of leverage.

With many of our most dependable jobs given away to India and China, America's center can not hold. The miracle of compound interest can manufacture debt more efficiently than our middle class can produce goods and services.

If we see the Great Depression 2.0 we don't appear to have the manufacturing base anymore to work our way out of it.

We don't have the manufacturing job base to work our way out. The US in terms of output is still number one in manufacturing. Which is the more effective way of looking at economics.

Automation has been eliminating manufacturing jobs since the 1800s and since the last quarter century of the 1900s robotics has been doing likewise. The Singer sewing machine company was the first company to unite assembly line automation with consumer financing. Don't have the date on me but definitely the 1800s.

Here's where economics goes wrong to the benefit of corporations using the Hicks-Hansen model and its derivatives:

Most of the economic data used to set government policy was taken over from various groups with their own axes to grind so it is a very mixed bag of out of date dubious measurements that get published by official sources. These data sets can be and are gamed IF you know what is and is not being measured. Fortune 500 companies are set up so that bonuses are paid for measuring this distortion and gaming it. The Soviets called this storming the plan and it is the main reason there is no longer a USSR and the Russians are having a heck of a time digging their way out of the economic rubble.

Government policies are set without regard to the costs of debt service among other things so most people cannot get back up if they fall (unless they are connected to the revolving door of corporations and government). 10-20% of the population are not truly employable in their own field due to economic policy.

 

[georgephillip]

Is it accurate to say America's economic success in the mid 20th Century was due to two things, protectionism and British indebtedness after WWII which allowed the US dollar to take over the world's Reserve Currency role?

Paul Craig Roberts starts from that premise then goes on to argue that as American corporations began moving their production for American markets off shore, American cities and states lost tax base, and families and communities lost jobs.

"As the off-shored goods and services are brought back to America to sell, the US trade deficit has exploded to unimaginable heights, calling into question the US dollar as reserve currency and America's ability to finance its trade deficit."

Are we about to go the way of the Brits?

 

[william the wie]

Is it accurate to say America's economic success in the mid 20th Century was due to two things, protectionism and British indebtedness after WWII which allowed the US dollar to take over the world's Reserve Currency role?

Paul Craig Roberts starts from that premise then goes on to argue that as American corporations began moving their production for American markets off shore, American cities and states lost tax base, and families and communities lost jobs.

"As the off-shored goods and services are brought back to America to sell, the US trade deficit has exploded to unimaginable heights, calling into question the US dollar as reserve currency and America's ability to finance its trade deficit."

Are we about to go the way of the Brits?

A simple effective model and way too soon to tell if it is an oversimplified model. An alternative model that goes in the same direction is looking at English as a network economy. In this model as India becomes more rich and educated the center of balance of the English speaking world will shift to New Delhi and Mumbai. But the same model says that then the center of balance will shift back to North America around 2060 or so as India's population undergoes a more severe demographic shift due to its population policy.

The Economist had an article a couple of months ago that the UK and parts of Scandinavia are experiencing a second demographic shift back to larger families. This appears to be true also for the US and probably NZ but not yet Canada and Australia. The result of these shifts are unpredictable and until the results are in figuring out which model to base decisions on is unknown. My best guess is that the level of current debt will force hopefully amicable secession on the US, EU and China to get rid of the excessive debt and work out new political spectra.

That last part is really needed. Everybody's response to the product life cycle has been to at least some degree dysfunctional with the range running from highly to extremely dysfunctional. Current political and economic models no longer deal with reality.

 

[California Girl]

I would trust a corporation about as much as I would trust a politician.... which is not at all.

 

[Big Fitz]

In the last two years we have seen two catastrophes driven by corperate greed and incompetance. The near collapse of the world's financial sector, and the present fouling of the Gulf of Mexico.

In both cases, the driving factor for the corperations was greed, irregardless of the consequences. The people in the financial corperations never considered the eventual impacts of their actions, just looked at the billions they were racking up daily. BP never even considered the possible cost of not installing that $500,000 dollar valve. Or the consequences of the many other shortcuts that were taken on that drilling rig. Enough shortcuts that the possibility of a disaster became a certainty of a disaster.

Is there any reason to allow any major corperation to operate without intensive oversight and regulations? Can we afford not to keep a short leash on these people.

And in this display, we see in action the false free market example by ignoring the impact of government interference in the function of markets.

Selective and over regulation combined with laws designed to unfairly benefit some corporations over others all distort the market. The playing field is made uneven so certain outcomes are created for the sake of extra market desires.

For example. McDonalds wishes to increase burger sales. Therefore the corporate office tells their franchisees to lower the price of a burger to a nickel. Sales of McDonalds burgers skyrocket beyond belief. All the time, the franchisees are losing 20 cents a burger but they are selling 2,3,5,10 times as many burgers as they were when they were charging a dollar. At the next board meeting the shareholders are told that the sales of McDonalds Burgers have increased 7.5 times over the same point last quarter. With such incredible growth, they should invest even more because they are doing so well. What the board does NOT tell the shareholders regarding the wonderful Nickel Burger plan is that each burger COSTS them 25 cents!

This is a false market improvement. Yes, burger sales have increased but losses have also skyrocketed because they lose money on every burger.

Now let's look at the consequences of the Nickel Burger. Not only is McDonalds now losing money hand over fist, they have harmed their competition because people aren't eating there for the deal is too good putting them out of business and driving more consumers to their door increasing the sales and losses further. Compound difficulties further, the sales of everything else but for soda have plummeted because of the cheap burger.

Realizing the mistake of pricing the burger too low, the board looks to fix things. They don't want to increase burger prices because it's selling so well and don't want to hurt sales. So they increase prices on other products that aren't selling well. Sales for those items dry up. Now, there is no other way to save the company from certain bankruptcy except to raise the amount of money taken from the franchisee owners so they can recoup losses. The result is franchisees try to get bought out or sell their shares back to McDonalds to escape increasing costs. They also see behind the sales numbers at the loss column and know there is no way their investment is going to increase in value. So McDs start closing as the strain on the corporation increases, lack of managers exist and those promoted from within often are unqualified for the job that nobody else will take. Soon after this, the company collapses into bankruptcy and receivership because they had no money left, their credit was denied by the bank to maintain operations. All to sustain a bad program, created by the corporate board that made them look good originally.

This is just an example of how false markets are created. We're living with many many many false markets that pretend to be free. Housing, Health Care, Energy, Automobiles and many more. Government meddling cannot be trusted.

To the point of the OP, you are making the classic wrong assumption that profit is always greed. The desire to improve your lot in life is evil by nature. It is not wrong for a company to do well. It is the nature of life and economics. But not everyone is like your worst nightmares as you seem to view every last person who runs a business. You want to keep business on a short leash. I understand that because you are afraid of it. You're afraid of what it can do without you or to you. Fear is your motivator. For some reason though, you trust government to be perfect. That baffles me because government has a worse track record of corruption and failure than business. Neither should be trusted implicitly. They both should be distrusted, but weigh the balance slightly on the side of private individuals and corporations.

Lastly, you cannot expect or demand a 'risk free' or even a 'safe' world. This accident happened on a rig where mistakes were made by the crew, the inspectors, the company procedures, and the administration at large. It was considered a 'model of safety' by the Obama administration. You cannot lay this totally on BP's feet. It is on many people's feet. You cannot convict an entire industry on the failures on a single incident. You cannot cut off the lifeblood of society because you are scared of a mistake being made. Yes it's horrible. Yes it's a terrific disaster that could possibly have been avoided. But you need to live in the real world and in that real world, there is risk. The benefits must outweigh the risks otherwise you need to find a new way. You also cannot cut off your nose to spite your face. There is no going back on oil. There is only going forward. That direction has no changes in the energies available for the world to survive on and replace oil for another 50 plus years.

Realism, not reactionary fantasy is the order of the day. If you cannot handle it, you need to get out of the way of those who can.

 

[Big Fitz]

The modern economy is based on trust. If everybody didn't trust anybody, we would collapse back into the Stone Age.

The modern economy is based upon massive corruption. We need to clean house.

Start in washington.

Consider capital punishment for crimes over a hundred million dollars especially for politicians who deliberately engineer these disasters.

I want those people who have in their heart to do such terrible things to the lives of their fellow citizens to feel the grim hand of death on their shoulder when caught. Not if... WHEN caught.

 

[Big Fitz]

I wasn't speaking of the very near future, apart from gasoline prices. I am not an MBA and I have only a limited grasp of macro-economics. But it doesn't take a rocket scientist to see we are headed towards a period of terribly high inflation. When it hits, stocks may lose "real value" but the value of money itself will decline, and I don't expect that ON TOP OF THAT, stock prices will bottom out. For that to happen, the publically traded companies in this country would have to lose almost all real value -- I hardly think that's likely.

I am not like so many here, blaming the state of the economy entirely on the President. The best minds in economics STILL cannot agree whether FDR's New Deal alleviated the Great Depression or lengthened it. The President cannot control the factors that drive our economic engine; most likely, I will choose the candidate I vote for in 2012 on basises other than how my stock portfolio is performing.

Very wise of you. This disaster has roots going back to 1932. We only see the major sources though after the LBJ admin. We are facing either one of two options here.

If lucky just 'Stagflation' like the Carter years where we had +20% interest rates and substantial inflation.

If unlucky, we're talking Weimar Republic or Confederate States of America. Total financial and monetary collapse.