Free Market: greed.../private sector vs public sector

[Annie]

that is the most basic principle and it does not tell the whole story of how things work. advertising and marketing help alot too. there are other forces like greed and fixing of contracts that can make one rich with inferior or adequate products. billionaires like Ross Perot got incredibly wealthy by snagging guv contracts. It's not like his company provided a superior product or provided a service to be found nowhere else.

Yet the markets worked predating marketing, which is an offshoot. Marketing and advertising do provide services that are in demand.

You're correct that their are those that profit more than others, George Soros certainly comes to mind, an example of greed and other forces at work.

I never said the best always win, but it really is for the markets to decide. If however there are crimes involved, well that is for the police powers to deal with.

 

[AtlasShrieked]

Yet the markets worked predating marketing, which is an offshoot. Marketing and advertising do provide services that are in demand.

You're correct that their are those that profit more than others, George Soros certainly comes to mind, an example of greed and other forces at work.

I never said the best always win, but it really is for the markets to decide. If however there are crimes involved, well that is for the police powers to deal with.

George Soros? jeezuz, I didn't know you were a wing-nut.

sorry I took you seriously before.

WTF does Soros have to do with any of this thread? jesus, now people will start throwing competing gotcha names out there.

you madam are a mad women.

go get some fresh air.

now!!!

 

[Annie]

George Soros? jeezuz, I didn't know you were a wing-nut.

sorry I took you seriously before.

WTF does Soros have to do with any of this thread? jesus, now people will start throwing competing gotcha names out there.

you madam are a mad women.

go get some fresh air.

now!!!

LOL! Who was it that used Ross Perot? BTW, I'm far from a 'wing nut', though it seems you may be. It wasn't me that dismissed all you wrote, just because of your example.

What was it Gunny said about 'name calling' on messageboards?

 

[editec]

Here's the crux of the matter, I think...

The difficulties facing Brazil's IPO market show how a loose regulatory environment might have helped feed the frenzy. In 2007, about one in nine companies that went public in Brazil did so after receiving large loans from the underwriters that handled their IPOs. These loans were used to quickly prepare for an offering, in some cases by buying new assets. In exchange for lending money, underwriters collected extra fees after the IPO, either in the form of cash or stock options.

Such loans have the potential to create a huge conflict of interest. The job of an underwriter is to act as an intermediary, advising a company on the opening share price and lining up investors to buy those shares. It then pockets a small fee for each share it sells. But when a bank has a bigger-than-normal stake in the outcome of an offering - such as a large loan it wants to recover or the promise of shares - experts say the bank might set prices too high or rush an IPO of an unprepared company.

Banks in Brazil "took companies without credentials, and gave them credentials," says Octavio Castello Branco, who helps run the Sao Paulo private-equity fund Patria Investimentos.

Now one can understand that the banks putting together the IPOs and overseeing the sale of the offerings naturally does have an interest in seeing that the offering does well.

So the real question is: DID THE UNDERWRITERS MISLEAD THE INVESTORS?

Assuming that the potenital investors understood that the emerging company had taken on debt to "to quickly prepare for an offering, in some cases by buying new assets" and assuming that the potential of the IPO was legit, and not a whole lot of hoopla, I can't see what the problem really is.

We are obviously NOT in a position to evaluate if this is true:

Banks in Brazil "took companies without credentials, and gave them credentials," says Octavio Castello Branco, who helps run the Sao Paulo private-equity fund Patria Investimentos.

If the investors overseing the IPO mislead the investors, this complaint has merit.


However, if the IPO failed because the market changed, or because the froth of marketing simply made investors rush like lemmings to buy those shares?

Caveat emptor

 

[Toro]

he didn't say the government was doing those things...read it again. he said the GOP.

Well, that's even more ridiculous. Perhaps he meant Bush personally.

now I think he is wrong there on the GOP but the oil companies have cut way back or allowed a decline in/on refining capacity. if profit is teh motive they will do what it takes to increase profit. why is that so hard to understand?

The oil companies have not allowed for a decline in refining capacity. What has happened is that there has been no new refiners built over the past 3 decades. That is primarily due to environmental and political opposition in the US. There is a new refiner being built in Alberta and refinery capacity has increased ~15% per year in Asia over the past five years. In fact, refining capacity has increased in America because refineries have been upgraded. We need more refineries, but the oil companies have not been cutting back capacity.

Refining margins are being squeezed BTW. Oil has doubled but the price of the pump has increased 50%. Take a look at the stock price of a pure refiner, such as Valero.

VLO: Summary for VALERO ENERGY CP - Yahoo! Finance

A better criticism of the oil companies is that they are spending huge amounts on share buybacks rather than using that capital to increase production. I believe Shell and Exxon are still using $50 oil as their base case when making capital decisions. Heck, maybe they are correct and the price of oil is about to crash.

 

[sealybobo]

The government is not purposely keeping oil supplies low. They have nothing to do with the oil supplies, ong[/i] emergency supplies for the country.

are you this out of touch? really. gw and chaney let the defense and oil industries set policy for the last 7 yrs. bush is an oil man with ties to bin ladin oil family. fact. he appointed oil men to regulate their own industry and the gop congress deregulated the industry. they won't close enron loopholes and gave the oil companies tax breaks while they overspeculate. these are all gop appointes. they have everything to do with oil prices. gov. gives big oil their approval to tap alaska or off shore. the gop won't enforce the laws. the dems will. serious, you are either clueless or you are rich and just repeating what rush said. or hannty or o'reilly. I just told you fact. how dumb you sound to say the gov. has nothing to do... its our oil dummy. we can socialize oil and take it away from the rockafellers if we could wake you conservatives up. conspiracy? not if its fact dummy! that goes for all of you! not attacking any one person. just time you wake up. stop ignoring facts. stop giving spin.

 

[Glori.B]

so, you're not using your handheld device anymore?

 

[sealybobo]

how can you say gov has nothing to do with gas prices. either your not being intellectally honest or you are really really stupid. I think you aren't being honest. you could have gotten away with that in 03 but we now know what the gop congress and bush did for their oil buddies,mine owners, energy,telecoms,defense buddies. do you?

if you don't, it is like we are in 12th grade and you are in 6th grade. can't explain triganomitry to you.

 

[sealybobo]

he didn't say the government was doing those things...read it again. he said the GOP.

it isn't a theory that rockafeller,carnege & jp morgan wereruthless busines men who broke laws for profit. it is also fact that these families started the federal reserve in 1913 and later started standard oil. why do ppl doubt they are at it again? in 100 yrs, history will write this is a new guilded age. look up the term and see history is repeating itself. refineries are a problem because they made it a problem. china is an issue but not enough to make gas 5 gallon. it is ALL the gop's doing.

 

[BaronVonBigmeat]

Rockefeller founded Standard Oil. During the "guilded age", his monopoly brought down the price of oil quite a bit. And back then, politics were (are?) split into two groups--Rockefeller men (republicans) and JP Morgan men (democrats).

that is the most basic principle and it does not tell the whole story of how things work. advertising and marketing help alot too. there are other forces like greed and fixing of contracts that can make one rich with inferior or adequate products. billionaires like Ross Perot got incredibly wealthy by snagging guv contracts. It's not like his company provided a superior product or provided a service to be found nowhere else.

If he made money through government intervention, then that's not exactly a damning example of the evils of the free market, is it?

 

[BaronVonBigmeat]

The market creates the most wealth for the most people most of the time. It is the structure that generates the greatest amount of wealth than any other, bar none.

However, it does not create all the wealth for all the people all of the time.

Where markets fail, or where society deems it too important for the losers in the market to be left behind, government should intervene.

Most "market failures" aren't truly failures to begin with, but rather things that people just don't like, but which need to happen to get the least awful results (ie, the price of gas going up).

As far as helping people via charity, the private sector also does a superior job. "Private" doesn't necessarily mean for-profit.

Perhaps the greatest thing government can do in the market is to facilitate and increase transparency. Markets work best and most efficiently the more information sellers and buyers have. Excessive profits, known as "economic rents," are most likely to arise when one party has asymmetrical information relative to the party on the other side of the transaction. It is not possible for all parties to have perfect information, but the more information consumers have, the better choices they will make.

Mandating that honest information be provided isn't the worst thing that government does. Still, I have to point out that providing information and even regulating product quality are things that can be (and are, sometimes) done by the private sector. UL provides a seal of approval for well-engineered electronics. API and ISO inspectors come to my workplace a few times a year to re-certify us.

 

[Toro]

are you this out of touch? really. gw and chaney let the defense and oil industries set policy for the last 7 yrs. bush is an oil man with ties to bin ladin oil family. fact. he appointed oil men to regulate their own industry and the gop congress deregulated the industry. they won't close enron loopholes and gave the oil companies tax breaks while they overspeculate. these are all gop appointes. they have everything to do with oil prices. gov. gives big oil their approval to tap alaska or off shore. the gop won't enforce the laws. the dems will. serious, you are either clueless or you are rich and just repeating what rush said. or hannty or o'reilly. I just told you fact. how dumb you sound to say the gov. has nothing to do... its our oil dummy. we can socialize oil and take it away from the rockafellers if we could wake you conservatives up. conspiracy? not if its fact dummy! that goes for all of you! not attacking any one person. just time you wake up. stop ignoring facts. stop giving spin.

Yes, and Bush engineered 9/11 too.

 

[Toro]

Most "market failures" aren't truly failures to begin with, but rather things that people just don't like, but which need to happen to get the least awful results (ie, the price of gas going up).

As far as helping people via charity, the private sector also does a superior job. "Private" doesn't necessarily mean for-profit.

I've gotta disagree. I work in capital markets. I have seen three enormous market failures over the past 10 years.

I generally am a strong proponent of markets. I just don't believe they work all the time.

The best example is public education. In a completely efficient market, when one is entering school at the age of five, one would do a discounted cash flow of the five year old's earnings over her lifetime. But, that of course, isn't feasible because it is unknowable. If you make it all private, then many people will not be able to afford an education, which diminishes the collective skills of the nation. An educated population is enormously important for economic development.

The other problem with pure markets is something economists call the free rider problem. Simply put, many people simply will not pay for the services provided them. Thus, taxation is used to ensure that everyone pays at least something for the use of the public goods.

Mandating that honest information be provided isn't the worst thing that government does. Still, I have to point out that providing information and even regulating product quality are things that can be (and are, sometimes) done by the private sector. UL provides a seal of approval for well-engineered electronics. API and ISO inspectors come to my workplace a few times a year to re-certify us.

I certainly think private enterprise has a role to play in regulation, such as what you mention. And generally, if it can be done properly by private interests, all the better.

But that breaks down, and we are seeing the tremendous effects of that break down in the economy today with the bond rating agencies such as Moody's and Standard and Poor's. Incentives within those organizations skewed their rating systems such that garbage was rated AAA and bought in huge quantities by investors thinking they were safe investments. There is no way the housing bubble and the current credit crunch could have ever gotten as bad as it has now had the ratings agencies been less incentivized to lower the quality of their ratings. The argument put forward why ratings agencies would not act in such a manner is that they would not risk imperiling their reputations. The problem with that argument, however, is that when executives can make $10 million a year, they very well could risk the company's reputation because the incentives to themselves are so skewed to the upside, there is incentive to do so. An executive can walk away with $50 million after a few years work, and if the company collapses afterwards, he loses nothing. The shareholders lose. Heads I win, tails you lose.

 

[sealybobo]

you don't want to talk facts. not my fact. you like facts like....the earth warms and cools on its own or china is one reason gas prices are high. but don't discuss any other variables with you cause you will ignore. I know you know i'm right. its cool

 

[sealybobo]

regulating product quality are things that can be (and are, sometimes) done by the private sector.

isn't that why china is alowed to ship us poison unregulated? aren't mines unsafe because mine owners are regulating themselves? regulations are necessary. the gop broke gov. to prove it doesn't work. they,ve been trying since jeferson and madion days.

funny thing is that the same dirty politics that worked back then. it has to get pretty bad for masses to wake up. guilded age all over again.

 

[AtlasShrieked]

LOL! Who was it that used Ross Perot? BTW, I'm far from a 'wing nut', though it seems you may be. It wasn't me that dismissed all you wrote, just because of your example.

What was it Gunny said about 'name calling' on messageboards?

my use of Perot was in the context of government contracts and wealth made through contracts that are not so much a free market but a helping hand.

your comment about soros was what? you mentioned markets and then threw in something about greed and profiting and soros. I smell a partisanship thing that smacks of what goes on here all the time.

knocking how Perot made his money is not necessarily knocking the man's ideology. the way you threw in Soros was some silly sort of jab at what...progressives, liberals, democrats? it certainly wasn't a knock against the rich.

the obsession the right has with soros always raises a red flag. it's like when righties mention Clinton ...I hear blow job...which is what the impeachment (failed conviction) was all about.

 

[AtlasShrieked]

Here's the crux of the matter, I think...



Now one can understand that the banks putting together the IPOs and overseeing the sale of the offerings naturally does have an interest in seeing that the offering does well.

So the real question is: DID THE UNDERWRITERS MISLEAD THE INVESTORS?

Assuming that the potenital investors understood that the emerging company had taken on debt to "to quickly prepare for an offering, in some cases by buying new assets" and assuming that the potential of the IPO was legit, and not a whole lot of hoopla, I can't see what the problem really is.

We are obviously NOT in a position to evaluate if this is true:


If the investors overseing the IPO mislead the investors, this complaint has merit.

However, if the IPO failed because the market changed, or because the froth of marketing simply made investors rush like lemmings to buy those shares?

Caveat emptor

the man saying the banks played a dirty game runs a private-equity fund in brazil. why he'd lie about his pals is beyond me.

it was all about greed and markets that were not well regulated...that is the excuse the banks and others use all the time....after they soak everyone or get bailed out

 

[AtlasShrieked]

Well, that's even more ridiculous. Perhaps he meant Bush personally.



The oil companies have not allowed for a decline in refining capacity. What has happened is that there has been no new refiners built over the past 3 decades. That is primarily due to environmental and political opposition in the US. There is a new refiner being built in Alberta and refinery capacity has increased ~15% per year in Asia over the past five years. In fact, refining capacity has increased in America because refineries have been upgraded. We need more refineries, but the oil companies have not been cutting back capacity.

Refining margins are being squeezed BTW. Oil has doubled but the price of the pump has increased 50%. Take a look at the stock price of a pure refiner, such as Valero.

VLO: Summary for VALERO ENERGY CP - Yahoo! Finance

A better criticism of the oil companies is that they are spending huge amounts on share buybacks rather than using that capital to increase production. I believe Shell and Exxon are still using $50 oil as their base case when making capital decisions. Heck, maybe they are correct and the price of oil is about to crash.

I've been ;listening to Cramer lately on the oil markets and china, but...

oil refining capacity in the us is an old tale of deception and deceit

 

[AtlasShrieked]

he didn't say the government was doing those things...read it again. he said the GOP.

it isn't a theory that rockafeller,carnege & jp morgan wereruthless busines men who broke laws for profit. it is also fact that these families started the federal reserve in 1913 and later started standard oil. why do ppl doubt they are at it again? in 100 yrs, history will write this is a new guilded age. look up the term and see history is repeating itself. refineries are a problem because they made it a problem. china is an issue but not enough to make gas 5 gallon. it is ALL the gop's doing.

GO AWAY!


there is a whole area for conspiracy theories.


STOP HIJACKING THINGS WITH YOUR MORONIC IDEAS.

 

[sealybobo]

knocking how Perot made his money

that reminds me. bush always talks about free markets and no gov. intervention yet he got the texas ranger stadium funded with tax payers money, then he sold it for a profit. hypocrite! and mccain just married a rich beer heiress. they have no clue. honestly, they don't care about -air"