The rich aren't just screwing us, now they've taken to screwing each other.

[ayers231]

[quote=JWeeks;424823]

Indeed. However, you have no emotional attachment to the loans the banks make; you just plan on those interest payments coming in on time to pay your CD interest. It isn't that much different. So whether the banks makes loans directly, or loans the money to other banks or entities (the money market) there really isn't much distinction.

Sure there is. My getting those interest payments are per a contract I have with the bank. Banks being able to make money off of market betting, so they can offer 0% interest loans, is where the failure is, IMHO. Who they loan to should be directly tied to their finacial obligations (i.e. my CD). It is not, because they have these other products that they rely on to make up the difference.

At the end of the day, the bank really doesn't care how their borrowers make their loan payments. They simply expect those payments to be made and they penalize those that don't. Those who have CDs benefit from this system.

You are right, they don't care. Not because of the penalties they collect (that's a nice bonus, though), but because they make their money by playing the market.

Sorry; pooling money is at the very heart of banking.

You're right, it is. But the money pooled isn't supposed to be gambled away. It is supposed to be put back out as loans so we can continue to grow as a community, not dumped into an open market where some random in Germany can win it through a good days trading.

BTW, do you think than non-market based economies are free from immoral management techniques?

Not at all. However, those companies (according to your own free-market model) would fail through those practices.

Sorry, I disagree. If anything, banks are worse than the immoral companies that you decry. Banks, as stated, expect to get paid. Corporations can, if they choose, operate at a loss, explaining to their shareholders their reasons for doing that, hoping for good things in the future. They are not obligated to make a profit each and every quarter (and many don't).

Banks can profit without playing the market. They did so for centuries. They just can't profit at the level they currently do. They ARE AMONG the immoral companies I decry.

That $70 million hasn't shown up on the bottom line yet, but apparently it eventually will pay off. So it isn't emotional involvement alone. The owners are counting on the business eventually prospering due to the decisions that they have made.

True, but the decision to take a loss for the sake of that growth can only be made someone emotionally attached to it's existence. Otherwise, they would milk for what it is worth, file bankruptcy, and start over. Then I would get to start a thread on how the rich are screwing each other.....oh, wait.....

Look at the company you work for as an example. Do you think the employees would do a better job running the company than the owners? Would the group of employees collectively agree to wage freezes or decreases with the idea that by so doing you would bring in new business (and presumably make a profit)?

Or would your company prosper more if it was run by some government functionary (talk about disinterested management). Simply put, the market economy is the only one that leads to wealth, freedom and prosperity. The more people try and move away from a market economy, the more they experience shortages, loss of freedom, and despair. "The People" can't manage a company, and "the People's representative" isn't any better.

Our company is a singular entity. I have worked anywhere like this before, and would never choose to leave. We succeed BECAUSE WE ARE ATTACHED. All of us. We know the family. We see them daily. They drive Honda Accords and Ford Taurus (Tauri?) because they leave the money in the company. As a result, the employee base pushes to succed. To drive costs down, to improve sales. This company had $402 million in sales last year, and at decreased costs of 2.3%. That is because each of us has a desire to see us succeed. A company is run by it's employees, no matter what the management wants to tell themselves as they cash their bonus checks. No one above me can do my job. There are only two other people here that know how to run the program I use to do it. My investment is one of time and focus, even when off the clock. And I pay it because I am emotionally attached to this company. The people all over the world that own stock in Sysco Intermountain could care less if they close, as long as they get their 8 cents this quarter. That is a fundamental flaw that will destroy us.

I disagree with your assessment that the market economy is the only way to succeed. My company has succeeded without taking part in it. In fact, we have succeeded as a result of it shortcomings. I guess we will have to agree to disagree on this, at least until an example is created. Oh, wait. The US for the first 100 years would apply, wouldn't it? No market economy, lot's of growth...or am I wrong?

[JWeeks]

Originally Posted by ayers231

Sure there is. My getting those interest payments are per a contract I have with the bank. Banks being able to make money off of market betting, so they can offer 0% interest loans, is where the failure is, IMHO. Who they loan to should be directly tied to their financial obligations (i.e. my CD). It is not, because they have these other products that they rely on to make up the difference.

I'm sorry, your understanding of banking and the money market is incorrect. Banks don't bet on the market. The money market is literally loaning money out to other entities that need to borrow that money, often for a day or overnight.

You are right, they don't care. Not because of the penalties they collect (that's a nice bonus, though), but because they make their money by playing the market.

Banks don't "play the market." They simply loan money.

You're right, it is. But the money pooled isn't supposed to be gambled away. It is supposed to be put back out as loans so we can continue to grow as a community, not dumped into an open market where some random in Germany can win it through a good days trading.

Banks don't engage in trading with their pooled money market funds. They make loans.

The other things that banks do is actually "create" money through the lending process. Money that is deposited in a bank has a multiplying effect. Banks are required to maintain a certain fraction of the money you deposit as a "reserve." The rest they can loan out. The money they provide as a loan is again deposited back in a bank, which is then used as the basis for another loan, and so forth. It is literally possible for banks to loan out money at a low interest rate, and pay CD holders a higher interest rate and still make money through the miracle of fractional reserve banking. They don't do that, of course, but it is still possible.

You need to do some reading up on the whole topic of fractional reserve banking.

Not at all. However, those companies (according to your own free-market model) would fail through those practices.

Non-market based economies are the most immoral entities known to man. They eventually fail but not before causing enormous pain and suffering to their victim...er..citizens. Non-market based economies were responsible for killing 170 million of their own citizens during the 20th century.

Banks can profit without playing the market. They did so for centuries. They just can't profit at the level they currently do. They ARE AMONG the immoral companies I decry.

I await your further enlightenment.

True, but the decision to take a loss for the sake of that growth can only be made someone emotionally attached to it's existence. Otherwise, they would milk for what it is worth, file bankruptcy, and start over. Then I would get to start a thread on how the rich are screwing each other.....oh, wait.....

My experience is different. I was employed by DuPont for a number of years. During that time, DuPont decided that they wanted to buy Conoco. In order to free up cash, they asked all employees to take a freeze on their salaries for that year (all 120,000 employees). That was a business, not an emotional decision, but we all did it anyway. To assume that all companies must show a profit every quarter is simply not true.

Our company is a singular entity. I have worked anywhere like this before, and would never choose to leave. We succeed BECAUSE WE ARE ATTACHED. All of us. We know the family. We see them daily. They drive Honda Accords and Ford Taurus (Tauri?) because they leave the money in the company. As a result, the employee base pushes to succed. To drive costs down, to improve sales. This company had $402 million in sales last year, and at decreased costs of 2.3%. That is because each of us has a desire to see us succeed. A company is run by it's employees, no matter what the management wants to tell themselves as they cash their bonus checks. No one above me can do my job. There are only two other people here that know how to run the program I use to do it. My investment is one of time and focus, even when off the clock. And I pay it because I am emotionally attached to this company. The people all over the world that own stock in Sysco Intermountain could care less if they close, as long as they get their 8 cents this quarter. That is a fundamental flaw that will destroy us.

Let's ask a little question. I know you do a good job for the company and they treat you well. That is the example of a well run company. You claim that no one above you can do your job., and that may be true. However, if you and the two other employees that know how to run your program are traveling to your golf game next Saturday and are hit by an 18 wheeler, will that result in the failure of Sysco? Sure, it make have some influence on the bottom line for a quarter or two, but, will Sysco be destroyed?

I disagree with your assessment that the market economy is the only way to succeed. My company has succeeded without taking part in it. In fact, we have succeeded as a result of it shortcomings. I guess we will have to agree to disagree on this, at least until an example is created. Oh, wait. The US for the first 100 years would apply, wouldn't it? No market economy, lot's of growth...or am I wrong?

You, sir, are confused at what a market economy actually is. The first 100 years of our country really was a market economy. We grew and thrived as a country under a market economy. We only started moving away from a pure market economy into a "mixed": economy in the 1930s.

Here are a couple of definitions of a market economy:

An economic system in which economic decisions and the pricing of goods and services are guided solely by the aggregate interactions of a country's citizens and businesses and there is little government intervention or central planning. This is the opposite of a centrally planned economy, in which government decisions drive most aspects of a country's economic activity.

An economy in which the greater part of production, distribution, and exchange is controlled by individuals and privately owned corporations rather than by the government, and in which government interference in the market is minimal. Although a total market economy is probably only theoretically possible (because it would exclude taxation and regulation of any kind), capitalist economies approximate it and socialist economies are antithetical to it (see capitalism and socialism). Market economies are also called free economies, free markets, or free enterprise systems.

If you have a different definition of what a market economy is, then I'd like to hear it.

[ayers231]

Originally Posted by JWeeks

If you have a different definition of what a market economy is, then I'd like to hear it.

My comments have been in reference to our economy based on the performance of the stock market. Gambling based on confidence. Banks do it, too.

A "market economy" as you describe isn't what we have right now either.

...production, distribution, and exchange is controlled by individuals and privately owned corporations rather than by the government...

This is where it doesn't apply. It's not controlled by individuals. It's controlled by fund managers for companies like JP Morgan who take money from individuals and spread it around hoping to come up with a gain over time. DavidW for example, never had an opportunity to weigh in on how Ford is operated, or how they used his investment capital. His money was funneled intot hem, and as they gained value, he saw a return. There was no control on his part.

That is the inherent flaw in our current system, and the reason that Sysco will never be competition for us in our service area. The mere thought of taking a loss for one quarter creates the loss of value in the stock, without anything really changing. We maintain our value, regardless of the confidence of uninvolved third parties, because our value is based on our actual value, not confidence in our potential future value.

[JWeeks]

Originally Posted by ayers231

My comments have been in reference to our economy based on the performance of the stock market. Gambling based on confidence. Banks do it, too.

If you want to argue that the stock market is kind of a rigged game, then I agree. Banks, per se, don't actually have much to do with the stock markets, while bank holding companies do. That is why I was talking about money market accounts. Those funds participate in the "money" market. (FWIW, there are two other markets, there is the "stock" market, and the "bond" market.)

The money market isn't based upon gambling or speculation. Banks and similar entities simply loan money to each other as needed.

A "market economy" as you describe isn't what we have right now either.

On this we are in complete agreement. The federal government historically has spent 21% of all money spent in the economy. With the takeover of the health care system, the government will control about 40+% of the economy. If the financial regulation bill goes through, the government will control about 70% of the economy. A government that is expanding more and more control over the economy is the opposite to a market economy. 100 years ago, the government controlled probably less than 5% of the economy.

This is where it doesn't apply. It's not controlled by individuals. It's controlled by fund managers for companies like JP Morgan who take money from individuals and spread it around hoping to come up with a gain over time. DavidW for example, never had an opportunity to weigh in on how Ford is operated, or how they used his investment capital. His money was funneled intot hem, and as they gained value, he saw a return. There was no control on his part.

Well DavidW had as much control over Ford as I have over who is elected to fill Bob Bennett's seat.

Actually DavidW has significant control over Ford. If he likes their products, their managment, and the way they are running their business, he votes with his money. If they fail on any of those accounts, DavidW has complete control; he can fire the entire Ford Motor Company, lock stock and barrel. He can then take those funds and put them somewhere where he belives they can be put to better use. If he likes a certain solar company, believes in their management, believes in what they are trying to do, he can invest as much or as little of his funds there as he wishes. In fact, if he can't find a company that he likes, he can start a new company, hiring whatever management he thinks will perform the best for him.

On the other hand, if DavidW wants to concentrate his time and effort in other areas, he can hire a fund manager and tell him "put this in profitable opportunities," or "invest in green technology."

It is called "freedom." I understand that you think it unfair that the million stockholders in Ford each have little say in the day to day operation of that company.

Now, on the other hand, if Tim Geithner decides to invest your taxpayer dollars in Ford or AIG or wherever, then you really don't have a say in your "investment." You can't fire them, and you have almost no say over what they choose to invest in or choose not to invest in. Don't you think that being in control of your own money is better?

Let's consider one other point. We have one group of Ford shareholders saying "build green cars." We have another group saying "build red cars." A third group is saying "build bigger trucks because that is were the money is." We have another group saying "build smaller cars; save gas."

If every shareholder has his say, Ford couldn't get anything done because everyone is expressing their opinions which frequently conflict with each other. Instead the shareholders have asked Ford to hire professionals to decide what kind of cars they will build, in what colors and in what numbers. Ultimately it isn't the shareholders, the employees, or the goverhment who decides what products should be built...it is the customer who shows up and a Ford dealership and says "I want that one" who decides. If Ford can give him the car he wants at the price he is willing to pay, then that customer had "hired" Ford to build that car for him. Otherwise, he walks over to Honda and makes a deal there.

In a controlled economy, customers aren't giving that choice. You want a car, you buy what the government offers or you go without. Controlled economies only tolerate competition for so long.

That is the inherent flaw in our current system, and the reason that Sysco will never be competition for us in our service area. The mere thought of taking a loss for one quarter creates the loss of value in the stock, without anything really changing. We maintain our value, regardless of the confidence of uninvolved third parties, because our value is based on our actual value, not confidence in our potential future value.

Actually your company gains and loses value all the time, but those gains and losses are generally not realized because no one buys and sells their ownership in that company on a regular basis. If someone dies and that portion of the ownership is available for someone to buy, they will obviously pay a higher price for that ownership when there have been 9 quarters straight of profitability, as opposed to what they would pay with 6 down quarters out of 9. There is no inherent flaw. Everyone buys ownership in a company based upon their evaluation of future value of the stock (even if that future is only 20 minutes away).

[ayers231]

Originally Posted by JWeeks

If you want to argue that the stock market is kind of a rigged game, then I agree. Banks, per se, don't actually have much to do with the stock markets, while bank holding companies do. That is why I was talking about money market accounts. Those funds participate in the "money" market. (FWIW, there are two other markets, there is the "stock" market, and the "bond" market.)

The money market isn't based upon gambling or speculation. Banks and similar entities simply loan money to each other as needed.


On this we are in complete agreement. The federal government historically has spent 21% of all money spent in the economy. With the takeover of the health care system, the government will control about 40+% of the economy. If the financial regulation bill goes through, the government will control about 70% of the economy. A government that is expanding more and more control over the economy is the opposite to a market economy. 100 years ago, the government controlled probably less than 5% of the economy.

Well DavidW had as much control over Ford as I have over who is elected to fill Bob Bennett's seat.

Actually DavidW has significant control over Ford. If he likes their products, their managment, and the way they are running their business, he votes with his money. If they fail on any of those accounts, DavidW has complete control; he can fire the entire Ford Motor Company, lock stock and barrel. He can then take those funds and put them somewhere where he belives they can be put to better use. If he likes a certain solar company, believes in their management, believes in what they are trying to do, he can invest as much or as little of his funds there as he wishes. In fact, if he can't find a company that he likes, he can start a new company, hiring whatever management he thinks will perform the best for him.

On the other hand, if DavidW wants to concentrate his time and effort in other areas, he can hire a fund manager and tell him "put this in profitable opportunities," or "invest in green technology."

It is called "freedom." I understand that you think it unfair that the million stockholders in Ford each have little say in the day to day operation of that company.

Now, on the other hand, if Tim Geithner decides to invest your taxpayer dollars in Ford or AIG or wherever, then you really don't have a say in your "investment." You can't fire them, and you have almost no say over what they choose to invest in or choose not to invest in. Don't you think that being in control of your own money is better?

Let's consider one other point. We have one group of Ford shareholders saying "build green cars." We have another group saying "build red cars." A third group is saying "build bigger trucks because that is were the money is." We have another group saying "build smaller cars; save gas."

If every shareholder has his say, Ford couldn't get anything done because everyone is expressing their opinions which frequently conflict with each other. Instead the shareholders have asked Ford to hire professionals to decide what kind of cars they will build, in what colors and in what numbers. Ultimately it isn't the shareholders, the employees, or the goverhment who decides what products should be built...it is the customer who shows up and a Ford dealership and says "I want that one" who decides. If Ford can give him the car he wants at the price he is willing to pay, then that customer had "hired" Ford to build that car for him. Otherwise, he walks over to Honda and makes a deal there.

In a controlled economy, customers aren't giving that choice. You want a car, you buy what the government offers or you go without. Controlled economies only tolerate competition for so long.

Actually your company gains and loses value all the time, but those gains and losses are generally not realized because no one buys and sells their ownership in that company on a regular basis. If someone dies and that portion of the ownership is available for someone to buy, they will obviously pay a higher price for that ownership when there have been 9 quarters straight of profitability, as opposed to what they would pay with 6 down quarters out of 9. There is no inherent flaw. Everyone buys ownership in a company based upon their evaluation of future value of the stock (even if that future is only 20 minutes away).

Just a couple of quick comments. I don't think it "unfair" that a million people "own" Ford, I view it as the reason that our market crashes, and companies aren't being run as well as they could be. Ownership is a joke of a title at this point. DavidW "owns" a portion of Ford, but even if he flexed all of his power as owner, he couldn't affect any changes. He owns a percentage of a percentage. Knowing that he could not affect change if he didn't like how it was being run is something he knew up front when he bought it (I assume). So it was his confidence in how the current controlling owners and operators are running things that convinced him to buy in. He has no emotional involvement in how the company fairs, other than pride when he collects dividends, and frustration when he loses his cash. His emotions are attached to the cash itself, not the company he invests in. (DavidW, if I am wrong, I apologize. I know some investors, particularly in the US Auto stock arena, do invest to support the US Auto workers.)

There are no portions of ownership at my company. Our company is a true family owned company. Owned by the Grandson of the original creator, and run by the great-grandson. As I said, we are s ingular entity as far as I know. A $450 million a year company owned and operated by a father-son team that actually cares about the future of the company. Extremely rare to say the least.

[JWeeks]

Originally Posted by ayers231

Just a couple of quick comments. I don't think it "unfair" that a million people "own" Ford, I view it as the reason that our market crashes, and companies aren't being run as well as they could be. Ownership is a joke of a title at this point. DavidW "owns" a portion of Ford, but even if he flexed all of his power as owner, he couldn't affect any changes.

DavidW's role as owner depends upon the extent of his ownership. If he owns 0.001% of the company, you are right, his voice isn't going to count for much. If he owns 5% of the company, his voice will have a strong influence.

But such is life. If you join a company of 100,000 employees, your name isn't going to show up in the annual report. If you join a company of 20 people, you can have a large effect on the success or failure of that company.

How would you arrange things otherwise? Should the noisy 0.001% wag the dog?

On the other hand, the million owners isn't the cause that companies crash or they aren't run as well as they could be. That really is a function of management and the decisions they make, and whether the board of directors acually is involved in making sure management is doing their job. DavidW is voting for that management team and board of directors when he buys that stock, and he votes them out of office when he sells that stock. When enough people decide that the management team and the board of directors aren't doing their jobs properly, the price of the stock drops and sometimes both are replaced.

He owns a percentage of a percentage. Knowing that he could not affect change if he didn't like how it was being run is something he knew up front when he bought it (I assume). So it was his confidence in how the current controlling owners and operators are running things that convinced him to buy in. He has no emotional involvement in how the company fairs, other than pride when he collects dividends, and frustration when he loses his cash. His emotions are attached to the cash itself, not the company he invests in. (DavidW, if I am wrong, I apologize. I know some investors, particularly in the US Auto stock arena, do invest to support the US Auto workers.)

The fact that you acknowledge that you may be wrong is an acknowledgment that, despite your assertion to the contrary, some people do have an emotional attachment to the companies that they invest it.

And you have summarized the point well. David knew, going in, that if he didn't like the management team, the product line, or Ford's level of social responsibility, then his ability to change that would most likely be very limited.

There are no portions of ownership at my company. Our company is a true family owned company. Owned by the Grandson of the original creator, and run by the great-grandson. As I said, we are s ingular entity as far as I know. A $450 million a year company owned and operated by a father-son team that actually cares about the future of the company. Extremely rare to say the least.

Rare, perhaps, but hardly unknown. Huntsman Chemical is another fine example. It was built up from the ground and became the largest privately owned chamical producter in the world. The only reason it went public was so that Jon Huntsman could get the cash he desired to build the Huntsman Cancer Center.

[DavidW]

Originally Posted by ayers231

Just a couple of quick comments. I don't think it "unfair" that a million people "own" Ford, I view it as the reason that our market crashes, and companies aren't being run as well as they could be. Ownership is a joke of a title at this point. DavidW "owns" a portion of Ford, but even if he flexed all of his power as owner, he couldn't affect any changes. He owns a percentage of a percentage. Knowing that he could not affect change if he didn't like how it was being run is something he knew up front when he bought it (I assume). So it was his confidence in how the current controlling owners and operators are running things that convinced him to buy in. He has no emotional involvement in how the company fairs, other than pride when he collects dividends, and frustration when he loses his cash. His emotions are attached to the cash itself, not the company he invests in. (DavidW, if I am wrong, I apologize. I know some investors, particularly in the US Auto stock arena, do invest to support the US Auto workers.)

There were a lot of reasons for my gambling my entire portfolio on Ford. Despair and desperation at seeing my recommended "diversified" account crashing fast and memories of the dot.com and housing bubbles bursting still raw, familiarity with Mulally's run at Boeing, liking Ford products, incredulity that a basically sound company like Ford would be down to junk status at just a little over $1 a share, and the nagging belief that the stock market is basically little more than a casino.

But actually I do have a somewhat emotional investment in what I invest in. For ethical reasons I've dumped stocks like Starbucks and GE and would never consider investing in companies like Caterpillar, no matter how lucrative they might be.

Dividends? Nah. Ford isn't giving any.

[JWeeks]

Originally Posted by DavidW

There were a lot of reasons for my gambling my entire portfolio on Ford. Despair and desperation at seeing my recommended "diversified" account crashing fast and memories of the dot.com and housing bubbles bursting still raw, familiarity with Mulally's run at Boeing, liking Ford products, incredulity that a basically sound company like Ford would be down to junk status at just a little over $1 a share, and the nagging belief that the stock market is basically little more than a casino.

But actually I do have a somewhat emotional investment in what I invest in. For ethical reasons I've dumped stocks like Starbucks and GE and would never consider investing in companies like Caterpillar, no matter how lucrative they might be.

Dividends? Nah. Ford isn't giving any.

Very good explanation. You made the best informed decision possible, recognized that you were, indeed, gambling with the balance of what you had left to invest, and were amply rewarded for your decision. Most others weren't willing to take such a gamble, thus the low price for Ford stock in the first place, and the reward you received for the risk you took.

You are my hero.

[DavidW]

Originally Posted by おなら頭Weeks

You are my hero.

omg. Where did I go wrong?

[JWeeks]

Originally Posted by DavidW

omg. Where did I go wrong?

There is much to respect and admire in most people. Generally we focus on areas of disagreement here, rather than praise areas of agreement.

I respect and admire you as being a successful business person and obviously a successful capitalist. What is not to admire about that? (Acknowledging, of course, that calling someone a capitalist is what many might consider a grave insult.)