China has been an aggressive Capitalist nation for over 15 years now. It's not a Capitalist Democracy, but whatever hybrid Socialist-Totalitarian-Oligarchy it's been running since the Cold War is also running in tandem with a capitalist economy. The wealth is not confined to government members. Private Mainland Chinese citizens have bought up 5% of Australian real estate in our capital cities, and are making large inroads into Australian farmland. As well as owning huge portions of American treasury bonds.
It's true that the absolute numbers of poor Chinese are still devastatingly huge, but their Middle Class and Wealthy counterparts have been growing exponentially. There are now more Middle Class and Wealthy Chinese than Middle Class and Wealthy Americans...both populations measured in US$. Things change drastically around the world in 5 years, let alone 10 years.
Russia and China's trajectories have been very different over the past 70 years.
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Smasharoo wrote:
For the most part, economic prosperity across the board has been highest when that increase in gap has been highest. It's more like the exception is the other way around. Sometimes, when the gap increases, economic conditions get worse. But usually? They get better.
Nope, unrelated. Not an open question. Income inequality has pretty much zero net effect on economic growth.
Nope, unrelated. Not an open question. Income inequality has pretty much zero net effect on economic growth.
Wrong. Sigh...
FACT 1: While specific outcomes in any given period of time can vary based on a number of factors, as a general trend, macro economic growth for a given economy over time is a function of the relative amount of money put into investment within that economy (the "I" in a basic macro-economic formula). This is contrasted to money spent on production, consumption, and government. While elements of each of those can influence economic growth positively or negatively, money in the investment category has by far the greatest direct impact on future economic growth.
FACT 2: As a rule, the wealthier someone is, the greater the percentage of that persons money will be put into investment rather than consumption. Should be somewhat obvious that a guy who earns $100k/year will invest a larger percentage of his earnings than someone earning $20k/year or $30k/year. Similarly, the guy with a billion dollar net worth must have a larger portion of that worth in investment than someone with less net worth. Therefore, the division of real dollars within a given economy directly affects what percentage of those total real dollars will be invested versus spent on consumption.
Simple example: Let's assume in our economy there are 10 people, and a total of $500k dollars. If we equally divide that money up, each person gets $50k. Assuming a minimum living cost of $20k, each person *could* put the other $30k they have left over into investment (things that increase total dollars available later). But we all know that those people will most likely spend the other $30k on nice things for themselves. No one wants to live at the minimum level, right? So they'll buy TVs, and nicer homes, and nicer food, etc for themselves and very little will be invested. Take the same economy and give 9 of those people $25k and the 10th person the rest ($275k), and something very different happens. The 9 "working class" people will have enough for their basics ($20), and a little extra to spend for themselves ($5k), the "rich" guy will have enough for basics, and quite a bit for luxuries. Hell. Let's say he spends $100k on himself cause he's a greedy sob who likes to live well (5 times better than everyone else, right?). But that means that this economy will have $175k put into investment. Thus, it'll grow faster than the one in which we divided the wealth evenly.
CONCLUSION: What we find if we actually stop and do the math, is that in all cases, everything else staying the same, the more unequal the income distribution is, the greater the percentage of the total dollars in an economy will be put into investment. And the greater the percentage of dollars in investment, the greater the relative economic growth. Ergo, you're not just wrong, you're completely backwards. Greater income inequality is directly related to increased economic growth within an economy. It has to be. There physically cannot be as much money spent on things which grow the economy if there's less money available for that purpose. And that money is most going to be available when it's in the hands of people who don't need it just to provide basics for themselves. It's only when someone has the basics, and some luxuries, and maybe even a bit more luxuries, that they start putting significant amounts of that money into investing. So the more money they physically have beyond that needed to live, the larger the percentage of that money will be invested rather than consumed.
This is not speculation. It's basic human nature.
Quote:
Over-performing economies can have a wide disparity, under performing economies can have a wide disparity, etc.
There can be other factors that cause one economy to outperform another Smash. But within any given economy, that economy will *always* grow faster if more relative dollars are used for investment than if they are not. Period. It's axiomatic because "investment" in this context is defined as "money spend on future economic growth". And the maximum amount of money in an economy will be put into investment when a maximum amount of money is available to be invested. And that will almost always happen when that money is unequally distributed (I'm granting the possibility that a command economy could actually invest money, although they rarely actually do, and it usually doesn't last).
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The idea that there's a structural link is a marketing ploy, quite literally. There is, let me state...once again, no economic model that shows how wealth is distributed by a society is tied to that societies overall economic growth.
False. Demonstrably false. Anyone who's taken any college level economics course knows that this is false. Why you keep repeating this falsehood in the face of actual facts is beyond me. Actually. Scratch that. I know why you do. Your political ideology requires that people believe falsehoods about economics in order to succeed, so you must do things like tell people that investment doesn't create economic growth even though it's a core assumption of every single economic model in existence that this is the actual definition of the word in macro economics.
The only way your claim can be true is if we assume that more dollars will end out in "investment" if those dollars are spread evenly than if they are spread unevenly throughout the economy. And I think that's also pretty easy to show to be incorrect. Hell. Even the command economy model spoken of earlier (with regard to China) requires an unequal distribution of wealth. In China's case though, its the government which has the bulk of those dollars, thus allowing them to focus on economic growth at the expense of luxuries and standard of living for their citizens. And while I personally believe that command economies can't sustain that long term, even that model assumes that it's an unequal distribution which creates economic growth.
Quote:
In layman's terms, a society can choose to have a tiny ruling class and a large serf class or it can choose to have a broader distribution of wealth and a large middle class. The choice is basically an ethical one and not one of economic outcomes (there does actually seem to be a net benefit to more even distribution particularly in high income per capita systems, but it's fairly technical and you won't understand it, so let's ignore it for now) Given that, the reasoning for choosing the tiny ruling class option is fairly lacking. The primary reason it somehow succeeds to the degree it has in the US is largely the big lie of success = money = hard work = talent, which, of course, isn't at all how that works. It's a compelling fantasy, though.
This is a false dilemma though. Income inequality in the US is not driven because we have a small number of "rich" and everyone else is "poor", but because we have a large and wealthy middle class. It's the comparison of the poor to the middle that drives our income inequality, not the poor and the rich. We *also* happen to have some very very rich people relative to our poor, but there's a huge amount of wealth in the middle as well.
This is part of the strawman argument though. The verbalization of the argument takes the form of "rich vs poor", but the calculations are often really about "poor vs middle". Let's not forget that Marx defined the middle class as the enemy to socialism because they give the poor hope for their own economic future. This is why international calculations of poverty tend to be a function based on the median income within a given economy (percentage of that median defines the poverty line). There is no comparison of the poor to the rich when calculating poverty. The comparison is to the middle. The presumed solution isn't to eliminate the rich, but to lower the middle relative to the bottom.
Once you understand this objective (destruction of the middle class), the arguments of socialists become really obvious and their falsehoods become equally obvious. No one (at least not me) is arguing for a rich/serf economy. But that's the strawman you want to attack, so that's what you attack. Income inequality in the US isn't about rich/poor. It's about too many people making a couple hundred thousand dollars a year being allowed to keep too much of it, and invest it in stocks, and *gasp* hand it down to their children in various ways. How unfair!!! We must make everyone "equal", and the way you do that is to make everyone equally poor. And that's the part of the socialist agenda you don't like to talk about.
King Nobby wrote:
More words please
That monster in the mirror, he just might be you. -Grover
Aripyanfar wrote:
China has been an aggressive Capitalist nation for over 15 years now. It's not a Capitalist Democracy, but whatever hybrid Socialist-Totalitarian-Oligarchy it's been running since the Cold War is also running in tandem with a capitalist economy. The wealth is not confined to government members. Private Mainland Chinese citizens have bought up 5% of Australian real estate in our capital cities, and are making large inroads into Australian farmland. As well as owning huge portions of American treasury bonds.
It's true that the absolute numbers of poor Chinese are still devastatingly huge, but their Middle Class and Wealthy counterparts have been growing exponentially. There are now more Middle Class and Wealthy Chinese than Middle Class and Wealthy Americans...both populations measured in US$. Things change drastically around the world in 5 years, let alone 10 years.
Russia and China's trajectories have been very different over the past 70 years.
It's true that the absolute numbers of poor Chinese are still devastatingly huge, but their Middle Class and Wealthy counterparts have been growing exponentially. There are now more Middle Class and Wealthy Chinese than Middle Class and Wealthy Americans...both populations measured in US$. Things change drastically around the world in 5 years, let alone 10 years.
Russia and China's trajectories have been very different over the past 70 years.
I'm not arguing that this can't/hasn't happened in China. I'm arguing that the command model is not sustainable over the long term. The inherent problem with command economies is that the route to wealth/power becomes abstracted within the political arena, and will eventually become separated from "real" economic factors. In a free market, in order to become rich you *must* produce some goods/services which are in demand. Thus, whatever you do *must* benefit others to a sufficient degree that you experience economic gains. Which means that your economic gains are tied to "real" economic growth.
In a command economy, you can fake this for awhile, but you can become rich by doing whatever the government will choose to spend money on. And this is often easier than doing something that actually produces economic benefits for both the producer and consumer. Over time, the number of people gaining wealth/power via things that the government (which recall will tend to be influenced by those with wealth and power) chooses to reward rather than those with real positive economic benefits will grow. Those taking the easy route to wealth and power will take control of the government, and the command nature of the economy will allow them to easily reward themselves for doing this.
And that will appear to work, sometimes for decades, before the whole thing must collapse. I honestly don't think it's possible for a command economy to last for any significant length of time. Not in any sort of modern economic environment.
King Nobby wrote:
More words please
gbaji wrote:
summarized gbaji wrote:
Fact 1: While it can vary macro economic growth is largely a function of investment, as opposed to production, consumption, etc.
Fact 2: People with more money can put more of that money into investments, as they need less of it to live on (i.e. the consumption part).
Conclusion: Because of this greater income inequality leads to greater economic growth.
This is not speculation. It's basic human nature.
Fact 2: People with more money can put more of that money into investments, as they need less of it to live on (i.e. the consumption part).
Conclusion: Because of this greater income inequality leads to greater economic growth.
This is not speculation. It's basic human nature.
Edited, Nov 6th 2013 3:18pm by someproteinguy
That monster in the mirror, he just might be you. -Grover
That takes all the fun out of it though. ;)
King Nobby wrote:
More words please
Whatever floats your boat down the moat with a goat.
That monster in the mirror, he just might be you. -Grover
gbaji wrote:
"A lot of words emphasizing that I don't know how investments work within the economy"
First off, Consumption > Investment always. Consumption breed investment. Apple didn't hold over 50% of the market in smart phones because of investment. Their product and consumers did that, Apples stock and investment rose because the consumer was buying Apple products en masse, Consumers didn't buy Apple product because the stock marched to $400+ they bought the product because they desired it.
Investment is tertiary at best in the economy, behind Consumption, and Government Spending. Your little example emphasizes this, with scenario A putting 300K directly into the economy, and Scenario B adding only 135K. The 175K from investment is irrelevant because its existence entirely depends on consumerism. Since there is now 165K less consumption dollars being spent the 175K in investments represent a lot less value to the economy, since people are buying much less stuff.
A clear example of that in real world economy would be GM, who saw its market share decline, and thus its sales decline through the 00's. GM turned to their Investors for money, in order to maintain similar production levels through the lull in consumer spending. They restyled their products and spend billions trying to revive the GM name. Then when the man came to collect his return on investment...GM had no money, had to declare bankruptcy, had to lay off a majority of its work force, had to cut its product line, had to sell its investments in other companies, had to beg Government for money, and essentially had to rebuild the companies identity from scratch.
Did investment cause this to happen. No, it actually helped buoy GM for about 4 years in the 00's, which helped to keep peoples jobs, and keep money flowing. But when the money dried up and the consumer still wasn't buying, GM was left with Airport tarmac filled with unconsumed vehicles....when this happened Investment left Billions of dollars sitting at Airports to devalue.
Yet Toyota, and Honda were having great times, consumers were buying their products, production was expanding not staying stagnant, and their market share was rising. Even the Buy American campaigns could not slow the rise, even massive investment in the American Auto industry could not compete with the rise of consumer confidence in Asian autos. Despite record investments into GM market share dropped, their contribution to the economy dropped, and they now operate at less than half of their early 00's capability in terms of staff and production capability. Investments are not net contributors to growing economy. They are an insurance policy for when the consumer is no longer purchasing. The problem is when you overdraw on your investments as GM did. Instead of working out the kinks in their product they continued with the status quo eventually evaporating Billions from the economy, and forcing Government to pick up the tab or watching many more people lose their jobs than the some 55% who did anyway.
Consumption will always be the biggest contributor to economic growth and more people being able to consume means more money directly entering the economy, and flowing through it. Investments will always be the biggest security blanket for the economy because in times of no consumption, there is no money flowing through the economy.
Economy
^^^^^^^^^^^^
Consumption <=> Production => Investment.
^^^^^^^^^^^^^^^^ ___________ ^^^^^^^^^^^^^^^
Government ___________ Government
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
PEOPLE PEOPLE PEOPLE PEOPLE PEOPLE
One side Grows, One side maintains. Both are required for healthy economy, but only 1 is an expert at growing it.
Back to you example:
Scenario C. I say bring 10 more people to the Island.
So now we have 20 people living on Asylum Island instead of 10. They all agree to divide the 500K equally because it is the most fair option. This leads to positive growth, more over the original 10 members couldn't be happier, because they were shouldering the costs of living themselves it was getting kind of expensive, thankfully with a doubling of the population the cost of living was spread across 20 people and not 10 people. Now it only cost them only 10K to live on Asylum Island, a savings of 10K
Armed with now 15K in extra money the people of Asylum Island decided to invest their new 10K, after all they could already buy everything they wanted with 5K, and the 10K was just extra to tuck away for a rainy day. So now Asylum Island looks like this.
20*10K (cost of living) = 200K
20*10K (investment) = 200K
20*5K (Consumption) = 100K
Which was a good thing, their strongest trading partner went into an economic recession. Dictator Kaolin rose to power in the far off land of Oot and banned all foul language. The good people of the Asylum's leading export. Fortunately because they had foresight to invest their jobs were not immediately lost they had enough money banked up that they could fund everyones cost of living for a full year...which thankfully was enough for them to find other exports to +1 across their network of trading partners.
Edited, Nov 6th 2013 8:39pm by rdmcandie
I mean you hate taxes right. I am sure we all do. Well if everyone had more money and over 50% wasn't dependent on Government for money...then everyone in the nation could pay less taxes. If everyone had enough money to pay for cost of living and have 5K to spend how they wanted, there would be no welfare, or obama phones, or food stamps, or living shelters. Which means less tax needed, which means more money at home, which means more money to buy sh*t, so more need to make sh*t.
Investment does not do that. Only consumption can, and the only way you can generate consumption is if everyone has money to consume with...
*note making **** doesn't specifically mean more jobs...see robotics in industry as to why*
Edited, Nov 6th 2013 8:50pm by rdmcandie
Edited, Nov 6th 2013 8:59pm by rdmcandie
HEY GOOGLE. **** OFF YOU. **** YOUR ******** SEARCH ENGINE IN ITS ******* ****** BINARY ***. ALL DAY LONG.
rdmcandie wrote:
gbaji wrote:
"A lot of words emphasizing that I don't know how investments work within the economy"
First off, Consumption > Investment always.
Lolirony!
It's not a competition. I think this is a mistake that far too many people make. They think it's about which is "best" and doing that thing. Thus we get eternal arguments about "supply side versus demand side", when that's the wrong way to look at it. Each component of the economy has its own purpose. None is inherently more valuable than another, and it's wrong to think so.
We were talking about economic growth. In macro economic terms, economic growth is caused by investment, not consumption. It's not about which is "better". It's about the fact that the two do different things.
Quote:
Consumption breed investment. Apple didn't hold over 50% of the market in smart phones because of investment. Their product and consumers did that, Apples stock and investment rose because the consumer was buying Apple products en masse, Consumers didn't buy Apple product because the stock marched to $400+ they bought the product because they desired it.
Consumption is necessary for the people within the economy to live, incomes to be earned, products to be built and sold, etc. That's not the question we were examining though. The question is about economic growth. How do you make the economy as a whole "bigger"? You put money into doing things that doesn't create earnings today (so consumption and production is not relevant), but which increases the amount of total production and consumption in the future. That is what "investment" is (within this context at least).
Quote:
Investment is tertiary at best in the economy, behind Consumption, and Government Spending. Your little example emphasizes this, with scenario A putting 300K directly into the economy, and Scenario B adding only 135K. The 175K from investment is irrelevant because its existence entirely depends on consumerism. Since there is now 165K less consumption dollars being spent the 175K in investments represent a lot less value to the economy, since people are buying much less stuff.
There's no "into the economy" though. It's all in the economy. It's a matter of what the money is doing within the economy. Do we allocate resources increasing the number of TVs that people have in their living rooms today? Or increasing the number of TVs (or other things) they can have tomorrow?
Quote:
A clear example of that in real world economy would be GM, who saw its market share decline, and thus its sales decline through the 00's. GM turned to their Investors for money, in order to maintain similar production levels through the lull in consumer spending. They restyled their products and spend billions trying to revive the GM name. Then when the man came to collect his return on investment...GM had no money, had to declare bankruptcy, had to lay off a majority of its work force, had to cut its product line, had to sell its investments in other companies, had to beg Government for money, and essentially had to rebuild the companies identity from scratch.
This has nothing to do with macro economics though.
Quote:
Back to you example:
Scenario C. I say bring 10 more people to the Island.
So now we have 20 people living on Asylum Island instead of 10. They all agree to divide the 500K equally because it is the most fair option. This leads to positive growth, more over the original 10 members couldn't be happier, because they were shouldering the costs of living themselves it was getting kind of expensive, thankfully with a doubling of the population the cost of living was spread across 20 people and not 10 people. Now it only cost them only 10K to live on Asylum Island, a savings of 10K
Scenario C. I say bring 10 more people to the Island.
So now we have 20 people living on Asylum Island instead of 10. They all agree to divide the 500K equally because it is the most fair option. This leads to positive growth, more over the original 10 members couldn't be happier, because they were shouldering the costs of living themselves it was getting kind of expensive, thankfully with a doubling of the population the cost of living was spread across 20 people and not 10 people. Now it only cost them only 10K to live on Asylum Island, a savings of 10K
Huh? Just declaring that this "leads to positive growth" doesn't make it true. If you double the number of people, while keeping the total amount of resources the same, the people will have less, not more. They will be poorer. And you will have created economic shrinkage, not growth (at least as a function of population). You just toss out an assumption that their costs will magically be cut in half. Why? If it costs $20k for one person to live before, it will cost the same now. Why assume otherwise? If anything, doubling the population would increase the per-person cost because of overhead involved in providing sufficient goods and services for more people.
Your scenario makes no sense at all. Doubling the number of people would presumably also double the amount of "wealth" in the society (assuming the 10 new people do the same average amount of work as the original 10). It should be a complete wash. Certainly, for the point I was making, there's no reason to care how many people are involved. All that matters is the ratio of people to wealth, and the relative distribution of that wealth. The point I was making was purely that by dividing that wealth unequally, you are more likely to have a larger portion of that wealth allocated to investment rather than consumption.
We can debate which is "better", but the point I was making is completely valid.
Quote:
I mean you hate taxes right. I am sure we all do. Well if everyone had more money and over 50% wasn't dependent on Government for money...then everyone in the nation could pay less taxes. If everyone had enough money to pay for cost of living and have 5K to spend how they wanted, there would be no welfare, or obama phones, or food stamps, or living shelters. Which means less tax needed, which means more money at home, which means more money to buy sh*t, so more need to make sh*t.
Investment does not do that. Only consumption can, and the only way you can generate consumption is if everyone has money to consume with...
Investment does not do that. Only consumption can, and the only way you can generate consumption is if everyone has money to consume with...
Huh? This makes absolutely zero sense. I honestly have no clue what you're trying to say here or why you think it means anything. You may as well have just typed a paragraph of random characters and it would make just as much sense.
Edited, Nov 6th 2013 7:13pm by gbaji
King Nobby wrote:
More words please
rdmcandie wrote:
*note making sh*t doesn't specifically mean more jobs...
Paying your rent is better, at least that get recycles through the system, services are nice.
What you should really do is give all your money to the scientists, talk about a good return on investment, we tend to create all kinds of new stuff.
That monster in the mirror, he just might be you. -Grover
Actually I have a true story about investing.
Last Summer I bought about 1K shares in RIM they were trading at about 6 bucks at the time so it seemed like a good deal. Here was a company siting on a very small market share, having been smacked down by every ones new favorite Apple. The stock had basically just free fell from its lofty price "as far as cell companies were at the time" of about $150. But they had 200M in the bank, still a pile of shares being traded, and 2 new phones set to enter the market and compete.
By Christmas the stock was at about 16 bucks....I cashed out about 500 shares and made a good chunk of change. Since the phone was not out yet I figured why not split and take a chance of it hitting about 40 (as it was being projected to do, based on its 200M in the bank, and its increasingly positive trading trend, and 2 phones). Well by march the Shares were in decline the phones both bombed, and generated no traction in the market, the money in the bank dried up and the stock went down to about 8 bucks, and rebounded to about 9.20 (I sold there) RIM (now BB) laid off about 5K people and began shopping. A deal was in place up until last week to sell BB to a group of interests and go private. The CEO was let go with a massive bonus on his way out the door, the deal fell apart, and now BB stock is continuing to decline, they have gained no market share, they have no longer got 200M in the bank, and they are 5K people shorter on staff than they were previously.
Now what could have saved BB in this case.
Well there was investment, I was one of many people who traded millions of shares of the company over about a 8 month period.
They had money in the bank.
They had decent product.
But...they had no consumer confidence, and their product didn't sell, despite it being every bit as capable as an Iphone and arguably better, their product didn't sell, they became insolvent quickly...and then investment left.
Now could these be investment in a failed company...sure, but on the other hand you are betting for them to lose as well. For example despite not having a market share, despite having no money, and despite not having much investment....BB is still a very well off company with potentially billions in patents. For all purposes as a competing company in the cell phone market blackberry is dead...its last heave was the BBM app for Android and IOS, essentially giving up the last bit of itself to the dominant market holders....but there is still a fortune to be made when the company inevitably is forced to begin selling its patents off to Samsung and Apple, and other competitors....and of course there is the coveted encryption that is more than likely to land some big Government offers namely from the US the UK and Canada.
No amount of investment can save BlackBerry, no amount of investment will return those 5K people to work...because the company has no market. Investment propped the company up for 8 months, and collapsed. But if say the 100M phones they expected to sell sold to the consumer...then BB would be just fine, their projections were never met at the consumer level, despite millions of investment moves being done over an 8 month period.
We should all invest in BB right now. We have the power to save them. They have no market share, but the power of investment trumps all! It is gospel it is truth!....And even if it does fail anyway despite our efforts we can still make money on the patents. We can be economic heroes guys help those 5K little guys who lost their jobs!
(and its true Ive made a lot of money on BB twice. The first time when it went up to 150 (I sold well before that) I used about 1K shares over several years to pay for school and sh*t., this time I just put it all in my bank...I think Im going to buy property in Detroit to sell in 5-10 years. Actually to elaborate more the guy they have coming in as CEO is some dude he took an insolvent company in Germany and turned it into a $5.8B Sale of ownership. If the shares hit under 5 bucks I am getting back in the game...there is no losing here...well for me... thousands of people still have jobs to lose.)
Edited, Nov 6th 2013 11:43pm by rdmcandie
Last Summer I bought about 1K shares in RIM they were trading at about 6 bucks at the time so it seemed like a good deal. Here was a company siting on a very small market share, having been smacked down by every ones new favorite Apple. The stock had basically just free fell from its lofty price "as far as cell companies were at the time" of about $150. But they had 200M in the bank, still a pile of shares being traded, and 2 new phones set to enter the market and compete.
By Christmas the stock was at about 16 bucks....I cashed out about 500 shares and made a good chunk of change. Since the phone was not out yet I figured why not split and take a chance of it hitting about 40 (as it was being projected to do, based on its 200M in the bank, and its increasingly positive trading trend, and 2 phones). Well by march the Shares were in decline the phones both bombed, and generated no traction in the market, the money in the bank dried up and the stock went down to about 8 bucks, and rebounded to about 9.20 (I sold there) RIM (now BB) laid off about 5K people and began shopping. A deal was in place up until last week to sell BB to a group of interests and go private. The CEO was let go with a massive bonus on his way out the door, the deal fell apart, and now BB stock is continuing to decline, they have gained no market share, they have no longer got 200M in the bank, and they are 5K people shorter on staff than they were previously.
Now what could have saved BB in this case.
Well there was investment, I was one of many people who traded millions of shares of the company over about a 8 month period.
They had money in the bank.
They had decent product.
But...they had no consumer confidence, and their product didn't sell, despite it being every bit as capable as an Iphone and arguably better, their product didn't sell, they became insolvent quickly...and then investment left.
Now could these be investment in a failed company...sure, but on the other hand you are betting for them to lose as well. For example despite not having a market share, despite having no money, and despite not having much investment....BB is still a very well off company with potentially billions in patents. For all purposes as a competing company in the cell phone market blackberry is dead...its last heave was the BBM app for Android and IOS, essentially giving up the last bit of itself to the dominant market holders....but there is still a fortune to be made when the company inevitably is forced to begin selling its patents off to Samsung and Apple, and other competitors....and of course there is the coveted encryption that is more than likely to land some big Government offers namely from the US the UK and Canada.
No amount of investment can save BlackBerry, no amount of investment will return those 5K people to work...because the company has no market. Investment propped the company up for 8 months, and collapsed. But if say the 100M phones they expected to sell sold to the consumer...then BB would be just fine, their projections were never met at the consumer level, despite millions of investment moves being done over an 8 month period.
We should all invest in BB right now. We have the power to save them. They have no market share, but the power of investment trumps all! It is gospel it is truth!....And even if it does fail anyway despite our efforts we can still make money on the patents. We can be economic heroes guys help those 5K little guys who lost their jobs!
(and its true Ive made a lot of money on BB twice. The first time when it went up to 150 (I sold well before that) I used about 1K shares over several years to pay for school and sh*t., this time I just put it all in my bank...I think Im going to buy property in Detroit to sell in 5-10 years. Actually to elaborate more the guy they have coming in as CEO is some dude he took an insolvent company in Germany and turned it into a $5.8B Sale of ownership. If the shares hit under 5 bucks I am getting back in the game...there is no losing here...well for me... thousands of people still have jobs to lose.)
Edited, Nov 6th 2013 11:43pm by rdmcandie
HEY GOOGLE. **** OFF YOU. **** YOUR ******** SEARCH ENGINE IN ITS ******* ****** BINARY ***. ALL DAY LONG.
holy **** you are ********
Just as Planned.
Timelordwho wrote:
holy @#%^ you are batsh*t.
Because I make money like rich folks?
HEY GOOGLE. **** OFF YOU. **** YOUR ******** SEARCH ENGINE IN ITS ******* ****** BINARY ***. ALL DAY LONG.
Was there a point to all that?
I'll also make a macro economic point. That 100M phones that BB expected to sell, but didn't? Someone else sold them instead. That money you made on their stock? Someone else lost the exact same amount of money betting in the other direction. Those effects cancel themselves out. They may change the precise location of money within the economy, but doesn't affect the "total value" equation.
When speaking of investment on a macroeconomic scale, it only increases if the actual value of the entire market grows. And there are really only a few things that make that market grow. It really has nothing to do with how well one single company or industry does and you're failing to grasp what I'm talking about if you think differently.
I'll also make a macro economic point. That 100M phones that BB expected to sell, but didn't? Someone else sold them instead. That money you made on their stock? Someone else lost the exact same amount of money betting in the other direction. Those effects cancel themselves out. They may change the precise location of money within the economy, but doesn't affect the "total value" equation.
When speaking of investment on a macroeconomic scale, it only increases if the actual value of the entire market grows. And there are really only a few things that make that market grow. It really has nothing to do with how well one single company or industry does and you're failing to grasp what I'm talking about if you think differently.
King Nobby wrote:
More words please
When speaking of investment on a macroeconomic scale, it only increases if the actual value of the entire market grows. And there are really only a few things that make that market grow.
Right, it's just Y=C(Y-T(Y))+I(r)+G+NX(Y). Just kidding, it's clearly wishes and fairy kisses and low taxes on the wealthy.
Right, it's just Y=C(Y-T(Y))+I(r)+G+NX(Y). Just kidding, it's clearly wishes and fairy kisses and low taxes on the wealthy.
Disclaimer:
To make a long story short, I don't take any responsibility for anything I post here. It's not news, it's not truth, it's not serious. It's parody. It's satire. It's bitter. It's angsty. Your mother's a *****. You like to jack off dogs. That's right, you heard me. You like to grab that dog by the bone and rub it like a ski pole. Your dad? Gay. Your priest? Straight. **** off and let me post. It's not true, it's all in good fun. Now go away.
To make a long story short, I don't take any responsibility for anything I post here. It's not news, it's not truth, it's not serious. It's parody. It's satire. It's bitter. It's angsty. Your mother's a *****. You like to jack off dogs. That's right, you heard me. You like to grab that dog by the bone and rub it like a ski pole. Your dad? Gay. Your priest? Straight. **** off and let me post. It's not true, it's all in good fun. Now go away.
gbaji wrote:
Was there a point to all that?
I'll also make a macro economic point. That 100M phones that BB expected to sell, but didn't? Someone else sold them instead. That money you made on their stock? Someone else lost the exact same amount of money betting in the other direction. Those effects cancel themselves out. They may change the precise location of money within the economy, but doesn't affect the "total value" equation.
I'll also make a macro economic point. That 100M phones that BB expected to sell, but didn't? Someone else sold them instead. That money you made on their stock? Someone else lost the exact same amount of money betting in the other direction. Those effects cancel themselves out. They may change the precise location of money within the economy, but doesn't affect the "total value" equation.
Actually it has an impact on total value, the 1B debt reduces the value of all the currency in the system. Now this might not sound like much, but GM comparatively had over 300B in debt before its collapse was unable to pay it off and had to dive into some bankruptcy.(something BB is attempting to avoid at present) The US has 17T in debt. All that money that is "debt" all devalues currency. Which is why people are poor, and many more are becoming poor. More Americans can not afford to pay basic cost of living because the amount of wages has not kept up with the value of increases.
Also for the record your point had nothing to do with macroeconomics, no where in it did you account for the 5000 people who used to earn 70K/yr, you don't account for their spending habits and thus decline in money at places they shop at, nor did you account for the fact that if these people lose homes as a result it devalues their neighbors property prices. You didn't acknowledge that these people may be required to go on Government assistance (EI) and thus add strain to the government, which may or may not run a deficit...if they run a deficit they need to make more money to cover the gap thus devaluing the entire base of the currency...which impacts buying power globally and ultimately leads to increased prices at home as trade gaps widen. Which causes peoples money to become a lot tighter meaning they no longer go and buy stuff locally, this causes more people to lose hours at work as actually selling product (and not investing in the idea of selling) it begins to bog down.
^ Were you able to follow along because thats macroeconomics in a nutshell. The easiest and most simple way to stop that from happening, purchase actual product, and in order for that to be accomplished you need a value rich consumer society, something 'murica hasn't had in over a decade.
(also for the record although I am sure its been said a dozen times now. The amount of dollars one has is not the amount of wealth value one has)
Just to add because I thought about it over dinner. GM currently is operating at -4.5B and is currently shopping for investors to help shore up its loses. This is because people are not buying vehicles at the rate of production...If GM were to lay people off and reduce production they could shore up the difference, but this would be 4.5B in Consumer market income removed from the system...so they look to investment to bridge the gap...this is how investment "creates" jobs. The market says those jobs should not exist, investment is keeping those jobs in existence because the investors know (the big ones) that economic growth begins at the consumer level.
Edited, Nov 7th 2013 9:36pm by rdmcandie
HEY GOOGLE. **** OFF YOU. **** YOUR ******** SEARCH ENGINE IN ITS ******* ****** BINARY ***. ALL DAY LONG.
rdmcandie wrote:
Also for the record your point had nothing to do with macroeconomics, no where in it did you account for the 5000 people who used to earn 70K/yr, you don't account for their spending habits and thus decline in money at places they shop at, nor did you account for the fact that if these people lose homes as a result it devalues their neighbors property prices. You didn't acknowledge that these people may be required to go on Government assistance (EI) and thus add strain to the government, which may or may not run a deficit...if they run a deficit they need to make more money to cover the gap thus devaluing the entire base of the currency...which impacts buying power globally and ultimately leads to increased prices at home as trade gaps widen. Which causes peoples money to become a lot tighter meaning they no longer go and buy stuff locally, this causes more people to lose hours at work as actually selling product (and not investing in the idea of selling) it begins to bog down.
^ Were you able to follow along because thats macroeconomics in a nutshell.
^ Were you able to follow along because thats macroeconomics in a nutshell.
Um... No. It's not. Macroeconomics does not look at how a specific businesses success or failure affects the larger economy. Macroeconomics looks at how success or failure of all businesses in the economy affect the economy. It looks at factors that affect everything. So things like lending rates, interest rates, inflation, monetary flow periods, distribution of resources, and a host of other factors. You're cherry picking this business or that business and trying to extrapolate from those examples some claimed larger macro economic effect. That's not how it works though.
As I said, even if BB fails to build and sell those phones, some other business will instead (assuming demand in the market supports those sales). And that business will employ people to make those phones. And guess what? If demand doesn't exist for those phones then it will shift to something else, and some other company in some other industry will fill that demand (and employ people doing it). What you're talking about literally does not matter. I know that this is hard for some people to wrap their heads around, but the production and consumption within a given economy tends to be relatively constant across that economy, with gradual changes over time. While the specifics of what is produced and what is consumed changes gradually (and specifics like who makes a given product can change quite quickly), the overall results tend to not change that quickly.
A hell of a lot of the specifics going on within an economy really do get washed out at the macroeconomic level. There are trends that affect things (like say relative percentages of resources used for investment versus production say), but something like one company failing and firing a few thousand workers? Has more or less zero macroeconomic impact. Because the total capital in the system didn't change. Just how its distributed. Don't feel bad though, most people don't ever actually "get" this. Even people who've taken multiple courses in economics. It's just enough alien from what we see and know about economics around us every day that it doesn't feel right somehow. But if we're asking questions like "what causes an economy to grow over time", you have to stop looking at the details and look at the bigger picture.
Quote:
(also for the record although I am sure its been said a dozen times now. The amount of dollars one has is not the amount of wealth value one has)
Gee. Thanks for reminding me! I would never have known.
Quote:
Just to add because I thought about it over dinner. GM currently is operating at -4.5B and is currently shopping for investors to help shore up its loses. This is because people are not buying vehicles at the rate of production...If GM were to lay people off and reduce production they could shore up the difference, but this would be 4.5B in Consumer market income removed from the system...so they look to investment to bridge the gap...this is how investment "creates" jobs. The market says those jobs should not exist, investment is keeping those jobs in existence because the investors know (the big ones) that economic growth begins at the consumer level.
Sigh. Again. This has nothing to do with macroeconomics. It's frustrating to try to explain this to you over and over and have you just not get it. Maybe this time? Let me give you a hint. The second you are talking about any specific company or even industry you are *not* talking about macroeconomics.
Edited, Nov 7th 2013 6:58pm by gbaji
King Nobby wrote:
More words please
gbaji wrote:
Um... No. It's not. Macroeconomics does not look at how a specific businesses success or failure affects the larger economy. Macroeconomics looks at how success or failure of all businesses in the economy affect the economy. It looks at factors that affect everything. So things like lending rates, interest rates, inflation, monetary flow periods, distribution of resources, and a host of other factors. You're cherry picking this business or that business and trying to extrapolate from those examples some claimed larger macro economic effect. That's not how it works though.
I never said I was making a macroeconomic case. I was simply posting an experience I had investing in a company that has failed. You said you were going to make a macroeconomic statement you didn't. You just said that the money I made came from someone else's pocket. I pointed out how you were wrong.
Also does it ever bother you being wrong?
Macroeconomics is the method of tracking all economic data in a given region, a nation, and globally. Your city practices macroeconomics, your state, your country. 5000 people being laid off is a macroeconomic event. It isn't "well thats just money going from one pocket to another"...its 5000 consumers in a regional market, losing 5000 incomes directly impacts the consumer market, it directly impacts potential investment market, it affects value of the local housing market, and it could lead to increased cost of living for those who live in the region.
That is the macroeconomic impact on the Hamilton region. Then the Province of Ontario does their economic assessment at the macro level of Ontario...Then the Government of Canada does its economic assessment at the macro level of the nation. So no a hell of a lot of specifics don't get washed out. The specifics are all there. Its just as you go up in scope you lose sight of each smaller region. This is why looking at National economy is quite misleading. The trends could be absolutely garbage throughout regions in the nation, but if the overall trend is positive then the regional information gets lost...who cares to look at the Detroit Region if the US GDP is up and unemployment is down across the nation.
Well Im sure some folks in Detroit care now that their properties are essentially worthless, and the City is bankrupt. But hey 04-07 was a pretty good ride eh, Bush had that economy bumping...we even felt it in Canada, and now the garbage regional trends that went ignored are national trends that can't be ignored (although people still try). So just because you choose to ignore data, doesn't mean it is lost. Detroit was bleeding money through the 00's, but no one cared because y'all was getting rich making the most amount of paper in US history! while its value was being bled out by failing economics throughout the nation. All your states are broke, most counties are broke, the US governments broke, the people are broke...and im talking about wealth...not number of pieces of paper. Your country is broke, and the data was all there showing the trends the whole time and now Uncle Sam is stuck with his hand out bumming off the nations of the world...who have bought up nearly 30% of all American wealth.
You don't think a region like Hamilton or Ontario take note when 5000 people are laid off. You don't think a city like Detroit, or a State like Michigan take note when it becomes public one of their biggest business announces that they are 300B in debt. Just because you ignore city and state economic health, doesn't mean they don't track it, and you can bet your *** the nation takes note when thousands of workers might lose their jobs.
Quote:
Sigh. Again. This has nothing to do with macroeconomics. It's frustrating to try to explain this to you over and over and have you just not get it. Maybe this time? Let me give you a hint. The second you are talking about any specific company or even industry you are *not* talking about macroeconomics.
How did you get macroeconomics out of that? Oh I know because you don't know what macroeconomics is. GM is about as macro level as you get in business why do you think it was bailed out at a bi-national level you don't get that kind of cred unless you are responsible for moving a lot of cash.
Edited, Nov 7th 2013 10:59pm by rdmcandie
Edited, Nov 8th 2013 12:24am by rdmcandie
HEY GOOGLE. **** OFF YOU. **** YOUR ******** SEARCH ENGINE IN ITS ******* ****** BINARY ***. ALL DAY LONG.
Also I have a question for you. What do you think the biggest factor is in determining the health of the economy?
HEY GOOGLE. **** OFF YOU. **** YOUR ******** SEARCH ENGINE IN ITS ******* ****** BINARY ***. ALL DAY LONG.
Quote:
The US has 17T in debt. All that money that is "debt" all devalues currency. Which is why people are poor,
dear lord, the level of whack is too damn high.
Quote:
Right, it's just Y=C(Y-T(Y))+I(r)+G+NX(Y). Just kidding, it's clearly wishes and fairy kisses and low taxes on the wealthy.
Don't bring equations into this. It's obvious that Macro is just like a household budget.
Just as Planned.
rdmcandie wrote:
Timelordwho wrote:
holy @#%^ you are batsh*t.
Because I make money like rich folks?
With an unhedged bet on a random company that you "feel good about"?
That's how rich folks make money. Yep. Genius.
Just as Planned.
TLW wrote:
Don't bring equations into this. It's obvious that Macro is just like a household budget.
You don't use equations to balance your budget?
I see that the joke has alighted atop you, and moved on. Ephemeral things, these. Life imitates itself.
Just as Planned.
A local economist gave a talk yesterday at a tax conference. Some of his comments about our current economic problems....
A solution...
And on tax policy....
STORY
Quote:
“The gap between where we are now and pre-recession levels of employment is almost entirely explained by federal fiscal policy,†Colgan said Wednesday afternoon at the Augusta Civic Center. “Not quite all of it, but about 90 percent if it. That’s a really heavy-duty set of problems we have to deal with here....
Colgan said fiscal uncertainty at the federal level has restricted the country’s economic output and made economic recovery more difficult.
Since the end of 2009, fiscal policy uncertainty has reduced the growth of the U.S. economy by 0.3 percent per year, according to a study by Macroeconomic Advisors, leading to about 900,000 people not being hired, Colgan said.
That, coupled with reductions in discretionary spending as a result of fiscal action, such as the sequester cuts, has led to about 2.1 million jobs not being created since the end of 2009, close to the amount not yet regained from the Great Recession, Colgan said
He said the latest economic crisis — the battle about the debt ceiling in October, which led to a 16-day federal government shutdown — further damaged the economy’s growth, and another possible showdown is right around the corner. Congress passed a continuing resolution Oct. 16 to fund the government until Jan. 15 of next year and suspended the debt ceiling until Feb. 7. Colgan told the audience to mark their calendars.â€
Colgan said fiscal uncertainty at the federal level has restricted the country’s economic output and made economic recovery more difficult.
Since the end of 2009, fiscal policy uncertainty has reduced the growth of the U.S. economy by 0.3 percent per year, according to a study by Macroeconomic Advisors, leading to about 900,000 people not being hired, Colgan said.
That, coupled with reductions in discretionary spending as a result of fiscal action, such as the sequester cuts, has led to about 2.1 million jobs not being created since the end of 2009, close to the amount not yet regained from the Great Recession, Colgan said
He said the latest economic crisis — the battle about the debt ceiling in October, which led to a 16-day federal government shutdown — further damaged the economy’s growth, and another possible showdown is right around the corner. Congress passed a continuing resolution Oct. 16 to fund the government until Jan. 15 of next year and suspended the debt ceiling until Feb. 7. Colgan told the audience to mark their calendars.â€
A solution...
Quote:
When asked what he would do if he could control Congress, Colgan said he would get rid of the requirement of a debt ceiling, which gives permission to the executive branch to spend money Congress already has approved.
He said it has never been effective because fiscal policy is made in the budget and not in debt ceiling legislation.
“The debt ceiling has essentially become a nuclear weapon in the hands of both parties, which neither party can really be trusted with,†Colgan said. “I would eliminate that entirely,†he added. “It makes no difference in fiscal policy whatsoever and (eliminating it) would unilaterally disarm everyone from having to threaten to destroy the world economy in order to make their policy preferences enacted.â€
He said it has never been effective because fiscal policy is made in the budget and not in debt ceiling legislation.
“The debt ceiling has essentially become a nuclear weapon in the hands of both parties, which neither party can really be trusted with,†Colgan said. “I would eliminate that entirely,†he added. “It makes no difference in fiscal policy whatsoever and (eliminating it) would unilaterally disarm everyone from having to threaten to destroy the world economy in order to make their policy preferences enacted.â€
And on tax policy....
Quote:
In terms of tax policy, Colgan said the federal government needs to come up with a way to raise tax revenue through online sales. An increasing amount of purchases are made online, and the sector will make up 30 percent of all sales by the end of the decade, Colgan said.
“Online sales are going to pose a major threat to revenues by increasing the reliance on very volatile base in cars and building supplies services,†he said.
He advised that states should try shifting the source of tax revenue more toward consumption-based, such as sales tax, from income and capital gains taxes.
“Online sales are going to pose a major threat to revenues by increasing the reliance on very volatile base in cars and building supplies services,†he said.
He advised that states should try shifting the source of tax revenue more toward consumption-based, such as sales tax, from income and capital gains taxes.
STORY
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