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Wall Street vs Main Street?

Discussion in 'BBS Hangout: Debate & Discussion' started by Air Langhi, Aug 4, 2011.

  1. Air Langhi

    Air Langhi Contributing Member

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    There was saying "what was good for GM is good for the country." Many companies are producing record profits and have managed to grow their top line, Yet we struggle with nearly 10% unemployment. The stock market has closed to double yet millions are struggling.

    It seems to be a dichotomy. I think globalization obviously decoupled the success of US enterprise vs the health of the US economy. Is there anything that can really be done to force companies to focus on the US? Maybe the only solution is something like this is socialism or something akin to the korean government and their conglomerates?
     
  2. Mr. Clutch

    Mr. Clutch Contributing Member

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    Perhaps the US government should stimulate US demand.
     
  3. Rumblemintz

    Rumblemintz Member

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    It's a catch 22. If we impose tarrifs or other measures to penalize companies who use workforces outside of the US they may not be as competitive in a global market. Or they may just up and leave entirely. I think the future may be an ebb and flow of technological breakthroughs that we in the US benefit from early on until the skills are passed on to the outside workforce and we see the skilled workforce here in the US get cut out again. And that's assuming these breakthroughs happen to US based companies.

    It's a new ball game out there.
     
  4. Classic

    Classic Member

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    I've seen it argued here that we should keep hiring the best and brightest and they are considered those that went to Harvard & the other elite schools. Problem is that educational background puts those individuals in a position where they're focused on helping themselves and a very select few in their corporate and governmental endeavors. I liked this article as perspective of how Harvard's business school in particular has changed in the last 30 years from the eyes of an alumni pitting main st vs wall st:

    http://articles.moneycentral.msn.com/Investing/Extra/wall-street-run-amok-blame-harvard.aspx
     
  5. Rumblemintz

    Rumblemintz Member

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    Wonder what it would be like if the stock market wasn't the driving force behind our economy.
     
  6. DonnyMost

    DonnyMost not wrong
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    The staggering income divide pretty much explains this problem.
     
  7. thadeus

    thadeus Contributing Member

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    We've reached the point where capitalism has created its own nemesis in the form of the stock market being perceived (wrongly) as a central component of economic life, a small cadre of incredibly wealthy people (which equates to a massive centralization of power in an unaccountable body), and a mass of middle- and lower-class loud people who have been persuaded that their goals coincide with the goals of the wealthy.

    Capital only benefits society when it moves - and, right now, we have a significant portion of the total capital of the United States in complete stasis in the accounts of a relatively scant number of people/companies. If half of that festering sinkhole of capital went back into the economy, the rest of society wouldn't be in such dire economic straits.

    Wall Street vs. Main Street is a very real dichotomy, but few people will allow themselves to recognize the extent of it.
     
  8. Rocketman1981

    Rocketman1981 Member

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    When the stock market fell from July 2007 to October 2008 there was little effect on employment etc.

    Now that the market has risen from March 2009 lows in the 600's to the 1100's today do expect the same for everything else?

    The financial markets are a leading indicator of economic activity...it represents people's bets as to the direction of the economy and the individual companies that make up the 'markets'.

    Employment and such are lagging indicators, people buy stock in a company today when they feel the company will start making more money and do better in the future and by doing so they give the company capital. If the investors are correct the company will begin to do better and though in the short-run may have layoffs etc, if it has long-term sustainability it will want to grow with means re-deployment of capital which can translate to jobs.

    This whole Wall St. vs. Main St. is nonsense. Wall St. is simply the reflection of peoples perspectives and bets on Main St whether through the equity or debt markets.
     
  9. Classic

    Classic Member

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    http://sociology.ucsc.edu/whorulesamerica/power/wealth.html

    Really? According to the graph at this link from 2007, it indicates that 88.4% of people who own over 10k in stock are the top 1% of income earners in this country. I'd say main st has very little part of the stock market.
     
  10. Space Ghost

    Space Ghost Contributing Member

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    Just because you get a huge pay raise doesn't mean you go out and buy a bigger and better house or car. This is the fundamental difference between the wealth and middle class/poor. This is why multimillion dollar lotto winners go broke in a few years; They do not know how to manage money. Corporations are there to make money, not to serve for the greater welfare of the countries citizens. If this is what you want, then perhaps you should move to a socialist or communist country since that seems so much more attractive to you.
     
  11. DaDakota

    DaDakota If you want to know, just ask!

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    PUBLIC WORKS !

    MOTHER ****ING PUBLIC WORKS !

    DD
     
    1 person likes this.
  12. Dubious

    Dubious Contributing Member

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    The bond markets dwarf the stock markets.
    The housing market is the biggest generator of wealth, for most people.



    Rather than corporate subsidies we could structure a tax credits for new jobs created.

    We will have to: let the Bush tax cuts expire and raise the age of qualification for Social Security and Medicare,

    Medicare should be able negotiate the costs of prescription medicine.

    We should have a public works agency that will offer a job to any person needing one, at a livable wage (with the ability to fire persons who turn out to be deadbeats).
     
  13. Major

    Major Member

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    One simple no-cost solution:

    Take all the various tax breaks businesses currently get. Scrap them, and replace them with an equal number of tax breaks directly linked to employing people in the US.

    Tax breaks are a question of values. If jobs are important to us as a society, we should put a value on that - far more so than all the other random nonsense we give tax breaks for.
     
  14. DaDakota

    DaDakota If you want to know, just ask!

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    You know what Major, maybe the common US taxpayer needs to get a Lobby group going to propose such a thing, right now, the Lobbyist are running the country, and we are not represented.

    DD
     
  15. CrazyDave

    CrazyDave Contributing Member

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    I agree with this sentiment. If lobbyists are what it now takes for any semblance of true representation, then the american citizens should be able to hire a lobbyist for our interests.

    Now if we could agree on anything being a common interest, maybe we could take up a collection.
     
  16. Dubious

    Dubious Contributing Member

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    I like that. The tax code has always been used for social engineering. If the people have jobs as their highest priority then the government should endeavor to do that. You do away with corporate welfare so the Tea partyers would love it and you promote jobs the middle class so the liberals would support it. You just have to elect someone not in the corporate pocket.

    (sign)

    End the corporate welfare!
    Create Jobs now!


    However, the money will say the subsidies we have now do support jobs.
     
    #16 Dubious, Aug 5, 2011
    Last edited: Aug 5, 2011
  17. Supermac34

    Supermac34 President, Von Wafer Fan Club

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    Major corporations are doing OK right now because they have ready access to capital to be able to invest and grow. They are an important portion of our economy and drive many of the large investments that overall help major economic areas (manufacturing, IT infrastructure, etc). All this being said, the BIGGEST mover of American employment are small businesses. When small businesses are doing well, the US does well. Currently, small businesses can not afford or FEEL that they can not afford the various new regulations, health reforms, minimum wage increases and the like. Couple that with a major lack of access to money from the banks, then you get the major portion of our economy in "lean, mean" mode and not willing to take risks to hire.

    My parents' business is fortunately small enough to be exempt from many of the various new reforms that have been brought to the table, however, easy access to cash has kept them from being able to grow or hire or take RISK, even if their demand would indicate that they could take on additional risk.

    Even thought they are small enough to not be affected, many of their vendors are large enough. Due to the fact that they have little insight to how new healthcare laws will affect their costs, the fact that minimum wage has been pushed up 40% in 4 years AND the lack of available money, they certainly are not hiring.

    You can put tax incentives in to hiring people, and big corporations will probably absolutely take advantage of them to a point, but my parents and their business partners aren't going to hire new people for a one time tax break if there is so much uncertainty in how much it'll cost to keep that person employed.

    Many large corporations employ a lot of people, but their biggest benefit to the economy isn't so much employment and providing jobs. Large corporations' benefit to the US economy is in investing capital in projects, plants, materials, infrastructure, manufacturing, etc. Fortune 100 company "A" may spend $4 Billion a year on employing 40,000 people, and that benefits the economy quite a bit, but company "A" spends $40 Billion on construction, materials, laptops, desks, electricity, servers, steel, plastic, service contracts, delivery trucks, manufacturing plants, natural gas/oil, cell phones, light bulbs, jet engines, whatever. That benefits the economy a LOT more, so that is what the US tax code puts its incentives on. Those evil oil companies get MANUFACTURING tax breaks not "oil and gas" tax breaks, because that is what the US has put emphesis on in the past. GE gets tax breaks on bonus depreciations on plant and materials, because the US government wanted them to buy more heavy machinery and buildings. It has only become recently a poltical rallying cry to take those away because these same companies are hoarding their cash due to uncertainty in future costs of regulation, possibility of credit becoming unattainable similar to 2008, and generally, the market has wanted to see stronger balance sheets lately before they will invest in them.

    If you want to remove those tax breaks on depreciation, manufacturing, etc. and move it to providing tax breaks on hiring, that is fine, but you are moving the incentive on spending $40 Billion in the economy to spending $4 Billion.

    I don't have the answers, but in my opinion, you should let the major corporations in the US be competively advantaged in the world market, make the large capital investments in plant/materials/infrastructure, and leave the overall job creation to the small businesses that support those investments on the lowest level by somehow stimulating working capital into the small businesses by providing incentives to banks to make businesses loans of the money that the American taxpayers gave them to do so, even if you have to use the "2X4" method.
     
    #17 Supermac34, Aug 5, 2011
    Last edited: Aug 5, 2011
  18. updawg

    updawg Member

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    how much of wall street was tippped off about the downgrade? amazing that there would just happen to be this big of a selloff the last two days. I bet everything I own GS was shorting and books a record qtr
     
  19. Supermac34

    Supermac34 President, Von Wafer Fan Club

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    As soon as I saw the news this evening, I thought that the last couple days was perhaps insider driven on rumors or speculation that this downgrade was going to happen this weekend.

    My "positive outlook" thought is that this downgrade has already been priced into the market over the last 2 weeks, and perhaps even more the last 2 days, and on Monday we'll see barely a blip. It is not as if S&P didn't already say they were going to do this and every wall street analyst the last 2 weeks hasn't been expecting it.

    One analyst said today that they heavily investigated the downgrade on Japan a few years ago and that basically nobody ended up caring. Most likely the biggest impact of this downgrade will be completely political, however, it MAY be the kick in the pants that the US government needs to really make some hard decisions on the budget over the next few months (hopefully).
     
  20. rhadamanthus

    rhadamanthus Contributing Member

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