Why is the stock market rallying when the economy is so bad? • Hacker News Board

Re: Why is the stock market rallying when the economy is so bad?

#881

Post by KozmoNau7 » Tue, May 12, 2020, 10:33 AM UTC

Natsu wrote: post #852

KozmoNau7 wrote: post #768

Earlier quoted context omitted.

What you see with Walmart is singular entity, owned by an obscenely rich family, who can strong-arm any supplier into accepting their terms. They have the massive capital to build a megamart anywhere they want, and have it run at a loss for however long it takes to drive everyone out of business. This absolutely kills local businesses and funnels money out of the area, leaving only the low wages paid to the local Wal…

Efficiency always drives out competition. There's still room for small merchants for anyone who doesn't mind paying the premium to shop there. But not many people are willing (or able) to pay that much extra to be greeted by a familiar local face. And no, I don't think the supply chains are actually more robust for local stores. I've had better luck at the local Wal-Mart than at other stores for TP and other hard-to-…

The problem is that this efficiency comes from being a huge corporation with a tight hold on the market. Not an outright monopoly, but with the ability to bleed money in some areas to outcompete smaller stores and the ability to negotiate big contracts by virtue of sheer clout in the market.

Walmart is so big that it utterly dominates the market, to the detriment of everyone else. But because they're able to sell everything at the lowest price, people go there. It's impossible to compete with Walmart.

It's a clear example of why the invisible hand of the free market is a dangerous myth.

Re: Why is the stock market rallying when the economy is so bad?

#882

Post by friendlybus » Tue, May 12, 2020, 10:36 AM UTC

scelerat wrote: post #823

friendlybus wrote: post #759

Earlier quoted context omitted.

The middle class signed up for the trades offered by zuck/bezos. Why are they owed?

I don't see how you can you say too many people "signed up" for the system we have. 99% are simply born into it with little to no understanding or bargaining power whatsoever. To the extent that consumers do have a choice, that is somewhat true, but the examples of Facebook and Amazon are as much incredible luck of being in the right place and the right time, exponential explosion of brand new modes of communication…

You assign too much reasoned behaviour to 'luck'. Its impossible to discuss reason if you hide it behind luck.

The average consumer doesnt need to be given a bachelor's degree in economics to make a choice on making a company bigger or smaller with their purchase. I know people who support smaller business and it is independent of education.

Amazons offer to the end consumer, is not a hard sell. Theres no drug dealing physical addiction, nobody wakes up with a horses head in their bed and no guns held to people's head. The offer is buy an item that costs money. That's it.

People sign up. They want 0.50c cheaper with overnight delivery. The people see the benefit and convience of internet shopping and choose it. Small businesses failing to keep up and relying on thinking of the population as dumb and unlucky to force redistribution of wealth are not helping their own case.

Many small businesses have succeeded massively off the same medium amazon is using, the internet and it's not 'luck'.

Re: Why is the stock market rallying when the economy is so bad?

#883

Post by netjiro » Tue, May 12, 2020, 12:31 PM UTC

taneq wrote: post #868

samdamsamm wrote: post #863

Earlier quoted context omitted.

UBI doesn’t do that. Unless tied to something like land-value tax, UBI just raises rent cost. Of course it doesn’t happen immediately, but within a year or so UBI will be consumed by rent cost.

Shouldn't the free market take care of that? Rental costs in a given area are driven by supply of, and demand for, rental housing in the area.

Housing is generally supply blocked due to zoning/regulation/bureaucracy/etc. It's a severely dysfunctional market in most areas.

Re: Why is the stock market rallying when the economy is so bad?

#884

Post by Natsu » Tue, May 12, 2020, 4:35 PM UTC

KozmoNau7 wrote: post #881

Natsu wrote: post #852

Earlier quoted context omitted.

Efficiency always drives out competition. There's still room for small merchants for anyone who doesn't mind paying the premium to shop there. But not many people are willing (or able) to pay that much extra to be greeted by a familiar local face. And no, I don't think the supply chains are actually more robust for local stores. I've had better luck at the local Wal-Mart than at other stores for TP and other hard-to-…

The problem is that this efficiency comes from being a huge corporation with a tight hold on the market. Not an outright monopoly, but with the ability to bleed money in some areas to outcompete smaller stores and the ability to negotiate big contracts by virtue of sheer clout in the market. Walmart is so big that it utterly dominates the market, to the detriment of everyone else. But because they're able to sell eve…

How is Wal-Mart a monopoly? I can't name any single good there which can't be gotten elsewhere and they have plenty of competitors for any given product line. There are dozens of other places I can get clothes, groceries, sporting goods, tools, etc. You say it's impossible, but does Target no longer exist? They directly compete with pretty much everything Wal-Mart does and many other businesses compete with them on specific product lines.

Economy of scale is not at all the same as monopoly power and conflating the two only makes your point more confused.

Finally, the "invisible hand" is really just a survival of the fittest type effect. It's every bit as random and imperfect as that is in nature, but the effects are no less real, or we'd all be peasants living at 1800s level standards instead of typing to each other on a globe-spanning computer network.

If anything, I'd say that Socialism is the dangerous myth. Always promising utopia, as if you can create a utopia with unconstrained mass murder from a Socialist revolution. If we were the right kind of people to live in that utopia, we'd be sharing our stuff willingly right now, not seeing talk of guillotines and forcibly taking stuff, as can be observed in this very story. The proper way to get closer to that would be to encourage people to share and be generous.

As the song says, first it was a tragedy, now it's a farce: https://www.youtube.com/watch?v=QwqnRYPcrl0

Re: Why is the stock market rallying when the economy is so bad?

#885

Post by loco5niner » Tue, May 12, 2020, 5:24 PM UTC

kennywinker wrote: post #847

loco5niner wrote: post #828

Earlier quoted context omitted.

> If you only have $1000 in the bank, it’s not because you can save $1000 / year - it’s because that’s all you can save. But at least we all have our big screen TV's and iPhones, right?

Massive eye roll. Yes let's blame the poor for their bad purchasing decisions, instead of idk not getting paid enough? Like, ok... an entry-level iPhone ($20/month) and a big screen tv ($500, lasts ten years) That's $50/year + $240/year, call it $300 a year to get an iphone and a big screen tv. Amazing. Are you really here trying to tell me that $300/year is going to make the difference between crushing poverty and a…

Yes, I see that eye roll. This is a stereotype that comes up regularly specifically because it is such a prolific problem.

I guarantee that a single iPhone purchase and a single big screen TV purchase are not the only poor purchasing decisions being made here.

Yes, lets consider a $2/hour raise. That gets wiped out with a daily trip to take-out instead of regular meals at home, or even by a 750/mo car payment.

Compare it to burning calories. It's much easier to not eat that 500 calorie hamburger than it is to run 5 miles.

Our society should be giving our kids financial literacy instead of bombarding them with advertisements.

"The best minds of my generation are thinking about how to make people click ads. That sucks." - Jeff Hammerbacher.

Re: Why is the stock market rallying when the economy is so bad?

#886

Post by bo1024 » Tue, May 12, 2020, 6:47 PM UTC

chii wrote: post #682

bo1024 wrote: post #544

Earlier quoted context omitted.

I agree, or pretty close. But it's not axiomatic that bubbles always pop (at least on the time span one expects).

> But it's not axiomatic that bubbles always pop You can only call it a bubble once it pops. So therefore, it is axiomatic. This stock "bubble" might not pop, and hence, it might not be a bubble.

Your definition of bubble and the one I was replying to are fundamentally incompatible - I don’t really care which term one uses though

Re: Why is the stock market rallying when the economy is so bad?

#887

Post by Joof » Wed, May 13, 2020, 1:27 AM UTC

marcusverus wrote: post #813

Joof wrote: post #591

Earlier quoted context omitted.

Okay, but are they worse off because they can't afford as much stuff? They don't seem to be in more poverty, they're healthier, more fit and highly educated. I can spend an extra 20k as well or poorly as I like.

That 'extra 20K' of income is easy to sneeze at for the affluent, but it means that Americans have ~40% more disposable income . That's huge. > They don't seem to be in more poverty They're clearly not 'more in poverty'. The point is that they spend (the US equivalent) of Trillions of dollars per year for comparable outcomes. >They're healthier, more fit and highly educated. This is a matter of culture, not economics…

Suppose that higher incomes are also a matter of culture.

Re: Why is the stock market rallying when the economy is so bad?

#888

Post by anonytrary » Wed, May 13, 2020, 1:42 AM UTC

WalterBright wrote: post #758

anonytrary wrote: post #565

Earlier quoted context omitted.

That's my point -- this is something that doesn't even have to be Googled!

I'd be careful about that. A lot of popular internet economic theories get holed below the waterline with simple google searches.

Hehe, of course you're right! To be a responsible internet user...

Re: Why is the stock market rallying when the economy is so bad?

#889

Post by KozmoNau7 » Wed, May 13, 2020, 11:51 AM UTC

Natsu wrote: post #884

KozmoNau7 wrote: post #881

Earlier quoted context omitted.

The problem is that this efficiency comes from being a huge corporation with a tight hold on the market. Not an outright monopoly, but with the ability to bleed money in some areas to outcompete smaller stores and the ability to negotiate big contracts by virtue of sheer clout in the market. Walmart is so big that it utterly dominates the market, to the detriment of everyone else. But because they're able to sell eve…

How is Wal-Mart a monopoly? I can't name any single good there which can't be gotten elsewhere and they have plenty of competitors for any given product line. There are dozens of other places I can get clothes, groceries, sporting goods, tools, etc. You say it's impossible, but does Target no longer exist? They directly compete with pretty much everything Wal-Mart does and many other businesses compete with them on s…

Walmart has a history of building stores in areas where local stores already exist, letting them bleed money while they outcompete everyone with their lower prices, dominating the local area and driving other stores out of business.

They can afford to this due to their enormous size and domination of their suppliers, which means they can sell their wares at lower prices than anyone else. They can afford to bleed money for as long as they have to, in order to win in an area.

That is almost the textbook definition of a local monopoly, facilitated by sheer size and entrenched market position on a larger scale. They are so large that they can have everything in all of their stores, they don't have to worry too much about certain items not being profitable in certain areas, because they're big enough to carry everything everywhere, unlike smaller local stores, who cannot afford the space nor the losses.

Walmart banks hard on the convenience of everything being available in the same store, which is something they can only do because of their sheer clout and economies of scale that only work for really big powerful companies.

The end effect is that Walmat (and other similarly huge chains) drive smaller businesses out of the market, because a free market always rewards those who dominate others, and rewards domination by affording even better tools and methods for dominating competitors. It's a surefire way to make sure the market is owned and run by just a small handful of very large and powerful entities.

A truly free market is one that is sensibly regulated, in order to foster competition and prevent monopolies from taking over, according to Adam Smith, not one that is completely unregulated, as many free market proponents seem to argue for.

Re: Why is the stock market rallying when the economy is so bad?

#890

Post by Natsu » Wed, May 13, 2020, 3:07 PM UTC

KozmoNau7 wrote: post #889

Natsu wrote: post #884

Earlier quoted context omitted.

How is Wal-Mart a monopoly? I can't name any single good there which can't be gotten elsewhere and they have plenty of competitors for any given product line. There are dozens of other places I can get clothes, groceries, sporting goods, tools, etc. You say it's impossible, but does Target no longer exist? They directly compete with pretty much everything Wal-Mart does and many other businesses compete with them on s…

Walmart has a history of building stores in areas where local stores already exist, letting them bleed money while they outcompete everyone with their lower prices, dominating the local area and driving other stores out of business. They can afford to this due to their enormous size and domination of their suppliers, which means they can sell their wares at lower prices than anyone else. They can afford to bleed mone…

> Walmart has a history of building stores in areas where local stores already exist, letting them bleed money while they outcompete everyone with their lower prices, dominating the local area and driving other stores out of business.

So it's not a monopoly at all, they just offer things at cheaper prices and drive more expensive businesses out of business, while many reasonably efficient competitors still exist.