Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Was corporate profit growth a bubble inflated by "financial engineering"?

openpolitics.com

Post reply on HN
Print view View original

31–40 of 204 posts

Re: Was corporate profit growth a bubble inflated by "financial engineering"?

#31

Post by kaesar14 »

Gerardo1 wrote: post #12
kaesar14 wrote: post #9

Earlier quoted context omitted.

But those stock prices can never go down because of how much generational retirement wealth is locked up in financial markets.

I don't see how this addresses the comment you're replying to. The last month of cliff-fall would suggest your premise is wrong: prices absolutely can go down.

I should amend my point to say that stock prices cannot acceptably fall without massive intervention by the government. The system is set up so that those who have the most invested in the market (mostly the older generation who are trying to retire, institutional investors, high net worth individuals) will do anything to prop those prices up, and the government will listen because it's beholden to the interests of the older and the wealthy. They'll bankrupt this nation's economy for those that will inherit it to save those retirement funds at the benefit of wealthy investors.

Re: Was corporate profit growth a bubble inflated by "financial engineering"?

#32

Post by skoczko »

Here's what I don't get: this article claims that big (since that's what matters for stock market index levels) business sits on a mountain of debt. At the same time many economists (e.g Yanis Varoufakis) claim that big business sit on mountains of cash kept in tax heavens rather that "working" for the benefit of the economy. Which way is it and are there any confirmed statistics to check it?

Re: Was corporate profit growth a bubble inflated by "financial engineering"?

#33

Post by mmcgaha »

vzidex wrote: post #11
kaesar14 wrote: post #7

I find this scary and telling. "It is too early to say where the bottom is to this recession, but we have reason to believe the Millennials and Generation X do not have the resources to purchase the stock that Baby Boomers want to sell at prior market highs. With Corporate profit growth unmasked and the Baby Boomer’s transition into retirement, it seems unlikely that stocks will make a quick return to their prior lev…

[flagged]

Serious? Good luck with that because in 30 years the 25 year old know-it-alls will be saying the same thing about your generation. The cycle never ends.

Re: Was corporate profit growth a bubble inflated by "financial engineering"?

#34

Post by kqvamxurcagg »

kaesar14 wrote: post #7

I find this scary and telling. "It is too early to say where the bottom is to this recession, but we have reason to believe the Millennials and Generation X do not have the resources to purchase the stock that Baby Boomers want to sell at prior market highs. With Corporate profit growth unmasked and the Baby Boomer’s transition into retirement, it seems unlikely that stocks will make a quick return to their prior lev…

Well it's now clear that the Fed IS willing to engage in massive asset inflation. Nothing will stop that until the USD starts to significantly depreciation. Unlimited QE is essentially current debasement, but being the world's reserve currency provides protection.

Re: Was corporate profit growth a bubble inflated by "financial engineering"?

#35

Post by kaesar14 »

daxorid wrote: post #22
kaesar14 wrote: post #7

I find this scary and telling. "It is too early to say where the bottom is to this recession, but we have reason to believe the Millennials and Generation X do not have the resources to purchase the stock that Baby Boomers want to sell at prior market highs. With Corporate profit growth unmasked and the Baby Boomer’s transition into retirement, it seems unlikely that stocks will make a quick return to their prior lev…

Some of your gripes are valid, but: > absurd cost of living in major metropolitan areas I fail to see how this is the Boomers' fault. Cosmopolitan urban life is a choice, often fiercely defended by Millenials on account of access to "culture", which frequently boils down to a wide diversity of differently-decorated venues in which to get drunk. Sure, suburban life is boring, and living in the country is hard. But it'…

It's not access to culture, it's access to job opportunities and avoiding a commute on highways absolutely clogged to the brim with commuters.

Boomers get the blame for capturing regulatory agencies in zoning and housing construction and preventing growth in cities in like SF.

Re: Was corporate profit growth a bubble inflated by "financial engineering"?

#37

Post by LatteLazy »

One man's bubble is another man's under valuation.

Big moves when there is big news (like a global pandemic say) are normal events.

The thing I find concerning is why the FED are "intervening". Dumping cash made sense during a cash shortage. But when there are actual, real, concerns about the future (coronavirus), price falls are perfectly correct. They don't need "fixing". Happy to be corrected if anyone knows?

Re: Was corporate profit growth a bubble inflated by "financial engineering"?

#38

Post by jlj »

How about taxing corporate stock buyback transactions at a high enough rate to make it hurt, and keeping the money set aside for social safety net and training programs that support the people who are losing their jobs.

History has shown again and again that corporate tax cuts and repatriation schemes go right into stock buybacks and don't trickle down nearly enough to individuals. So tired of corporate welfare.

Re: Was corporate profit growth a bubble inflated by "financial engineering"?

#40

Post by fbonetti »

kqvamxurcagg wrote: post #27

The bubble has been enabled by the Federal Reserve. Quantitative easing and money printing has served to inflate asset prices over many years. For some reason markets going up is fine but when they inevitably decline sharply this is viewed as 'disorderly' and the Fed prints money to keep asset prices high. The Fed ensures that hedge funds have counter-parties to buy their toxic overvalued assets. It's now clear that…

The Fed also kept interest rates near zero for years after the last recession. That’s where all the cheap credit came from in the first place.
Post reply on HN