Conspiracy Theories R Us.
Was corporate profit growth a bubble inflated by "financial engineering"?
51–60 of 204 posts
Re: Was corporate profit growth a bubble inflated by "financial engineering"?
#52Assets across the board are and were massively inflated because there's tons and tons of money out there any not enough investments for it.
Re: Was corporate profit growth a bubble inflated by "financial engineering"?
#53Yes. Aggregate corporate profits have not gone up at all: https://fred.stlouisfed.org/series/A053RC1Q027SBEA There's a long way to go down to normalize this situation. I'm not saying this will happen, but the downside potential is enormous. Also, don't forget about the 50% of US GDP ($11T) that have been loaded into US capital markets (both debt and equity) by foreigners. This is also hugely out of balance: https://f…
It wont, they just showed that they rather let the system explode than implode; the balance, proper self-organization, invisible hand etc, was lost ten years ago
Re: Was corporate profit growth a bubble inflated by "financial engineering"?
#54Yes. Nothing to see here, move along.
This is unnecessarily dismissive..
Yes.
I shouldn’t have clicked Submit - it was out of frustration.
It’s one of those things we won’t know except in hindsight.
So: frustrated at the situation and at the article and at my inability to grasp what the hell is going on on markets. Misquoting Scott Adams, we have now Confusomarkets. Though probably they were always confusing but the more I try to interpret them logically the more duped by them I am.
The only move is to be cynical, which gets me depressed.
/rant
Re: Was corporate profit growth a bubble inflated by "financial engineering"?
#55One 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?
You might be right, but this sounds like Austrian School policy thinking after the crash of 1929. That depressions are good in the long run, bankruptcies are fine, the economy will self correct, etc. https://en.wikipedia.org/wiki/Great_Depression#Common_positi...
Re: Was corporate profit growth a bubble inflated by "financial engineering"?
#56It's certainly more nuanced than that. However, it does point out the fact that corporations focus too much on shareholder value as opposed to just making a good business system...except for the major players that is. These the so called "too big to fail" types of companies which borderline monopolize market sectors like Amazon and Walmart. But they don't care during recessions because they're fine. They essentially…
> They essentially are the government as they have a larger impact on your daily life than the actual government!
Even if that were true, "the organization that has the biggest impact on your daily lives" is a weird definition of "government".
Re: Was corporate profit growth a bubble inflated by "financial engineering"?
#57Yes. Aggregate corporate profits have not gone up at all: https://fred.stlouisfed.org/series/A053RC1Q027SBEA There's a long way to go down to normalize this situation. I'm not saying this will happen, but the downside potential is enormous. Also, don't forget about the 50% of US GDP ($11T) that have been loaded into US capital markets (both debt and equity) by foreigners. This is also hugely out of balance: https://f…
I thought the same, and had to ask some friends to provide another point of view:
If a company like amazon generates very little corporate profit, is that unproductive growth? Aggregate corporate profits are not the only stat that matters when discussing economic growth/value.
Re: Was corporate profit growth a bubble inflated by "financial engineering"?
#58There was an interesting interview with Chamath Palihapitiya on CNBC last week. Whether you like him or not, he made some good points around buy-backs and earnings per share manipulation.
Worth listening to the full interview if you have 15 minutes: https://www.youtube.com/watch?v=NvEWez59fbI
Re: Was corporate profit growth a bubble inflated by "financial engineering"?
#59The 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…
2008 made that blatantly clear.
Re: Was corporate profit growth a bubble inflated by "financial engineering"?
#60It's certainly more nuanced than that. However, it does point out the fact that corporations focus too much on shareholder value as opposed to just making a good business system...except for the major players that is. These the so called "too big to fail" types of companies which borderline monopolize market sectors like Amazon and Walmart. But they don't care during recessions because they're fine. They essentially…
>They essentially are the government as they have a larger impact on your daily life than the actual government!
Amazon and Walmart's power comes from being cheaper/better than the alternatives (though they may engage in unfair and unethical behavior as a means to that end). Government's power comes from having a monopoly on violence. These are very different and one has to be very far removed from government violence to think otherwise.