A Question About "Wall Street"

[PieceofThree]

I'm oversimplifying for simplicity's sake. I'm trying to cast an analogy...

Many companies find themselves in financial trouble for whatever reason and have to take out a loan, a note, from a bank. But how many of those companies just one year later find they have made record-breaking profit such that not only can they extend larger than ever bonuses to their employees but also pay the note off in full?

This seems rather extraordinary.

I'm not saying it's some great mystery, but it is a bit of a coincidence it seems to me. Maybe I just don't understand business.

[tony schofield]

Originally Posted by typically

Point taken ..but it's all a question of "worth".



That's fair.. but they are obviously worth something to somebody. Not that I know the insides from the outsides any better than anyone... I would certainly like to know the details.

I don't know either typically, and it seems that neither is anyone else aware of their "worth" outside their magic circle. It's never quite explicit what these wonderful talents are that are costing us so much. What they are "worth" seems to be judged only by others on the same gravy train, in which case they'll always be worth wealth beyond the dreams of avarice. Without some form of control or monitoring by agencies without a vested interest in keeping this particular form of transport on the same rails we'll just keep throwing money at nebulous targets.
tony

[typically]

I don't know either typically, and it seems that neither is anyone else aware of their "worth" outside their magic circle. It's never quite explicit what these wonderful talents are that are costing us so much. What they are "worth" seems to be judged only by others on the same gravy train, in which case they'll always be worth wealth beyond the dreams of avarice. Without some form of control or monitoring by agencies without a vested interest in keeping this particular form of transport on the same rails we'll just keep throwing money at nebulous targets.

I agree. It's actually tough to criticize players who are performing well - and legally - within a given system. They are simply good at what they do; as the old adage goes: don't hate the player, hate the game. It's our system that needs changing.

[Wylde]

Originally Posted by PieceofThree

By the way, has your company ever experienced a comparable turn of events, going from almost failing, taking out a note from a bank, to record breaking profit and paying off the note in full in one year?

yes it has. one year we lost millions. this was owing to our largest single customer going bankrupt. which left the business not only to face non-payment of bills, but also the subsequent loss of custom by our largest revenue source. really not too dissimilar to events of the financial collapse.
the very next year our company had a record year owing to a regeneration of our technology and new customer base.
it happens.

[typically]

Think about it this way:
These guys are so good, that they not only convinced people (Name us) to invest in the in spite of some bad numbers, but actually got billions because they were failing.
Say what you want, but that is one damn well played hand.
(From their perspective, anyways).

Smarter regulation is, I think, more useful than making banks into boogiemen. They're not evil, they're just shortsighted some times. Regulation needs to keep risky lending on the down low. Instead, the government not only allowed it but promoted bad loans. Instead of picking winners with TARP money, we should just make sure we have a well regulated system.

Exactly. Except that I would say that risky lending isn't all bad (it drives venture capitalism for instance); but only when all parties are aware of their investments and the associated risk. This precludes commercial banks. It is a very simple concept that was introduced after the Great Depression and nonetheless was eliminated to serve the interests of investment bankers.

[PieceofThree]

Quote:
Originally Posted by PieceofThree View Post
By the way, has your company ever experienced a comparable turn of events, going from almost failing, taking out a note from a bank, to record breaking profit and paying off the note in full in one year?

yes it has. one year we lost millions. this was owing to our largest single customer going bankrupt. which left the business not only to face non-payment of bills, but also the subsequent loss of custom by our largest revenue source. really not too dissimilar to events of the financial collapse.
the very next year our company had a record year owing to a regeneration of our technology and new customer base.
it happens.

But in all the years of your company's history was that year ordinary or extraordinary?

Something extraordinary happened between November, 2007 and November, 2008. Wall Street, meaning the financial industry in America, because they had been loaning money to Main Street, meaning the people of America, in a foolish fashion was faced with certain ruin such that Main Street, wishing to be able to continue borrowing money from Wall Street, had to bail them out by loaning them money through their representatives the government. Then, one year later, Wall Street has made such a killing that they are able to pay back all the money, while Main Street over the ensuing year has suffered the worst economic downturn in 80 years. Main Street can barely afford to put food on the table one year later. Wall Street has experienced record profits.

That's extraordinary.

[Gala The Word Wench]

is that for the last three decades, I have listened to rhetoric about "people vs. Business", or "Government versus Business."

I have heard people blame regulation for the issues of the past, and of course heard that "Government had no business intruding in private enterprise"...right up until Business NEEDED the money.

When the SEC wondered if they needed to toughen the regs three year back, they consulted someone the world respected, as a mover and a shaker. He told them "God no...if anything, the regs are too stringent."

His name was Bernie Madoff.

The thing is Government and Business are made of...people.
The thinking was that after the Wall Street meltdown, if we allowed the companies to and banks to flounder or fail, we would be causing the next Depression.

Regulation is CLEARLY needed...if only to stop idiots who should have KNOWN the writing was on the wall, with the sub prime mess. When they asled the CEO's why they kept investing in junk stock, the answer was the same..."Nothing else gave the same returns".

When the only people losing their homes (say three years back) were the poor, it didn't interest anyone. When foreclosures hit the middle class, then the upper middle class and beyond it was suddenly a "crisis".

So here's my question...why 20 years ago, was it "smart practice" to strip you to your financial shorts to prove that you could afford the mortgage you were going for...but two decades later we were THROWING money at people with "no doc mortgages" and "liar loans" that THEN were turned into "investment vehicles" on Wall Street...all because Business knew more about making money than the Government...right up until they had no choice but to hit Uncle Sam up for a loan....

[PieceofThree]

I just reread what I wrote last night. It reads like a fable to me now, some kind of myth story told round a fire in a dark cave while children stare in rapt wonder. Wondering how the grown-ups can be so damned stupid, no doubt.

I, too, find interesting what you find interesting, Gala. Very interesting.

[Norman Anderson]

It's all run by the CIA
drug money laundering

the whole world is under the control of the Federal Reserve system that was founded
in 1913. The Rothchilds and the Rockefellers own all of us.

Happy New Year!!