Newsgroup: it.politica.internazionale
Titolo: Siccome c'e' il rischio di un nuovo Black Monday

 
Spiegazione del weak point nello sviluppo delle corporations.
Perche' la bolla, dipende dalla banale e smodata ambizione dei dirigenti.
 
The great problem with corporate capitalism is that publicly owned companies have short time horizons. 
Unlike a privately owned business, the top executives of a publicly owned corporation generally come to their positions late in life. Consequently, they have a few years in which to make their fortune.
 
As a consequence of the short-sightedness of reformers and Congress, the annual salaries of top executives were capped at $1 million. Amounts in excess are not deductible for the company as an expense. The exception is "performance-related" pay, which has no limit. The result is that the major part of executive pay comes in the form of performance bonuses. Performance means a rise in the price of the company's shares.
 
However, there are a number of ways in which performance bonuses can be less legitimately obtained, almost all of which result in short-term gains to executives and shareholders and long-term damage to the corporation and economy.
 
But to transform manufacturing companies into marketing companies, as happened for example to Apple Computer, which apparently does not own a single factory, was a strategic mistake for the long-term. By offshoring the production of their products, US corporations transferred technology, physical plant, and business knowhow to China. American corporations are now dependent on China, a country that the idiots in Washington are endeavoring to turn into an enemy.
 
As time goes by, US companies are transformed from manufacturing enterprises into sales organizations and lose connection to the work process, and these functions relocate abroad with the manufacturing jobs.
 
Offshoring manufacturing jobs left Americans with fewer high-value-added well-paid jobs, and the US middle class downsized. Ladders of upward mobility were taken down. Income and wealth distributions worsened. In effect, the One Percent got richer by giving away US incomes and GDP to China.
 
The gains in executive bonuses and shareholder capital gains were achieved by destroying the economic prospects of millions of Americans and by reducing the growth potential of the US economy.
 
Executives also use the company's profits to repurchase shares, and when they lack profits executives arrange bank loans to the companies in order to buy back shares. Executive "performance pay" goes up, but the corporations are left more heavily indebted and thus more vulnerable to recession and foreign competition. In recent years, buybacks and dividends have used up most of corporate profits, leaving the corporations bereft of updates and reserves.
 
To sum up, the One Percent have enriched themselves at the expense of the economy's potential and everyone else.
What is happening to America is that all of the surplus in the system accumulated over decades of success is being used up. 
 
Based on earnings and the economy's prospects, stocks are overvalued. However, the appearance of a successful economy is important to Washington's power, and this brings in the Plunge Protection Team, a US Treasury/Federal Reserve team that intervenes to support the market.
 
Once the professionals see that government is supporting the market, they support it. 
This behavior is bolstered by greed. Participants want the market to go up, not down. Therefore, even if money managers understand that stocks are a bubble, they will support the bubble as long as they think the Plunge Protection Team is holding up the market.
 
Until a black monday.

Il giorno sabato 5 settembre 2015 23:39:57 UTC+2, Albert Crei ha scritto:
 
In short
 
The great problem with corporate capitalism is that publicly owned companies have short time horizons. As a consequence of the short-sightedness of reformers and Congress, the annual salaries of top executives were capped at $1 million. 
Amounts in excess are not deductible for the company as an expense. 
The exception is "performance-related" pay, which has no limit. 
The result is that the major part of executive pay comes in the form of performance bonuses. 
Performance means a rise in the price of the company's shares. 
Is a short time horizon.
 
The gains in executive bonuses and shareholder capital gains were achieved by destroying the economic prospects of millions of Americans and by reducing the growth potential of the US economy. 
 
In the long-run this means the demise of the US as a world power