Originally posted by robbie carrobieThe profit motive and the concept of infinite growth in a finite world are of the devil, robbie. To be seduced by the supposed legitimacy of their sophistries is to be seduced by Satan himself. Throw the money changers out of the temple and find a better method for carrying on the good fight. Economics, like a siren song, will only lead you to ruin. You know I speak the truth. Beware!!!!!
the whole point of going into business is to make money and to benefit from profits. Governments by providing infrastructure in the form of laws, regulations and logistical means for the business to carry out its business profitably expect a share of those profits in the form of taxation and rightly so. It appears to me that problems arise when bus ...[text shortened]... on harvests and driving prices up in the process as they seek to make a profit on their capital.
Originally posted by robbie carrobieThose people - capitalists - make money because the government says they have legal ownership of the resources the producers are using. Legal, capitalistic, accounting equation style private ownership is a different beast entirely from natural ownership in the social science sense. Natural ownership has limits to how much an individual can own. Capitalist ownership has no corresponding limit. Eventually as the difference between the two gets more dramatic society will collapse in violent anarchy which allows Fascists and Communists to pick up the reins of power. Those people could not rule if Capitalism didn't have problems for them to exploit. They need the mobs of commoners to be angry and Capitalism provides that in increasing amounts over time.
the whole point of going into business is to make money and to benefit from profits. Governments by providing infrastructure in the form of laws, regulations and logistical means for the business to carry out its business profitably expect a share of those profits in the form of taxation and rightly so. It appears to me that problems arise when bus ...[text shortened]... on harvests and driving prices up in the process as they seek to make a profit on their capital.
Originally posted by robbie carrobieAssets = Equity/Capital + Liabilities/Debts
umm i did a course in accountancy for my own business, what accounting equation are to referring to?
Capitalism is about maximizing the Equity/Capital variable. If you can do that whether you produce or provide anything is irrelevant.
Originally posted by robbie carrobie"Exponential growth and mergers help to create increasingly monopolistic market structures over time. However, it is not only a natural tendency of capitalism, but one that is accelerated by the political power of the large enterprises. Through legislation, government contracts, and the ability to command a bailout, the large enterprises enhance their advantage."
The Death Spiral of Capitalism
July 24th, 2013
posted by RJ Random
1) The Declining Rate of Profit
The early major theorists of capitalism, Adam Smith, David Ricardo, and Karl Marx, all predicted that the rate of profit of capitalist enterprises should fall, as a general trend over time.
Each reached this conclusion in his own way. A ...[text shortened]... iral-of-capitalism/
can someone interpret this for me, in essence, what is the writer saying.
Exponential growth and mergers really didn't have much favor in capitalism, until we lost even a pretence of an honest money standard. And secondly a central bank could make interest almost nonexistent, making possible funding speculative ventures. And thirdly, taxation policy and other government regulations created incentives to move income to capital gains and away from ordinary income. Finally, our government has made failure not an option, and supported prolonged life for "debt zombie" companies who will never be able to pay off their loans out of income.
Not one of the four aforementioned practices comes from a free market, nor would be tolerated in one.
How the LBO works, simplified version. A legacy company, well known but long in tooth is identified, still with decent but declining sales.
A predator (sometimes called a suitor) sizes it up, and offers a considerable premium to buy it out (why since the company is in decline). The suitor sells the deal to investment bankers, who get their money almost interest free, so cheap that bad deals can make money.
The suitor may put up as little as 10% of the funds, and those are probably borrowed, but puts themselves at the primary debtor level (the first to get paid in case of default).
The deal goes through, and the stock holders get a big cash reward, much of it going to executives, who also get golden parachutes.
Now the suitor/predator starts head cutting, and converting assets to cash. If it is stores, factories, or machines he sells them, and leases them back to use. The LBO selling price drives the stock higher, and the apparent efficiencies do as well. The suitor will usually leverage the company further to give the appearance of healthy growth, but the only thing growing on the balance sheet is the amount of debt.
Ideally, at this point, the suitor/predator sells out at the inflated stock price leaving a hapless punter to discover the debt ravaged zombie that is left.
This is surprisingly similar to what happened since the turn of the century in the housing market. People discovered (were sold) on equity withdrawal mortgages, sometimes second and third mortgages, not waiting for the housing crash to go under water. They lived above their means on CEW which mimics the LBO model above.
Got news. This isn't capitalism.
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Originally posted by AThousandYoungyour equation is confusing in accounting terms, assets can be anything, from money, to machinery, to plant and office furniture, to debtors, for these are all values which are are owed to the business and which the business can utilise to procure profits, liabilities are values which the business owes to others, like those who invested in it or its owners. The capital account simply represent the overall value of the business. Its that type of statement, Assets = Equity/Capital + Liabilities/Debts, which has obscured what should really be a very simple system to understand and which is cloaked in obscure and ill understood language and ill defined inhouse terms.
Assets = Equity/Capital + Liabilities/Debts
Capitalism is about maximizing the Equity/Capital variable. If you can do that whether you produce or provide anything is irrelevant.
Originally posted by AThousandYoungbusiness needs capital to run, i have ten dollars, i put it into a business, the business owes me the value of ten dollars, over time, if the business is profitable, as profits grow (hopefully) I may be owed more than my initial ten dollar investment.
Those people - capitalists - make money because the government says they have legal ownership of the resources the producers are using. Legal, capitalistic, accounting equation style private ownership is a different beast entirely from natural ownership in the social science sense. Natural ownership has limits to how much an individual can own. Cap ...[text shortened]... the mobs of commoners to be angry and Capitalism provides that in increasing amounts over time.
It appears to me that I am being rewarded not on the basis of merit for my skills or talent or even work but simply because I was willing to take a risk with my ten dollars. I have not produced a single thing. Is it not the case?
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Originally posted by normbenigncash is an asset in accounting terms, what i think you mean is that they start to sell off the assets (which take many forms) and hope to realise the value of those assets (it must be understood that assets like plant and machinery depreciate in value over time). Balance sheets are not accounts, they are simply a statement of what is owed to the business and what the business owes to others and anyone who looks at a balance sheet in order to evaluate the profitability of a business is asking for it.
How the LBO works, simplified version. A legacy company, well known but long in tooth is identified, still with decent but declining sales.
A predator (sometimes called a suitor) sizes it up, and offers a considerable premium to buy it out (why since the company is in decline). The suitor sells the deal to investment bankers, who get their money almo ...[text shortened]... above their means on CEW which mimics the LBO model above.
Got news. This isn't capitalism.
It appears to me that in accounting terms, what happens is that investors are ill equipped to read accounts and that accounts themselves are presented in a way which is difficult to evaluate, this is further compounded by the fact that accounts can be 'manipulated', to demonstrate more or less profitability, for example, the inclusion of purely nominal accounts like provisions. All of this makes it difficult to ascertain what is really going on.
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Originally posted by rwingettI agree whole heartedly dude which is one of the reasons i support Linux and open source, but we got to live dude in the satanic system.
The profit motive and the concept of infinite growth in a finite world are of the devil, robbie. To be seduced by the supposed legitimacy of their sophistries is to be seduced by Satan himself. Throw the money changers out of the temple and find a better method for carrying on the good fight. Economics, like a siren song, will only lead you to ruin. You know I speak the truth. Beware!!!!!
2 edits
Originally posted by normbenigna free market? are you unwilling to pay the government a share for providing an environment in which your business can flourish? Take a look at a system where government interference is absolutely minimal and what transpires is that business is stifled due to corruption or beset by thievery, for example the recent financial crisis.
Numbers 2, and 3 eliminate a capitalist free market, and both empower crony capitalism. To equate the decline of capitalism as the Marxist final solution, ignores the possibility of actually trying a free market, which has never been done.
Originally posted by normbenignWhat do you do about the formation of stifling monopolies in a true free market.
Numbers 2, and 3 eliminate a capitalist free market, and both empower crony capitalism. To equate the decline of capitalism as the Marxist final solution, ignores the possibility of actually trying a free market, which has never been done.
What do you do about powerful concentration of wealth in a true free market.