News US Bankruptcy: PF'ers Weigh In on the Risk

[WheelsRCool]

What about those corporations that pay workers partially with share options?

Are those corporations Communist/Marxist? Or are they Marxist-Socialist?

No, because those corporations are not saying that the workers are entitled to the profits, they are using it as an incentive. If the employees have partial ownership of the company through stock options, then they are inclined to work harder.

Or is it all part of a vast capitalist conspiracy?

One of the great ironies of capitalism is that although it emphasizes individualism, it is the only system that actually truly allows public ownership of the businesses, that actually allows the workers to own the business.

Capitalism basically achieves, by emphasizing individualism, what communism (Marxist socialism really) tries and fails to do.

On a more serious note, I'd venture to guess that people's stock ownership percentage is at an all-time high in the U.S. (directly or indirectly, e.g. through investment funds).

Most likely.

There is nothing wrong with public/worker ownership of corporations through stock ownership, the problem is when government tries to dictate this sort of thing.

Remember, the free market is ultimately about contracts.

Workers are ultimately in a contract with the company. For their work, they get paid. Certain companies offer more attractive contracts than others. The more skilled the worker and more in-demand their profession, the better the pay and other perks the workers can get, because companies compete with each other for workers. Some contracts say you will be given stock options, some don't, some are where if you move up far enough in the company, you'll get them, it all depends on the company and the particular job. But all of the contracts are voluntary.

Now if the workers are slaves, being forced to work for the company, well that's different. But when it's voluntary contracts between individuals and businesses, the only job of government, overall, is to just enforce those contracts.

Companies naturally resort to things like stock offerings as a way to raise money, that's why if your company needs some serious cash for growth, you try to go IPO.

Stock options are also a great motivator for startups, because then everyone has a stake in getting the company off the ground, and profitable, to the point that it then goes IPO or is acquired by another company and the owners become wealthy, but all the employees make a nice chunk of money as well, perhaps enough to go off and start their own company and the process repeats.

For example, when Google went IPO, Larry Page and Sergei Brin both became billionaires, and many employees became millionaires.

Many who became Google employees four years ago who bought stock for cheap now are worth around $3 to $4 million (because of the Google stock going up), and are cashing out their stocks and leaving to go off and start their own companies.

So the natural tendency in a capitalist society is that a great many of the corporations will end up being publicly-owned.

 

[EnumaElish]

So the natural tendency in a capitalist society is that a great many of the corporations will end up being publicly-owned.

That's somewhat ironic, but it also shows the adaptability of capitalism.

I hear your point about incentives, and for all I know it may work for startups, but from a financial diversification point of view, buying your company's stock is putting all your eggs in one basket.

You work for them, and you (partially) own them (or have the right to, through options).

If they go bankrupt, you (a) are out of work, and (b) have just experienced a drastic capital loss. This is an extreme example, but it demonstrates what I mean by "having all eggs in one basket."

 

[mheslep]

...The worst "offenders" in income inequality today are the financial companies that give multimillion dollar bonuses. But a $20 million bonus vs a $20k employee is still only a ratio of 1000 to 1.

Nah, trial lawyers beat them out easily for the top spot. Lawyers who filed the class action against Blockbuster Video: $9.25 million. The wronged customers: $20. Lawyers took $2.8 Billion of the $11.3B Florida tobacco settlement.

 

[WheelsRCool]

That's somewhat ironic, but it also shows the adaptability of capitalism.

I hear your point about incentives, and for all I know it may work for startups, but from a financial diversification point of view, buying your company's stock is putting all your eggs in one basket.

Well when you get the stock options, they're very cheap at that point, and the idea is if the company is successful and has a good IPO or gets acquired, you then can cash out your stocks and then diversify to preserve your wealth. It isn't as if you must make a huge cash investment into the company to get the stock options.

What you say about the "eggs in one basket" is actually a key mistake many made during the tech boom of the 1990s. There was one guy, I forget who, whose net worth was $10 BILLION. When the Dot Com bubble burst, all his net worth was in tech stocks, so it plummeted to $100 million (which still ain't bad, but a heck of a lot less than $10 billion!).

Now Mark Cuban for example, when he got $1 billion for selling Broadcast.com, he, being a businessman, and knowledgeable of the tech industry, saw that the tech industry was in a bubble that likely would burst soon. Being smart, he diversified his stock immediately, so he kept his wealth when the bubble burst.

You work for them, and you (partially) own them (or have the right to, through options).

Well I still wouldn't say you have the right to, if the company decides to give you options, that's nice, however, otherwise, the contract is you work for the company and they will pay you for your work in return. Remember, un-coerced contracts between individuals and businesses.

If they go bankrupt, you (a) are out of work, and (b) have just experienced a drastic capital loss. This is an extreme example, but it demonstrates what I mean by "having all eggs in one basket."

Maybe, maybe not, it depends. If you go to work for a startup and are given stock options, then if the company fails, you are only out of a job, not really any capital loss, because you didn't invest anything except time, energy, etc...

Now the venture capitalists, they would be out a loss.

But if the company succeeds, you can become a multimillionaire, then have the cash to start investing and also to start your own company even (and regarding many tech companies, it depends, certain ones require virtually $0 to startup, they'd need venture funding later).

In Silicon Valley, I've been told by someone who works there that it's actually a very common occurence for people to start a company, then sell it a few years alter for a few million, though venture capitalists don't like this as they are always looking for the next Google. The Valley is a crazy place :)

 

[WheelsRCool]

I don't know that the US is literally going bankrupt, but Bush has definitely screwed over the country. Apparently the debt is double what it was before he took office, and that will probably be used as a justification for more privatization. I doubt that the recent tax cut plan will do anything, since it will only give people more money to buy Chinese products, if they choose to buy anything at all. A better plan would have been to initiate a bunch of major infrastructure & public works projects, like what China, Canada & many other countries are doing these days. Like what's listed here:
http://www.upi.com/NewsTrack/Top_News/2008/01/16/us_infrastructure_crumbling/7237/
http://www.stateline.org/live/details/story?contentId=250042
That's what the original New Deal was all about wasn't it?

Bush did increase the debt, however didn't the economy also grow by about $3 trillion during his time in office...? (I might be wrong on that). Maybe that offset it.

 

[EarlT]

Let us Set Aside what we have been Taught,
and Discuss the Truth.

Lawful Money is Gold and Silver Coins of the United States
12 USC 152

Legal Tender is fancy Paper with green Ink.

Dollars are made of Paper and Ink.

There is No shortage of Paper or Ink.

The federal gov will pay for Socialist Security or any other program.

The effect will be:

When the National Debt reaches GDP
then the European Banks thru the European governments
will cause the US Dollar to no longer be the Reserve Currnecy of the World.
See CSPAN Dec24,2008

CSPAN

US Bankruptcy
When US Deficit reaches GDP,
(that will occur in 1.3 Trillion in Deficit spending,
@ 2011 - 2012)

Europeans will no longer accept US Dollars,
US Dollar will no longer be Reserve Currency of the World,
Euro Dollar to become Reserve Currency of the World.

CSPAN Dec 24,2008
http://www.c-spanarchives.org/library/index.php?main_page=product_video_info&products_id=282910-1

Click on Watch Flash Video

Move Time Cursor to 1:10:20
Watch from 1:10:20 - 1:11:50

also watch 1:07 - 1:12


That will be Stage 1 of the US Bankruptcy

Stage 2 will be:

China or any other government that accumulates US Dollars
then Buy Businesses and Houses
then move Communist / GloBaalists into those homes, and businesses.
then China can Buy the USA,
Home by Home,
Business by Business.






China has Accumulated 2 Trillion US Dollar:
the new Merrill Ling or Smith Chang Investment Company to the US.
On Friday, March 9th 2007, China announced they were starting an investment company this week in the US and 1 Trillion Dollars would be transferred to the company at this time designated for US Investments and maybe another Trillion Dollars on the way soon.
This will make the new Chinese investment company,
the largest liquid capital for investment company in the US.
China will also be investing in the real estate and Stock market also.
China said they still would continue to buy US Treasury notes.
http://cafr1.com/China.html

The GDP of the USA is 14 Trillion,
http://www.forecasts.org/gdp.htm




and that is how the USA can be taken over,
and the American people will not even know what happened to them,
until Congress removes NAFTA ,GATT, Free Trade, Stops Foreign Wars,
this will be the Future of America Created by the US Congress.