georgephillip
Diamond Member
- Thread starter
- #241
Would you agree with Michael Hudson's argument about corporate raiders borrowing high-interest "junk bond" credit to buy profitable industries only to strip assets, cut back long term investment and threaten their work force with bankruptcy if employees don't agree to "downsize" their pensions?Industry?
As in Apple or Appaloosa?
"Apple Corporation, for example, earned about $6 billion in 2009 by expertly engaging its 35,000 employees. (They went on to earn $6 billion in the last quarter of 2010 alone.) Along the way they offered us an array of popular new products that people are enjoying and putting to use.
"Appaloosa, the hedge fund, earned about as much as Apple in 2009 by speculating on god knows what. But it has fewer than 250 employees and it's not at all clear what these individuals added to our economy -- certainly not the iPad. How can 250 workers, no matter how wise and talented, produce as much real worth speculating on stuff as 35,000 Apple employees can make inventing, manufacturing and marketing useful products? They can't. So hedge funds must be siphoning off wealth from elsewhere, not creating it themselves."
Does the FIRE sector (Finance, Insurance and Real Estate) qualify as industry? Does industry as we know it exist without Finance, Insurance and Real Estate?
When Michael Hudson talks about corporate raiders borrowing high-interest "junk bond" credit to buy profitable companies and then make money by stripping assets, cutting back long term investments along with research and development in order to pay out depreciation credit to their financiers, does the government's tax bias of debt over equity investing affect industry and unemployment?
Obama's Greatest Betrayal
This is a terrible argument.
I am not wont to defend egregiously paid hedge fund managers, but they entered into contracts to manage the savings of individuals and institutions who of their own volition agreed to pay them levels of compensation based on specified targets. Thus, the hedge fund manager has every right to collect as much money as they did, even though I can't find anything to substantiate that Appaloosa earned $8 billion - Apple's 2009 income - which I believe is a gross exaggeration.
Finance is not an industry? Insurance is not an industry? Real estate is not an industry? The author of that article shows a stunning ignorance of economics. Finance represents capital and savings, which is invested within the economy to make the economy grow. Insurance plays a hugely critical role spreading risk throughout society. And you can't live nor go to work anywhere without the real estate industry. That's mind-boggling.
Obama's Greatest Betrayal