Archive for the ‘Excess and Algorithms’ Category

What is #Alibaba? And How Did It Become the Biggest IPO Ever?

Posted: October 7, 2014 in Excess and Algorithms
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by @anarchyroll
10/6/2014

The biggest Initial Public Offering (IPO) in the history of the New York Stock Exchange occurred recently.

Have you heard of Alibaba? Had you heard about Alibaba before last month? Have you already forgotten about Alibaba after it didn’t carry over to a fresh news cycle? When someone mentioned it to me last month, all I thought of was the Beastie Boys song.

What is Alibaba?

  • Google, Amazon, PayPal and eBay all rolled into one
  • A wholesale marketplace; Alibaba is the middleman the connects retailers/sellers directly to customers/buyers
  • Alibaba is the top dog in the largest e-commerce market in the world

How did Alibaba become the biggest IPO ever?

  • Capitalizing on the Chinese consumers’ desires to shop online, for cheap, with trustworthy retailers/merchants
  • 80% of China’s e-commerce is done through Alibaba
  • Domination of the world’s largest growing market paired with international expansion has Wall Street drooling

So China’s biggest internet cash cow has gone public on stock market. Yahoo is the biggest American company to directly benefit from Alibaba’s IPO success as the two are very  much in bed together, on the level, and in public NOT under the table. In fact, Yahoo has benefited so much from Alibaba’s success there is talk of them investing in and/or acquiring Snapchat.

What are potential problems with Alibaba?

  • It’s Chinese, the communist government/central bank could throw a monkey wrench into the mix at any time, and already has
  • The stock being bought isn’t actual stock in the company, but in their Cayman Islands shell corporation
  • Is Alibaba-Mania a product of a new Dot Com Bubble? The question is worth asking.

Should you go out and buy as much Alibaba stock as you can afford? Well, if you’re a good investor, you should always asked yourself; what would Warren Buffett do?

As with most IPOs, if you weren’t ahead of the curve or a fan of the band before they were cool, the ship has mostly sailed on this one. What I find personally noteworthy about Alibaba, is everyone I know who invests and is well off because of it, wants nothing to do with Alibaba. Why? They all say the same thing; the Chinese government. How much is the government involved with Alibaba? How much influence do they have? How much transparency is there and how much of that can actually be trusted?

When the Head of the FBI goes on 60 Minutes and openly talks about the Chinese military attempting to cyber attack the US economy, one should be very cautious about investing in the Cayman Islands shell company of a Chinese internet marketplace with direct ties to the Chinese government.

Inhumane Scheduling isn’t Just a #Starbucks Thing, It’s a Retail/Service Industry Thing

Posted: August 28, 2014 in Excess and Algorithms
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by @anarchyroll
8/27/2014

When one’s problems are in the realm of having to wait in line to get a  $5 (or more) cup of coffee, blissful ignorance to the plight of those serving the coffee apparently is to be expected. Having worked at a Starbucks for a cup of coffee (pun intended) I know that the vast majority of Starbucks customers care about the baristas serving them just as much as fast food customers care about the people serving them their burgers and burritos.

The only difference between the people who work at Starbucks and the people who work at fast food is the ratio of Latino-American’s behind the counters, wearing the aprons/uniforms. The majesticness of espresso cafés has been thoroughly destroyed by the corporate culture of Starbucks, and the fact that they added drive thrus. Starbucks is just another fast food joint, the only difference is they specialize in beverages. The way they treat their employees has been akin to how fast food workers have been treated and paid, poorly.

A recent article in the New York Times showed just how inhumanely Starbucks employees are treated. The focus on the article was related to scheduling. The article raised such public ire that Starbucks has immediately gone into damage control, introducing sweeping changes to their scheduling system. Most baristas I have talked to are on a, we’ll believe it when we see it attitude. Why? Because management has zero credibility when it comes to treating employees like whole people. Baristas, much like the majority of service industry and retail industry workers are treated like marks on expense reports. Treated as just another inventory item, like the cups and straws.

The managers in the store aren’t too often the enemy because in a corporation, the store managers themselves are just another cog in the machine. Unless you are in a suite, most corporations will only care if you die because of the profit loss they may endure having to move resources around to cover your duties. I’ve only worked for so many corporations so I’m not going to be Mr. Anti Capitalism here, but Starbucks I have worked for. They care about you only if they can’t immediately replace you. I’m willing to bet many other people working at lower levels of corporations would say the same thing.

The inhumane treatment of employees spotlighted in the NYT article once again shows the high cost of the low prices and fast service America’s shrinking middle class has come to expect and the 1% can’t live without. Eyes shut, ears covered, just give me what I want at the lowest possible price in the shortest amount of time involving the least amount of effort. That is the American attitude towards buying things. That is why e-commerce has destroyed brick and mortar stores. We can lie to ourselves about technology all we want. I worked retail and counted hundreds of customers per week who would shop in stores then buy online to avoid paying tax. No concern for the human beings who suffered so they could save a few bucks.

Corporate management seems to be a reflection of the customers, me first. It has always amazed me that working class people have so little regard for other working class people. I thought as I got older I would understand it, but I am yet to grasp it beyond greed, ego, and the victim mindset. Working hard, having a bad day, and/or being upset gives no person any right to impart suffering on another. It is great that Starbucks is changing policies and procedures that will benefit their employees. However, until Americans can start accepting higher costs for non-essential purchases so that the people who make, transport, and sell them can have a higher quality of life, then clopening is just another symptom being addressed while the cause of the illness goes avoided.

 

 

#Derivatives are Getting a Makeover but are Still Financial WMDs

Posted: August 14, 2014 in Excess and Algorithms
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by @anarchyroll
8/14/2014

Can a nuclear bomb be repackaged and sold as anything other than a weapon of mass destruction?

Countries that have the bomb, like the United States, claim they can be used as weapons of peace. Peace via the threat of destroying the world hanging over the head of anyone who dares to cross the boss.

Derivatives were at the core of the financial collapse of the global economy in 2008. Warren Buffet; America’s greatest living investor, has publicly stated he stays far away from them. With those two unremovable stains, it is no wonder why JP Morgan and Goldman Sachs are trying to rebrand derivatives.

Derivatives are the tool or instrument most used by big banks and hedge funds that turns Wall Street and the finance sector of the American economy into a casino on steroids. Until derivatives are regulated (they are completely unregulated presently) then Wall Street will, like a degenerate gambler, continue rolling the dice as often as possible, at the highest stakes possible.

Using money to make money has been described as The American Way by many CEO’s who have taken their respective companies public. If that is an acceptable definition of The American Way, then there is nothing more patriotic than using derivatives to make money.

One of the many problems with derivatives is that it uses nothing real, tangible that can be held and felt in the real world. The only thing a derivative is used for, is to make money in the finance sector. The finance sector of any economy is meant to help build wealth for the masses. Derivatives are a tool used by finance sector insiders, for finance sector insiders. Derivatives are purposefully complex and confusing, in many cases beyond any verbal explanation.

Attempting to rebrand derivatives under the umbrella of Alternative Mutual Funds, shows exactly why the finance sector of America’s economy needs to be strictly and tightly regulated this side of the 2008 collapse. They know how dangerous and damaging derivatives have been in the past, and rather than allow transparency and regulation, Wall Street is trying to sweep them under a rug, and try to tell people that the rug is a self-sustaining money tree.

 

Why is #WarrenBuffet Staying Away from #CMBS & #Derivatives?

Posted: July 26, 2014 in Excess and Algorithms
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by @anarchyroll
7/26/2014

If you don’t know who Warren Buffett is, all you need to know is that he’s the greatest living investor in the history of the American stock market(s). In the world of finance he’s the Michael Jordan, Muhammad Ali, Wayne Gretzky, and Babe Ruth. He is the man and has nothing resembling an equal.

Warren Buffett has also become the conscience of the finance sector the American economy.

This is evidenced by his refusal to put his wealth of wealth into commercial securities and derivatives. Whereas all other big banks, hedge funds, and trading houses can’t get enough of either.

In a recent issues of TIME magazine, Buffett called all commercial securities “weapons of mass destruction.”

Commercial mortgage-backed securities (CMBS) and derivatives were two primary instruments in the 2008 global economic meltdown, the worst economic collapse since The Great Depression.

Warren Buffett invests the old-fashioned way, when investing was investing. CMBS and derivatives are the tools that have turned Wall Street into a casino on steroids. CMBS and derivatives are the dice, the global economy is the table, the chips that big banks and hedge funds are playing with are the liquid assets of the global economy. Are the craps and gambling metaphors coming across clearly enough?

After all of the pain and devastation that derivatives trading has done to the global economy, there is certainly a strong case to be made that they should be done away with completely. But in the spirit of baby steps and pragmatism, how about we start with at least putting some kind, any kind of regulation on derivatives trading?

If commercial securities and derivatives aren’t good enough for the greatest living investor in America, perhaps it is best that we all steer clear of them. If someone with literally billions of dollars to burn doesn’t want to touch them, why would any person dependent on a robust 401k to be able to retire at 65 want their limited assets intertwined with the same investment instruments that collapsed the global economy barely a half decade ago?

 

Wage Stagnation is the Silent Killer of #Economic Equality

Posted: July 15, 2014 in Excess and Algorithms
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by @anarchyroll
7/14/2014

Wages have not kept up with inflation or the consumer price index for over thirty years. That is what is meant when you hear people talk about wage stagnation.

As long as wages remain stagnant compared to how much stuff costs there will never be a fully robust economic recovery.

Wage stagnation is why there is currently an all time record high of income inequality in America.

This is why you don’t need a degree in economics to understand why all debates over economic issues in America are made to seem overly complicated on purpose. Because if people were paid more for their time and effort, they could buy more things. But wouldn’t those things then be more expensive? Yes, but people would be making more money. It would be a cycle, kind of like the cycle our economy is on now but less vicious and soul crushing for the generationally poor.

You’ve heard about class warfare between the 1% of earners who possess more wealth than the other 99% of earners in the country, right? That is the heart of the Occupy Wall Street movements and protests. Why is there such a gap in income equality? Why is there class warfare? Why is there a sentiment that the “game” that is the US economy is rigged and the American Dream is dead? The underlying cause/answer is wage stagnation.

Wage stagnation is not an accident, it has been done very much on purpose for almost half a century. The haves don’t want to pay the have-nots an honest salary for their honest work and have been allowed to get away with it. The 1% could make the choice to pay their workers more. But other than it being the right thing to do, why? After all, paying the masses a living wage would mean less one-percenters could afford private yachts, jets, and islands.

Wage stagnation is tied directly to the rise in consumer debt (people use credit to pay for necessities they don’t have the money to have because they don’t get paid enough), student loan debt (parents and students need to take loans because they don’t get paid enough to pay for college tuition), and mortgage debt (not being paid enough to afford a home). Being able to afford a home is the center piece of the American Dream. To afford property, not simply to achieve financial prosperity as many would have you believe.

Until wage stagnation is addressed and done away with, very little else matters in terms of turning around America’s economy for 99% of the population. To deny this is to deny reality, or be apart of the minority of the population that is benefiting from the system as it is currently constructed. There is no gray area or in between.

A living wage is the only humane solution to this problem. But traditionally, humanity and the American economy don’t always go hand in hand. The fierce resistance to paying a living wage in America is only the most recent example.

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