Posts Tagged ‘finance’

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by @anarchyroll
10/15/2014

It turns out Apple is worth more than a lot of things. A lot of things and a lot of other companies.

The company is valued at over half a trillion dollars and at any one time, has around $160 billion of liquid assets on hand.

The US government for instance, has less than 1/3 of that on hand. Although, as the Forbes article linked above makes sure to note, the US Treasury can at any time print more money and invest it into treasury notes.

What does it mean when a company has more than three times the amount of money as the government  of the country it operates in? Does that tremendous gift on incredible wealth come with added responsibility? A responsibility not just to employees and shareholders, but to cities, cultures, and societies?

Apple hoards so much cash, that Carl Ichan, the man who the lead character in the movie Wall Street is based on, thinks Apple is being too greedy with their profits. That takes a whole lotta greed. Ichan is as ruthless of a capitalist as it gets. If someone who makes his living using money to make money thinks Apple owes something to other people, that puts Apple in a different light than the idolatry bestowed upon their founder and products.

Apple already deserves some scorn for their notorious tax dodging/avoidance practices. They dodge taxes and hoard cash from even their own stockholders. What about the societies that have enabled the company to become richer than governments? What about the roads, schools, bridges, farms, poverty, intelligence, and morale of the places and people Apple has made their billions in? Do they owe something? Should they bear more responsibility to the public than slightly newer, slightly modified consumer electronic gadgets a few times per year?

With great power comes great responsibility. Money equals power in the world we live in. No one person, government, or corporation in the world has more money than Apple. Where does responsibility come in?

 

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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.

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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.

 

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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?

 

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by @anarchyroll
1/17/2014

Quantitative easing is a hard concept to comprehend and I would not classify it as easy to write about either. I wanted to write an article about the subject in August. I sat down to do my research and gather sources. When I decided to take a break, I saw that I had been reading articles, watching videos, and listening to audio clips on the subject for five hours. And I felt like I had barely scratched the surface of the subject. And I just wanted to write a blog, not a graduate school thesis.

The economic collapse of 2008 and the fallout of it, part of which being quantitative easing, are the fuel for me wanting to write economics articles in simple language.

QE (quantitative easing’s often used abbreviation) is a tool in the monetary policy tool belt of the a country’s central bank. In the case of the QE being used by the United States Federal Reserve Bank (not associated with the federal government) to ease credit flow or encourage lending by banks to small businesses and citizens, buy up government bonds with freshly printed money to keep the financial markets stabilized, and encourage large scale investors to invest in safer more boring assets than riskier/sexier assets (derivatives, credit default swaps).

So the Fed is printing money and buying government debt with it to stop the bleeding, close the wound, and aide in the rehab of the US financial sector and the global economy.

Sounds good right? The central bank of the United States is using their stroke to end a financial crisis and prevent another one…..except…Many signs and indicators are pointing to the economy becoming or already being dependent upon QE, hence the crack analogy/drug metaphor. There are also signs pointing to an asset bubble growing in the debt market. What do both of those last points mean? I’ll explain and expand in part two…

eanda logoby @anarchyroll
December 26, 2013

Why no online sales tax? A 1992 Supreme Court ruling in the case of Quill Corp v. North Dakota where it was ruled a business needed a physical presence (ie office, store, etc) to collect sales tax as opposed to just a paying customer. How was this ruling maintained for two decades? The Direct Marketing Association‘s lobbying on behalf of online behemoths like Amazon and eBay. What could force sales taxes onto online purchases? The Marketplace Fairness Act of 2013. Who? The bill was sponsored by Illinois Senator Dick Durbin. When do you have to start paying taxes on your online purchases? You already do in 24 states. However, surprise surprise there is a loophole and congressional gridlock holding up progress.

States must simplify their sales tax laws in order to make the collection of taxes easy. Apparatus is being provided to states free of cost to help in the transitory process/period. However, a certain political party is objecting to a new tax of any kind being put on the books. I’ll give you one guess which one, hint hint, it’s not the Whigs. In October it appeared as though the machine and momentum were both rolling in the direction of sales tax collection on all internet purchases made in the United States. But never underestimate what congressional obstructionism has the power to not do.

Even if the bill were to pass tomorrow it is already too late for the thousands of brick and mortar stores that shut down and the millions of people who lost their jobs due to being unable to compete in a game rigged against them by a law that protects e retailers created before they existed. There is hope for the future. Small businesses that are better able to adapt to and engage with technology will find that a new era where the internet is a friend and a tool as opposed to a competitor will equal opportunity and prosperity. Now if only they could get small business loans…