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Fri Aug 19, 2016, 12:57 PM

Goldman Sachs Says It May Be Forced to Fundamentally Question How Capitalism Is Working

Source: Bloomberg

....

But what if margins stay elevated? That too is possible, and its implications could be unsettling.
Goldman wrote: "We are always wary of guiding for mean reversion. But, if we are wrong and high margins manage to endure for the next few years (particularly when global demand growth is below trend), there are broader questions to be asked about the efficacy of capitalism."

In other words, profit margins should naturally mean-revert and oscillate. The existence of fat margins should encourage new competitors and pricing cycles that cause those margins to erode; conversely, at the bottom of the cycle, low margins should lead to weaker players exiting the business and giving stronger companies more breathing space. If that cycle doesn't continue, something strange is taking place.

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Read more: http://www.bloomberg.com/news/articles/2016-02-03/goldman-sachs-says-it-may-be-forced-to-fundamentally-question-how-capitalism-is-working


Wow, not often do the cracks and misalignments get highlighted this clearly.
(sorry 'bout having it in the wrong place first)

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Reply Goldman Sachs Says It May Be Forced to Fundamentally Question How Capitalism Is Working (Original post)
Sentath Aug 2016 OP
unblock Aug 2016 #1
pansypoo53219 Aug 2016 #2
BillyBobBrilliant Aug 2016 #3
Wolf Frankula Aug 2016 #4

Response to Sentath (Original post)

Fri Aug 19, 2016, 01:07 PM

1. what we have isn't really capitalism. it's closer to economic anarchy.

certainly, that's what republicans and right-wing libertarians preach.

economic anarchy is just letting businesses get away with whatever they can get away with. minimal regulation.

capitalism is like most sports games, it requires referees. someone has to prevent inappropriate monopolies, someone has to prevent anti-competitive behavior, someone has to internalize externalities. that simply can't be done without government intervention, regulation, lawsuits, enforcement, etc.

if margins stay high for a protracted time, chances are really good that the incumbents have erected big barriers to entry, preventing real competition. at that point, it's no longer capitalism, it's economic anarchy. or, if the government is actually complicit in limiting competition, perhaps it is fascism. but it's not capitalism.

genuine competition is the cornerstone of capitalism.

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Response to unblock (Reply #1)

Fri Aug 19, 2016, 02:42 PM

2. crapitalism. losers do not die. wall street is a casino.

and the HOUSE WINS MORE.

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Response to Sentath (Original post)

Fri Aug 19, 2016, 03:43 PM

3. What we have is

Toxic Capitalism. Where money is made from money rather than effort, products, or services. The wealth is a house of cards, not based on material goods or public benefits.

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Response to Sentath (Original post)

Sat Aug 20, 2016, 01:31 AM

4. Lenin Was Wrong

The highest and final form of capitalism is NOT imperialism. It is casino capitalism which has replaced it. Markets, market share imports, exports and prices are not so important now. All that is important is share price, nothing else. The world economy is based on trading pieces of paper.

Wolf

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