Financialization and oligarchism masquerqading as a Democratic Republic

Over the last several months I have been researching why the US stock market has been grasping at new highs with an economy that is tanking. With the Federal Reserve restricting corporate buybacks to get a better picture of the economy, corporate greed has side stepped that with company executives using free cash flow to manipulate their stock prices.

The introduction from an article by Ben Hunt at Epsilon Theory sums it up nicely:

‘It’s a note about financialization…the zombiefication of our economy and the oligarchification of our society.

‘Financialization is profit margin growth without labor productivity growth.

‘Financialization is the zero-sum game aspect of capitalism, where profit margin growth is both pulled forward from future real growth and pulled away from current economic risk-taking.

‘Financialization is the smiley-face perversion of Smith’s invisible hand and Schumpeter’s creative destruction. It is a profoundly repressive political equilibrium that masks itself in the common knowledge of “Yay, capitalism!”.

‘What does Wall Street get out of financialization? A valuation story to sell.

‘What does management get out of financialization? Stock-based compensation.

‘What does the Fed get out of financialization? A (very) grateful Wall Street.

‘What does the White House get out of financialization? Re-election.’

Instead of using free cash flow to build company infrastructure and create new jobs, management is using company liquid assets for self enrichment.

Their are many interesting articles at the Epsilon Theory website explaining how individuals and companies are grifting the system.

Epsilon Theory

a reply to: eManym

That won't last long, a year at best in my estimation.

Less if the Dems win (either Biden or Pelosi sworn in). I got my 401 K completely out of stocks as I am not gambling on that outcome.

a reply to: eManym

Back in the eighties a ponzi scheme swept through our metro area. It sucked up oddles of free cash based on a structured game of gambling. Put in a grand and a week later get it back along with 16 grand more. Sounds crazy huh? But it was real.

It lasted several weeks taking the savings of many along with it. Those who started the scheme made out very well and those early ''investors'' also did well themsevles. But the rest, those late to the game paid the price.

And as it neared it's end, and the structure began to crumble, those who had invested their grand and not even gotten that back began to try and sell the investment to their friends and grand parents. Bosses fished around for that last apprentice in the shop who might not have joined in the fun.

Yes, the stock market has nothing to do with the strength of an economy but only the successes of the gamblers invested in the scheme.

a reply to: eManym

92% of all stocks are owned by the top 10%.

a corp is only concerned with the bottom line. they will do, and have done, anything that reduces cost and increases profit, illegal or not.

"The top 1 percent of U.S. residents now earn 21 percent of total national income, up from 10 percent in 1979." www.brookings.edu...

just a few facts that none of you care about because one day you too will be rich. in the mean time you are getting screwed by unfettered greed.

a reply to: eManym

It is essentially the last gasp of the systems end game. Where its all Bull #ted, and the fabricated system has to go into a lockdown to continue. I mean by this a fake war economy , run as a command economy like during the Second world war. With tight security protocols to protect the Fiat system, Fiat means by command. Which will require enforcement .True Capitalism is true Darwinism, where if its not fit to survive it dies, goes bankrupt and is born again to meet the changing conditions. Theirs a whole raft of Oligarchs, which don't like the idea of going broke, who have worked out that a welfare system for the big Corporations is a far better bet, lets see if it plays out.