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cloudship

Is the Stock Market a Terrorist Operation?

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I am throwing this out there for discussion. For some reason I seem particularly obsessed with this latest financial crisis, and pretty disturbed at how we got there and how we plan on fixing it.

In any case, I have been thinking about the role our financial system, he stock market, and our economy plays in our lives. Perhaps I am looking at this an odd way, but to me the point of the government is "Of the people, by the people, for the people. I don't recall anywhere in the Constitution where it guarantees businesses a right to a profit. Now, we are a capitalist society. That means, and maybe I have this wrong, that the idea is that the person (or company) that can produce the best product the cheapest will stand out. It relies on everyone having equal access to teh market, and that the business have a direct link to the consumer.

Doesn't the stock market then interfere with this? In the stock market investors can invest in companies in hopes they will perform well, and the companies in tern get needed resources. That in itself would be fine if the reason investors would invest would be because of the products those companies produce. But the stock market is itself influenced as much by, if not more by, performance in the money market. Now instead of being based on how a company responds to consumers, it is based on how the banks are doing. Investors are now more concerned with financial issues than with the products,. Companies, since they need the money to grow, worry more about how they appear to the investors than they do to the consumer.

We have kind of hit a head here where we have such a convoluted situation between investments by the banks in real estate loans and stock market investments in the banks that when the bottom fell out on the real estate market, which much of this was based on, the whole thing started falling apart. Instead of refocusing on doing a better job matching the consumers needs, however, the seeming course to redemption is by propping up the banking industry, simply because we are afraid the stock market will fall.

My point in the title is that we are now so concerned with the stock market being propped up that we are willing to place even more dire burden on the consumer public simply to ensure that the investors are kept happy. So in a sense the Stock Market has created this sense of fear in us, that somehow a bad stock market is going to bring doom and gloom. Would we be better off not paying attention to the stock market, and instead focus on smaller, local companies which are not traded? On Credit Unions and local banks which focus on the community? Has big business got us in a strong hold that we can't survive without it?

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^

The thing with the economy is now big businesses are here and our economy is globalized to the point of no return. We can't really turn back the clock on these things now. Some countries, particually in Asia, thought their economies were "immune" to what was happening here and guess what? Their economy is starting to tank too, because of what is happening here. The world economy today is like a knotted ball of yarn, good luck getting those knots out wihout breaking it!

Also, the vast majority of Americans over 18 are investors these days. Have a 401k or other retirement plan? Then you are essentially an investor, as the cash gets tossed into mutual funds, which in turn invest YOUR money into stocks, bonds, etc. Stocks are influenced by far more than the banks. They are influenced by the company's earnings, which in turn are affected by their level of service, competition and so forth. So when you look deeper into it, customer service DOES play some factor in it, but it also depends on how much competition they have, as well as marketing, in stock condition in the case of stores and on and on. I know it all too well, I hold a coushy job in a fortune 500 retailer and we are well loved by customers for our above the norm customer service and our profits continue to beat estimates, even in this economy. While many other stocks around us have fallen, our stock price has remained stable.

Small companies are tied into the whole economy as well now too. They get their goods through middle men who get their goods overseas. Small companies are actually more at risk in this economy than the big ones, mainly because they don't have the capital to weather the storm. When people are out of work, they aren't buying goods and what they need to buy, they are buying at the lowest price they can find, which is where Wal-Mart and others actually get the advantage. Now as far as banks go, I go with credit unions all the way, I despise the big banks and refuse to give business to them. They only thing I have that isn't in a credit union my mortgage, which was actually obtained at a local bank, which then sold it to a larger bank <_< .

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To grossly over simplify, its all cyclical.

Stock market goes up, people make money and are feeling good, they buy products, thay boosts stocks even more, until the economy peaks for various reasons, then people don't feel good, they buy less, thas causes stocks to fall, which causes more fear and people by less, until the perception is the worst is over, and now is a good time to buy stocks again, etc, etc, etc.

The stock market itself is a huge convulated system that has gotten much more complex since original conception because there were ways to exploit it. Each added layer of "protection" and price corrective options has led to new ways to exploit it.

I'm not going to make a judgement call if all of this is good or bad, other than to simply say, that without the stock market, we would be relatively smaller, more agrarian, and local....the Luddites would say thats preferable.

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