U.S. decline, China's ascension

[Phokus]

It's basically a fact that living on debt greatly increases your standard of living.

My city is doing this huge enormous expansion of the train system, and it's awesome, but we don't have money for it. We'll be paying this off for decades. If we only paid cash for everything, we probably wouldn't even have a train system. We probably wouldn't have those nice overpasses either. Building just a regular overpass for cars is unbelievably expensive. Arrgg and highways. Hundreds of miles of roads are crazy expensive.

But that's government projects. On a personal level, living on debt would mean buying a new car right now rather than buying a shit car right now then driving that piece of shit for 5 years until you can afford a real car. When you live on debt, you get things RIGHT NOW then pay it off in 5 years. Without debt, you live like a peasant for 5 years then you buy the car that you could have purchased 5 years ago

I'm going to quote a VP i overheard talking about laying off some of our accountants and outsourcing their functions to India:

"It'll cost me 19K to hire an Indian accountant. Not only do i have to pay 60-80K for an American accountant, I have to pay for their expensive benefits package as well".

Yes, clearly low savings rate and not 'expensive employees' are the reason why shit is being shipped oversees.

 

[bamacre]

LOL, where do you libertarians come up with this crap? The US could have a high savings rate and it wouldn't make a LICK of difference. The reason capital is fleeing is because, in the eye of the capitalist, the American standard of living is 'too high'.

You laugh at me then agree with me? Do you not understand that "the American standard of living is 'too high'" is said with an understanding that the American is living beyond his means? His standard of living is too high in relationship to what he is producing. While this is not true of all Americans individually, it is very true collectively. And it's not just the individuals, it's government. People like yourself want government to do this and do that, and you want to pay for it with higher taxes. The other side says you can't have the government do this or that, because I don't want to pay the higher taxes. The problem is both of you have been getting what you want, all the welfare and warfare you ever wanted, and at a low tax rate. How is all that possible? Easily. It's not magic. You just go from being the world's biggest creditor to the world's biggest debtor. Now if our government can keep that game going forever, that's magic. I don't believe in magic. Do you?

 

[Phokus]

You laugh at me then agree with me? Do you not understand that "the American standard of living is 'too high'" is said with an understanding that the American is living beyond his means? His standard of living is too high in relationship to what he is producing. While this is not true of all Americans individually, it is very true collectively. And it's not just the individuals, it's government. People like yourself want government to do this and do that, and you want to pay for it with higher taxes. The other side says you can't have the government do this or that, because I don't want to pay the higher taxes. The problem is both of you have been getting what you want, all the welfare and warfare you ever wanted, and at a low tax rate. How is all that possible? Easily. It's not magic. You just go from being the world's biggest creditor to the world's biggest debtor. Now if our government can keep that game going forever, that's magic. I don't believe in magic. Do you?

Let me repeat. You could balance every budget, you could have Americans save every penny and it WON'T MAKE A LICK OF DIFFERENCE when the incomes of Americans are nowhere near parity to that of developing economies... and even if it were, the Chinese government and every other country have the political will to use any and all methods to make sure parity is never reached with America. We are literally the world's whipping boy.

It's funny how you point to the Chinese and their savings rate when capital is starting to flee THEM as well. Now that some of their manufacturing is deemed 'too expensive', some of their capital/jobs are now fleeing to places like Vietnam.

P.S. raise taxes on the rich, cut the military, etc. etc. etc. I'd rather have a smaller deficit too, but that has nothing to do with jobs fleeing out of this country.

 

[Zebo]

I think someone once said all the world is a stage. (Don't tell me, I am being facetious and paraphrasing.)

After WWII, the US excelled in manufacturing over all of the rest of the world. In perspective, all of the rest of the world was bombed to near oblivion. Given the intelligence, inherent motivation, AND survival of all infrastructure, at the time, the US could not fail.

Now. Things look to be leveling out ... looking out to the next few decades.

EVERY US citizen needs to study, read, think and work smarter for life. We are now competing with every burgeoning economy. We need to have the opportunity to learn Mandarin AND German in our elementary & high school years. My only choice was Spanish. ¿Cómo está usted?

I don't care what one learns one still has to reconcile who gets profit off labor (labor or capital), if we want to live in an environmental wasteland, safety, retirement and how to deal with the reality that very few can be top level engineers and scientists within a country and what to do with them. These are real issues affecting every nation.

US has chosen to rack up debt and keep OSHA, EPA, minimum wage and those who can not survive offshoreing warehouse in section 8. This is unsustainable and we will have to deal with not producing what we consume one way or the other.

I never see us leveling out. For one thing 3 billion still live on less than $100 a year. Second Western tradition demands more egalitarian socio economic structure.

 

[Zebo]

Not talking about you and your dad, I'm talking about me and my kids. It's no secret that the decade of the 2000's was the first decade in US history that showed a decline in wages for BOTH college grads as well as high school grads for the entire decade after inflation. Standard of living is being propped up simply by bubbles, not the creation of something...something that creates wealth in itself. Maybe we can hurry up and get that college thing in for everyone....good luck with that.

While I agree that lowering rates and more credits have contributed to a portion of those that have fallen out of paying federal taxes, lower wages have also contributed, not to mention the highest US poverty (I know it's a higher standard than poverty around the world) rate in over a generation. With global wage pressures, I highly doubt that the average US worker, if he or she can even get a job, will have a rising wage, on average, for quite some time (until equilibrium in global jobs vs global labor perhaps)?!

I was reading a story in NYT about $250,000 in debt unemployed lawyers or $12 an hour Starbucks lawyers the other day. I guess lawyers no gives a crap if they hit hard times, maybe even find it funny, but it's a damn shame someone so educated not to mention everyone else coming out of college as well sucking wind. I think you're right.

 

[Zebo]

Too many of them live well beyond their means, while most Chinese live below their means. That was my point. Capital comes from savings, so opportunity comes with savings. That's why opportunity is leaving the US and heading toward Asia.

I though it had something to do with 90cents an hour, company compounds where you live and are slaved for 80 hrs a week and your company security can literally kill you for IP theft. Sorry not how I want to live - let em have it. We should never allow capital, trade, IP or anything else with nations who don't subscribe to some basics unless we want to be like them.

The Chinese model is nothing to envy. We just need to take away the global labor arbitrage capital demands with their free trading religion. It's nothing more than divine rights of kings for the 21st century. aka "economics"

 

[Zebo]

I don't have a facebook or myspace. I do have a twitter and have used it about 4 times. I have never drank a drop in my life and I, for the most part, hate reality tv. I'm an old, cranky fuck just waiting for springtime so I can tell the neighborhood kids to get the hell off my dirt.D:

Exactly I'm not a 12 yr old boy or a girl so no "social networking" - You sound like me except for the drinking part But Only on Friday poker night little liquor to allow others to win so I keep getting invited and only with a designated driver.

 

[William Gaatjes]

I see Phokus mentioning "free market" in this thread, but anyone who has been paying any attention for the last 10 years (if not longer) and read the article knows that our fiscal policy is anything but "free market." "Too big to fail" and "bailout" aren't anywhere in the lexicon of any free-market manifesto I've ever read.

Is "Too big to fail" not an inherent effect of making profit's and expanding as a company ? And as such can be an effect of a free market ? Unregulated or not entirely unregulated ? Is this not just natural evolution when you are being successful and you want to keep that profit ? "Too big to fail" is in my view a result of coupling financial success (same as profit) and expansion. As such , you have to accept that continuous needed growth (is seen as profit) does that.

When does a company turn into a coorporate ?


My view is :
The only way to make a profit and not grow "too large to fail" is by staying small and be technological advancing all the time. The new technology creates new products and these products create together with marketing a new emerging market. The problem is that the current patent system prevents this and financial institutions do not create new markets. The place of financial institutions is to redirect wealth of the people to financially fuel upcoming technologies democratically.

This is not happening. Financial institutions wanting to make too much money always turn into a parasite sooner or later draining financial resources as we have seen over the last 100 years. I begin to see what the US has done for the world and how it has been accomplished. But it is a weakening. The old way is to look for another enemy again(China) as was the USSR. Maybe an enemy is not the way. Maybe an adversary as in a game of chess is the way. Not willing each others demise, but showing who can be the smartest while showing dignity, mutual respect, being humble and class... Make it a sport.

 

[bamacre]

Let me repeat. You could balance every budget, you could have Americans save every penny and it WON'T MAKE A LICK OF DIFFERENCE when the incomes of Americans are nowhere near parity to that of developing economies... and even if it were, the Chinese government and every other country have the political will to use any and all methods to make sure parity is never reached with America. We are literally the world's whipping boy.

No, while you're right in the areas where you are agreeing with me (whether you know it or not, and I think not), but you fail to see that we haven't been the world's whipping boy, the world has been our whipping boy. They have been working and saving. Saving means living beneath your means. Get that? That's where (real) economic growth comes from. We have increased our standard of living at the cost of them lowering their own standard of living. That's what will not last. So it is inevitable that Americans at some point in time have a decreased standard of living. How is that going to happen regarding China? Likely, the value of our dollar will decrease, and the value of their currency will increase. Their middle class will grow, ours will continue to decline.

It's funny how you point to the Chinese and their savings rate when capital is starting to flee THEM as well. Now that some of their manufacturing is deemed 'too expensive', some of their capital/jobs are now fleeing to places like Vietnam.

Yup. It's called a correction. China is due for a set back. China can afford a set back. See, they have saved for a rainy day. When it rains, they can take the day off and live on a little savings. In America, everyone is on the look out for a rainy day, because we are not nearly as prepared.

P.S. raise taxes on the rich, cut the military, etc. etc. etc. I'd rather have a smaller deficit too, but that has nothing to do with jobs fleeing out of this country.

It has something to do with it, but no, it is not the single cause of that problem. There isn't one.

 

[bamacre]

I though it had something to do with 90cents an hour, company compounds where you live and are slaved for 80 hrs a week and your company security can literally kill you for IP theft. Sorry not how I want to live - let em have it. We should never allow capital, trade, IP or anything else with nations who don't subscribe to some basics unless we want to be like them.

The Chinese model is nothing to envy. We just need to take away the global labor arbitrage capital demands with their free trading religion. It's nothing more than divine rights of kings for the 21st century. aka "economics"

My words here are not meant to put China on some kind of pedestal, there's no intention there at all. The Chinese government has done a great disservice to their own people. It's their peoples' awaking to and complaining about a lot of it that is aiding their country. Inflation is one of them, and very relevant to this discussion.

 

[JS80]

China will never catch up to the US. As their economy grows at unsustainable speeds, what will be their downfall is their lack of care for quality, the environment (no, not being bullshit "green," but polluting the shit out of their own immediate backyards with no regard to building codes/integrity), and the implosion of the social system due to their one-child policy in an already 1.3 billion population. Their buildings and their social welfare will come crashing down literally.

 

[JS80]

Yup. It's called a correction. China is due for a set back. China can afford a set back. See, they have saved for a rainy day. When it rains, they can take the day off and live on a little savings. In America, everyone is on the look out for a rainy day, because we are not nearly as prepared.

This is actually a huge problem for them. If they do have a rainy day as you say, because they haven't being playing trade with the US, when they stop buying US treasuries and have to redeeming it to spend it, you can be damn sure every hedge fund in the world will take advantage and there will be a rush to sell treasuries and the chinamen will have to take a haircut on all their hard earned savings.

And to kick them in the yellow nuts, as they spend the dollars to "live on" the savings, it will drive up the prices of global goods and everything will be more expensive for them.

 

[werepossum]

No, while you're right in the areas where you are agreeing with me (whether you know it or not, and I think not), but you fail to see that we haven't been the world's whipping boy, the world has been our whipping boy. They have been working and saving. Saving means living beneath your means. Get that? That's where (real) economic growth comes from. We have increased our standard of living at the cost of them lowering their own standard of living. That's what will not last. So it is inevitable that Americans at some point in time have a decreased standard of living. How is that going to happen regarding China? Likely, the value of our dollar will decrease, and the value of their currency will increase. Their middle class will grow, ours will continue to decline.



Yup. It's called a correction. China is due for a set back. China can afford a set back. See, they have saved for a rainy day. When it rains, they can take the day off and live on a little savings. In America, everyone is on the look out for a rainy day, because we are not nearly as prepared.



It has something to do with it, but no, it is not the single cause of that problem. There isn't one.

Might be hard to notice a rainy day when we're already under water.

 

[IGBT]

with all the jobs fleeing to china, most of you's guys will have to follow the jobs unless your interested in hanging out in front of Home Depot.

 

[0roo0roo]

Yup. It's called a correction. China is due for a set back. China can afford a set back. See, they have saved for a rainy day. When it rains, they can take the day off and live on a little savings. In America, everyone is on the look out for a rainy day, because we are not nearly as prepared.


.

no, their system of government has no legitimacy, it can turn ugly pretty quick if things just don't keep coasting along. like it or not their health care system will hit a brick wall in not too long, like the us but worse, with the massing demographic of elderly and their giant population of poor people. straight line progression charts of how things will keep coasting along without change are a nice way to be wrong.

 

[sandorski]

I did a little search on this and it looks like Canadians did experience a lot less subprime problems. But ... as you know no risk, no pay in finances. They may take less risks but they also don't make as much money when the market is booming.

One thing I don't get is that, if the economists are so bright, why don't they write a proposal of how to solve these problems instead of make gloomy predictions all day like that's going to help anyone. Ok, so we took hits on banks, now what should be do. I mean economy is NOT an inanimate object it CAN be changed in case people forget!! If we can go from good->bad, why isn't it possible to go from bad->good? I don't see why not.

So I say to these economists who has nice paying jobs, GET TO WORK AND FIX THIS DON"T JUST GET PAID FOR SAYING DEPRESSING THINGS!!

Don't look now, but Canadian Banks are on a US Bank shopping spree.

 

[5150Joker]

Until the US legalizes slavery again, we won't be able to catch up to China and their awesome living standards.

 

[JTsyo]

ha the joke's on them. When they pass us in standard of living, we'll take back the industrial jobs.

 

[CycloWizard]

So then why didn't Canada experience a similar near failure and they're MUCH more regulated than we are? In fact, they have most of their banking consolidated into 5 large banks and a handful of second tier banks. Talk about too big to fail? They're considered to have one of the soundest banking systems in the world.

You had systemic fraud throughout the WHOLE system. Mortgage brokers were helping create fraudlent mortgages, appraisers were appraising houses for more money than they should have been appraising them for (otherwise they won't get a call back from those brokers again), ratings agencies were rating crap they knew to be garbage AAA, and the mortgages kept getting passed on and on and everyone got a cut of their commission until it hit the aforementioned pension fund and they were stuck with the hot potato.

Canada's regulations were different than those in the US. Having 100k pages of regulation doesn't make you safer or less safe than having 10 pages of regulations if those 10 pages are written properly. If what you say is true (i.e. what these guys did was already considered fraud), then what will adding more regulations achieve? They were already acting illegally based on existing rules that weren't enforced, so your solution is to throw more rules at them that they can continue to ignore? Maybe the Chucklehead-in-Chief needs to do his job instead of worrying about everyone else's for a change.

You don't understand the history of banks. The suggestion that the government told them to take on too much risk = LOL. Give me a break. Nobody told them they had to take on excessive risk to make a TON of money. It used to be that some banks were formed as partnerships where the top bankers owned significant portions of the bank. Of course when that happens, they're less likely to take on excessive risk because it's the president's money you're fucking with. Goldman Sachs used to be run as a partnership.

When banks went public, it wasn't really the CEO's money you're fucking with, it was the shareholders. Not only that, but many of these asshole banksters were smart enough to not hold onto the subprime mortgages themselves, instead, they sold them off to some pension fund in Iceland or something. Do you now understand why it makes perfect rational sense to take on excessive risk on wall street now? If *I* were in their position, I would do the exact same thing, not because government told me to, but because i'm going to get *PAID*. In the absence of government this still makes sense. If not, here's one: In finance, people move around a LOT and also retire very young (comparably speaking to the rest of the workforce). There's a wall street saying, IBGYBG "I'll be gone, you'll be gone". Who cares if you're taking on excessive risk? You get your bonus, and you move on to another bank. Or you retire (see Joseph Casano, patient zero of the CDO debacle, yet he made several hundred million doing so. Oh no, he's out of work. So fucking what, he's living the high life. Who picks up the tab for your fuckup when the piper comes calling? It's the shareholder (and if the fuckup is big enough, the taxpayer).

They were told that they had to lend to minorities and other people who typically wouldn't qualify. Why wouldn't they normally qualify? Too small a down payment, poor credit history, low income, or any number of factors which have nothing to do with race and everything to do with the creditworthiness of the client. Instead of allowing banks to use that information as they see fit and make loans accordingly, government coerced loans to these people. This had two effects: artificially increasing demand for housing (since these were specifically loans for housing) and introducing huge levels of risk to banks' portfolios. The outcomes were very predictable: artificial inflation of housing prices and high foreclosure rates. This is true regardless of who owns or runs a bank, and anyone who's ever seen an econ book should be able to arrive at the same conclusion.

 

[CycloWizard]

Is "Too big to fail" not an inherent effect of making profit's and expanding as a company ? And as such can be an effect of a free market ? Unregulated or not entirely unregulated ? Is this not just natural evolution when you are being successful and you want to keep that profit ? "Too big to fail" is in my view a result of coupling financial success (same as profit) and expansion. As such , you have to accept that continuous needed growth (is seen as profit) does that.

When does a company turn into a coorporate ?

If a company is managed well enough to become very large in a certain market subject to known regulatory constraints, why would it suddenly fail? The obvious answer is that the regulatory constraints have changed the rules of the game: the cricket champions don't have a chance when the rules of cricket are suddenly changed to match the rules of rugby. However, if the game is still cricket, the cricket team might not be the championship winner every year, but they will not generally lose every game either.

 

[alphatarget1]

Let me ask this simple question: What has the US government done in the past 20-30 years to ensure that our society maintains healthy growth? I'm talking about education, infrastructure, etc, what the government should have spent SS surplus on instead of pissing it away on social experiments like the Great Society, Affirmative Action, or worthless wars like Vietnam and Iraq #2. What have we been talking about on P&N? Gay rights? Abortion? Teaching creationism at schools? Since the US is a democracy, I would say for better or worse, what our government has done is the reflection of what our society wants/wanted.

China's got its problems for sure (lol @ Three Gorges Dam), and I'm not sure how they handle it. It's clear, though, that we (the US) as a society cannot find common ground and compromises to address issues that we face.

 

[Phokus]

Canada's regulations were different than those in the US. Having 100k pages of regulation doesn't make you safer or less safe than having 10 pages of regulations if those 10 pages are written properly. If what you say is true (i.e. what these guys did was already considered fraud), then what will adding more regulations achieve? They were already acting illegally based on existing rules that weren't enforced, so your solution is to throw more rules at them that they can continue to ignore? Maybe the Chucklehead-in-Chief needs to do his job instead of worrying about everyone else's for a change.

They were told that they had to lend to minorities and other people who typically wouldn't qualify. Why wouldn't they normally qualify? Too small a down payment, poor credit history, low income, or any number of factors which have nothing to do with race and everything to do with the creditworthiness of the client. Instead of allowing banks to use that information as they see fit and make loans accordingly, government coerced loans to these people. This had two effects: artificially increasing demand for housing (since these were specifically loans for housing) and introducing huge levels of risk to banks' portfolios. The outcomes were very predictable: artificial inflation of housing prices and high foreclosure rates. This is true regardless of who owns or runs a bank, and anyone who's ever seen an econ book should be able to arrive at the same conclusion.

You have such a fundamental misunderstanding about how the CRA worked and how subprime worked. Nobody put a gun to the banks heads and said 'lend to these people'. Nobody HAD to. What you posted is such a ballfaced lie that it's not a surprise that you're just regurgitating Rush Limbaugh talking points:

Conservative critics also blame the subprime lending mess on the Community Reinvestment Act, a 31-year-old law aimed at freeing credit for underserved neighborhoods.

Congress created the CRA in 1977 to reverse years of redlining and other restrictive banking practices that locked the poor, and especially minorities, out of homeownership and the tax breaks and wealth creation it affords. The CRA requires federally regulated and insured financial institutions to show that they're lending and investing in their communities.

Conservative columnist Charles Krauthammer wrote recently that while the goal of the CRA was admirable, "it led to tremendous pressure on Fannie Mae and Freddie Mac — who in turn pressured banks and other lenders — to extend mortgages to people who were borrowing over their heads. That's called subprime lending. It lies at the root of our current calamity."

Fannie and Freddie, however, didn't pressure lenders to sell them more loans; they struggled to keep pace with their private sector competitors. In fact, their regulator, the Office of Federal Housing Enterprise Oversight, imposed new restrictions in 2006 that led to Fannie and Freddie losing even more market share in the booming subprime market.

What's more, only commercial banks and thrifts must follow CRA rules. The investment banks don't, nor did the now-bankrupt non-bank lenders such as New Century Financial Corp. and Ameriquest that underwrote most of the subprime loans.

These private non-bank lenders enjoyed a regulatory gap, allowing them to be regulated by 50 different state banking supervisors instead of the federal government. And mortgage brokers, who also weren't subject to federal regulation or the CRA, originated most of the subprime loans.

In a speech last March, Janet Yellen, the president of the Federal Reserve Bank of San Francisco, debunked the notion that the push for affordable housing created today's problems.

"Most of the loans made by depository institutions examined under the CRA have not been higher-priced loans," she said. "The CRA has increased the volume of responsible lending to low- and moderate-income households."

In a book on the sub-prime lending collapse published in June 2007, the late Federal Reserve Governor Ed Gramlich wrote that only one-third of all CRA loans had interest rates high enough to be considered sub-prime and that to the pleasant surprise of commercial banks there were low default rates. Banks that participated in CRA lending had found, he wrote, "that this new lending is good business."



Read more: http://www.mcclatchydc.com/2008/10/12/53802/private-sector-loans-not-fannie.html#ixzz1AjvPPKI1

Between 2004 and 2006, when subprime lending was exploding, Fannie and Freddie went from holding a high of 48 percent of the subprime loans that were sold into the secondary market to holding about 24 percent, according to data from Inside Mortgage Finance, a specialty publication. One reason is that Fannie and Freddie were subject to tougher standards than many of the unregulated players in the private sector who weakened lending standards, most of whom have gone bankrupt or are now in deep trouble.

During those same explosive three years, private investment banks — not Fannie and Freddie — dominated the mortgage loans that were packaged and sold into the secondary mortgage market. In 2005 and 2006, the private sector securitized almost two thirds of all U.S. mortgages, supplanting Fannie and Freddie, according to a number of specialty publications that track this data.



Read more: http://www.mcclatchydc.com/2008/10/12/53802/private-sector-loans-not-fannie.html#ixzz1AjwDreVY

http://www.mcclatchydc.com/2008/10/12/53802/private-sector-loans-not-fannie.html

Federal Reserve Board data show that:

More than 84 percent of the subprime mortgages in 2006 were issued by private lending institutions.

Private firms made nearly 83 percent of the subprime loans to low- and moderate-income borrowers that year.

Only one of the top 25 subprime lenders in 2006 was directly subject to the housing law that's being lambasted by conservative critics


Read more: http://www.mcclatchydc.com/2008/10/12/53802/private-sector-loans-not-fannie.html#ixzz1Ajwc0I1Y

It's disgusting that conservatives point to minorities and automatically scapegoat them without any of the facts actually backing them up. You could have completely removed the government from the system and this would have gone on because there was risk free profit to be made.

 

[Phokus]

No, while you're right in the areas where you are agreeing with me (whether you know it or not, and I think not), but you fail to see that we haven't been the world's whipping boy, the world has been our whipping boy. They have been working and saving. Saving means living beneath your means. Get that? That's where (real) economic growth comes from. We have increased our standard of living at the cost of them lowering their own standard of living. That's what will not last. So it is inevitable that Americans at some point in time have a decreased standard of living. How is that going to happen regarding China? Likely, the value of our dollar will decrease, and the value of their currency will increase. Their middle class will grow, ours will continue to decline.



Yup. It's called a correction. China is due for a set back. China can afford a set back. See, they have saved for a rainy day. When it rains, they can take the day off and live on a little savings. In America, everyone is on the look out for a rainy day, because we are not nearly as prepared.



It has something to do with it, but no, it is not the single cause of that problem. There isn't one.

See what i wrote above... a $19K white collar worker vs. a 60-80K (and probably over 100K if you count benefits) white collar worker. THAT is the difference. Savings are nice, but you shouldn't have to eat into your savings when you have your job shipped overseas with no hope of finding another job to replace it.

It doesn't matter how much you save, when a nation of 300 million is facing a wide gulf with a couple nations of several billion and their standard of living is so much lower, the capital will continue to flee 'over there'.

 

[Texashiker]

To hear a number of prominent economists tell it, it doesn't look good for the U.S. economy, not this year, not in 10 years.

When you give all of your manufacturing jobs away, what do you "really" expect.

Free trade will be the downfall of the USA.

 

[William Gaatjes]

If a company is managed well enough to become very large in a certain market subject to known regulatory constraints, why would it suddenly fail? The obvious answer is that the regulatory constraints have changed the rules of the game: the cricket champions don't have a chance when the rules of cricket are suddenly changed to match the rules of rugby. However, if the game is still cricket, the cricket team might not be the championship winner every year, but they will not generally lose every game either.

I agree that it is true indeed that well managed, it would not fail as long as the market is not satisfied and common sense laws are obeyed.

There are a few situations that must be met for the company not to fail :

#The company must be well managed.

#The Market must not be satisfied for a given product. If that is the case then before the satisfaction of the market occurs for that product, a new product must be delivered.

#The products cannot contain patents from other patent holders(other companies) who do not wish to license the patents.

# The needed raw materials must be available.


A problem from the point of view of the government or a citizen :
I can imagine that the government want to make sure by laws that the company can not hold the government hostage by denying a service in demand for more money and therefore holding the citizens hostage. ANd that is very bad for the economy. Such a


it is healthy for the market to promote competition. If the first company is the sole patent holder then progress can not be created by competition and prices can be inflated artificially by the patent holder. Or is there some rule that a patent holder must be ready to license others after say 10 years ? How does that work ?



In the past many large companies where split up because of becoming to big to fail and behave like monopolies. Not giving emerging companies a chance.
Or was there something else going on ? I have to read some history about that...