Tuesday, March 23, 2010

Why I Don't Mind Market 'Corrections'

Why I Wrote This:

Everyones loves to tell me that we are in a recession, I get it, we are, are in a deep putrid green glowing vat of shit. What is particularly annoying is how incredulous people sound when they are telling me this, like it never occurred to them that we were actually in a recession and they are NOW coming terms with that discovery. People are unemployed or underemployed, life is tough, people who have jobs are getting poorer and consumer based economies are facing the ultimate poltergeist nightmare of no consuming. Shit Balls.

I however, have no problem with recessions, in fact I call them market corrections. Seems a lot nicer that way, being as that millions are unemployed and all.

1. It is Necessary to Weed out the Crap Companies: 'Recessions Catch What the Auditors Missed'; John Kenneth Galbraith. Lets be honest here, big companies should not be considered important or vital for the structural soundness of an economy because they employ lots of 'hard working, honest folk'. Lots of big corporations are crooked and cook their books (sometimes with help from their auditors), to make themselves seem blue chip, when they really are the deep putrid glowing shade of green chip that I was talking about earlier.

2. My Values vs Your Values: When the market hits a correction trough, Companies become fairly valued or under valued. The best time to buy is when you can see the market bottoming out, the problem with the hysteria that is the stock market is that ones the pendulum swings, people don't realize that it's eventually going to swing the other way, unless it's a really crappy pendulum and just breaks entirely. Buy Low Sell High is more profitable than buy high and sell higher. When there is hysteria around a sector or a stock, it just makes smart investing that much more entertaining, even if it means that someone's pension fund just got ROBBED.

3. Debt & Capital Markets Squeeze Up: Like a Fat model looking for work, once something becomes too bloated it becomes unattractive, so like that model, it must loose weight and get rid of all that excess fat. But one important distinction that needs to be made is that Capital Does NOT mean Cash, it means access to human, physical and mechanical inputs constrained by nature. If you have decent access to Capital in a crappy market, that means that you are a pretty decent company. If a cockroach is the only thing that survives a world wide nuclear blast, you can bet anything that those will be the most valuable animal species on the planet.....well the only one left too.

4. Government's Posse to the Rescue: Whilst the most scariest ten word sentence in the English language is, 'We are from the government and we're here to help', it must be noted that companies get a lot of help from the government. They also have a right to whine more, but with the added advantage that the govt. needs your business to survive, so they'll give you more fun stuff. Tax break, stimulus packages, bail outs, big screen Tv's ...the keys to the nuclear arsenal etc. If you want a date with Miss '(Insert Home Country)' this is the time to ask for it.

5. Shitty Businesses are Meant to Fail: Capitalism is as much about failure as success. In fact statistically most businesses fail, and they ought to as the strong, truly viable ventures will survive. the reason why communist and socialist models stutter and fail even on the back of tax payer support is because they are inefficient, they aren't in the same cut-throat winner take all environment that you find in the free market. Shitty businesses ought to fail, it's not fair on those fair few who managed to get their shit together, what is their incentive to improve?

The Big Idea: 

Life is not perfect, companies are only as perfect as the people who work in them. Sometimes bad decisions are made and risk taken that really shouldn't have been taken, and there are massive far reaching consequences and the worst part is that people who don't understand the system that they are even in the first places are dramatically hurt. This sucks, but market corrections are necessary for the long term good of our species, to ensure that we can keep innovating, being more productive and just plain being better year in and year out. Think of it as the Evolution of business complete with natural selection fueled by money.

10 comments:

Alec Lindsay said...

All this is written from a perspective based deep in the existing system. What do you think about other models (note plural), and what do you think about the idea that the function of a society is to care for all? Just interested. Love, Alec

Ateeq Khaliq said...

Murtuza..How come you have shifted towards serious topics like economy, what about comparative study between sexes? But Nice post, though recession and all i hate to study, you made it simple with your fun filled article.

Ateeq Khaliq said...

As Marx said “Anyone who knows anything of history knows that great social changes are impossible without feminine upheaval. Social progress can be measured exactly by the social position of the fair sex, the ugly ones included.”..............Now i can understand ....Ur comparative study is linked to economy ;)

Alec Lindsay said...

Hey Ateeq, isn't anything formulated by Marx forever tainted? Even the spoof quotes? Anyway, which IS the fair sex? I think maybe my answer is different from yours! Love, Alec

Alpha Za said...

@ Alec: Thanks for the comments Bud. I do deal with reality once in a while and most other models are either suitable for their niches or just plain suck. I think societies should care about it's own citizens, but I also believe that by artificially employing people, you are hurting them in the long run. When China's economy goes through it's first major crashe (In about 5 years), it'll hurt alot of people in govt. subsidized businesses in the first place.

Society should be cut throat competitive but have a large safety net that is focused on ensuring basic necessities like food, shelter, medical care and even education. It should be geared towards meritocratic upliftment, but it should recognize that not everyone can be a doctor, lawyer, Banker etc. We need construction workers, plumbers etc just as much.

As for your view on Marx, as tainted as they may seem in history, what has survived are his ideas; Socialism is just another form of Marxism.

@Ateeq: Thanks for the comments man, glad you appreciated the piece. As much as I do write about the sexes, I tend to have a wide variety of interests that encapsulate politics, economics, social issues etc, just go through my old posts ;)

Marx is an interesting fellow, he does reign supreme in various esoteric college campuses and maybe Nepal. Although he has a point with regards to feminine upheaval, I feel social progress has more to do with intra-economic class relationships.

Is it normal for the child of a Fortune 500 company to go to school with a child living on welfare? Are they treated equally and how do they treat each other?

Alec Lindsay said...

'Normal' is an interesting word to use in that context. I guess no country has achieved a totally equal education system, but I think achieving equality of opportunity is the basis of a fair society and that surely starts with education. (Apart from anything else, the maximisation of a society's talents can only be good for that society.) Achieving equality of education for all is probably only possible through social engineering, and the right always throws up its collective hands in horror at the idea of that. But let's face it, living in a society must mean that some sort of social engineering has happened, so it's illogical of them to shy away from the idea. I've rather strayed from the point, haven't I? Ah well, goodnight, dear Murtaza

Ateeq Khaliq said...

@ Alec..why such a word for Marx, is it fair to use "TAINTED" for such a great personality? :( you broke my heart :(

Alec Lindsay said...

I don't know if I can do anything for your heart Ateeq, and Marx has a place in the affairs of men that anything I might say can't possibly affect. I used the word 'taint' in a provocative way (Murtaza's influence, you see, is bad!) because I meant that the social experiments which have derived from Marx's ideas have been, and I put this mildly, unsuccessful. Marxists, I think, would either disagree, or, say that his ideas have been misunderstood or badly implemented. Hmmmm! Love, Alec (I grieve for your heart!)

Alpha Za said...

@ Alex: By normal I meant socially acceptable and common. As for 'social engineering', it happens every day through the uncommon choices that people make and governments new initiatives, like making white people go to school with black people. oh and don't you blame me for your transgressions ;)!

@ Ateeq: I find that you'll find your romance with Marx very one sided, then again as Marx is dead, he is unlikely to cheat on you. As far as the word 'tainted' goes, all of our heroes get tainted in one manner or another, after all, they were merely human who accomplished extraordinary things.

Alec Lindsay said...

I think we are as one on the social enginering point. Just by being social animals we engineer society. As to blaming you for my transgressions, I think your continual demonstration of the power of provocation is bound to inspire imitators. You're just going to have to accept it. Love, Alec