Posts Tagged ‘Wall Street’

“You can’t fake an economic recovery….  Instead of ‘stimulating’ a recovery, the feds have ‘simulated’ one.  They dropped the price of capital to near zero.  Commodity producers took the bait.  They borrowed money and increased production….  You can’t get real demand from empty credit.  Real demand comes from Main Street, not Wall Street.” -Bill Bonner

“Adding credit to the system, rather than cash, is how Wall Street got rich. It sold credit!… And it is why the rich got richer, too: they were creditworthy!… All the plain people could do was borrow money to buy a car, or if they couldn’t find a job, get a student loan. They could go deeper in debt. But, they couldn’t benefit from a rise in asset prices – because they didn’t have any assets.” -Bill Bonner

Don’t blame the rich, they didn’t create the system; blame those that created the system.

Perhaps others are unaware, as was I, that after the initial public offering (IPO) of a company, that company receives no capital benefits from the trading that occurs on Wall Street.  Wall Street is basically a “financial product” used to help generate profit for these entities, in which they provide a “return” to the investor (or stock purchaser).  Mutual Funds are one such financial product.

“Actual wealth, or capital, is transferred to a corporation at the time of the initial public offering of the stock, or IPO.  This, however, is a one-time event.  For all the daily trading these exchanges perform, they provide no capital whatsoever for American industry.” -L. Carlos Lara     LMR     May 2013