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Corporate Greed

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Hi, new here, just finished reading atlas shrugged and am full of ideas...

but i wanted to know, after reading some of the other posts regarding the war in iraq, etc, some of your views on the state of the economy...

i am canadian... a big bad, unsupportive canadian... i believe that if the US is waging war, they should at least be honest about what they are fighting for... i am also a former socialist who believes in government but not in excessive control... i don't think the govs should be passing laws like where you are and aren't allowed to smoke ciggarettes, whether you can open a bar here or there, or tell me that i can't choose to smoke marijauana! i do believe that taxes can be levied at reasonable rates to keep roads, schools and our ever loving socialized health care system going...

but i want to know how egoists and objectivists react to the deceit of businesses like Enron, Tyco and even good ol' Martha Stewart Living, where executives fake reports and fluff up results to line their pockets, with no view of the impending crash that will come when they are found out... i love business, i love to sell, to work, to trade, to create... but when i hear about the dishonest practices, i feel like my friends who want to string up big business... so many of you seem happy that the US if fighting in Iraq, and so i would likle your views on these corporate crimes as well...

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Objectivists feel towards them and react to them as they do to any other crime: indignation.

Unlike you, who feel like you want to "string up" big business in general when you see cases like the Enron scandal, Objectivist don't want to "string up" everyone just because some man shot and killed another.

It is totally non sequitur that if coroporation X commits a crime, all corporation commit crimes. The the mistake (whether honest or dishonest) that people make with respect to business is that they presume its immorality precisely because it is a business; i.e., is it a profit-seeking enterprise.

I don't think you would want to "string up" everyone if one person commited a crime. Why do you feel so when it comes to big business?

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Martha Stewart is someone I admired because she created an empire borne of her own ingenuity.

As I posted elsewhere in this forum, I strongly believe the government was out to get Ms. Stewart.

Martha Stewart = Hank Rearden.

Regarding Kenneth Lay, the evidence is claear that he contributed mightily to Enron's collapse with his mismanagement, his bilking his investors of billions, and his pathetically incompetent leadership- he's just like James Taggert! Yet Ken Lay remains free.

So mush for Justice under John Ashcroft, the Welsey Mouch of today.

You can count on the Bush administration to trash CEO's, continuing a sorry legacy of incompetent leadership regarding the economy and such issues.

Unless of course, Like Ken Lay, they are Republican

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The scandals that we have seen occuring in the financial industry did not materialize overnight. Many have been brewing for years but people simply ignored the signs. The conflicts of interested between companies and accounting firms, companies and analysts, ratings firms, etc.... have existed for quite some time.

The reason the scandals came to light was a result of the change in trend of social mood which drives collective human social behavior. When social mood waxes positive or is peaking, so is the stock market (which is a quantitative barometer with which to measure mood) and people are less interested in looking for deficiencies in the system that could pose a risk to one's finances.

Many people blame the ENRON scandal for their financial losses. What the company did with regards to their accounting was indeed wrong, but what people fail to realize is that the share price of the company had already plummeted prior to the scandal coming to light. (The entire market was in a downtrend at the time). The breaking of the news actually coincided with a temporary market low that reflected the extreme negative sentiment.

What is interesting about social mood is that it is patterned based on something called the Wave Principle which is in turn based on natural laws of growth based on the Golden Ratio (1.618) and Fibonacci number sequences. This patterning lends to the possibility of successful prediction of the direction of social mood and its various manifestations in all aspects of collective behavior such as economics, politics, fashion, music, art, sports, sex, and conflict (war).

The most important thing I learned from this was the fact that the stock market is the best predictor of the future of the economy. Economists have always been unsuccessful in forecasting significant changes in trend because they have the entire relationship between finance and economics backwards. One proof of this is the fact that EVERY single recession/depression was PRECEDED by or coincided with a stock market peak then decline.

Collective social behavior is driven by a herding impulse that operates within all social animals (in the pre-rational portion of the brain - limbic system). This part of the brain controls our emotions. Unfortunately, our emotions often override the rational functioning of the neo-cortex without our being aware and cause us to act or behave in accordance with the rest of the herd. This is a survival mechanism that is useful in many aspects of life, but in the area of finance it actually very harmful to our well-being.

When one becomes aware of how this herding impulse operates one can actually consciously repress it and act/behave/live outside of its influence (but only so long as one exercises one's rational faculties and conscious awareness).

For anyone interested in learning more, visit www.socionomics.org or read Robert Prechter's book "The Wave Principle of Human Social Behavior..."

His website is www.elliottwave.com

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The reason the scandals came to light was a result of the change in trend of social mood which drives collective human social behavior.  When social mood waxes positive or is peaking, so is the stock market (which is a quantitative barometer with which to measure mood)

[...]

What is interesting about social mood is that it is patterned based on something called the Wave Principle which is in turn based on natural laws of growth based on the Golden Ratio (1.618) and Fibonacci number sequences.  This patterning lends to the possibility of successful prediction of the direction of social mood and its various manifestations in all aspects of collective behavior such as economics, politics, fashion, music, art, sports, sex, and conflict (war).

Wow!

And all this time I thought that stock prices were an estimate of the prospect for future earnings and that "economics, politics, fashion, music, art, sports, sex, and conflict (war)" were the result of ideas.

In fact, I still do, so I'm not likely to throw out philosophy and replace it with mathematics.

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Ahh, so many great answers...

i find that altho when i write i sometimes do oversimplify things, i don't feel that we should string up all big businesses... totally the opposite... i am a big supporter of business... i have owned my own, and worked in friends businesses... and i never really gave an opinion other than i love to trade!

but its funny that someone else had the same thought about martha stewart that i did... she worked hard for her empire and now the gov is making an example of her... or worse, just plain punishing her for being successful, which happens all to often...

i enjoy all the posts here and am excited to continue reading...

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No need to throw out philosophy, and yes, all of the above are the result of ideas. (Not all ideas are rational though). The Wave Principle applies only to collective social behavior and does not challenge individual volition or free will.

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As previous posters mentioned, these "corporate scandal" cases have been prosecuted cynically. The right connections and the right payoffs have made huge difference. Guliani made his career scavenging off Milken and friends. Now, Spitzer wants to do the same. (Look at how much Sandy Weill has had to pay to be let off the hook. He gave up his job and Citigroup is paying out billions.)

There is no doubt that many people have been duped out of their money. There is also no doubt that some of these were stupid to give their money to these shysters in the first place, but that does not excuse the con-men.

I would love to hear an opinion from an objectivist with a deep understanding of law regarding whether these cases should be criminal or civil, and why.

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No need to throw out philosophy, and yes, all of the above are the result of ideas.  (Not all ideas are rational though).  The Wave Principle applies only to collective social behavior and does not challenge individual volition or free will.

What exactly is meant by "collective behavior," and seeing as how any "social behavior" is only the sum of the behavior of individuals, how does that not challenge individual volition?

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Good question. Social behavior comes in two types: aggregate action (the sum of individual actions) and collective action (group based action based on purposeful cooperation toward an end desired by the majority).

The theory of patterned social behavior does not challenge the existence of free will, but it does challenge each individual's ability to exercise it rationally. We can use our neo cortex to generate rational, conscious actions when we choose to do so, but there are times when we operate unconsciously, under the influence of the limbic system and the hard wired emotional responses which it generates.

The emotional responses are the ones that contribute to the herding impulses that generate the actions which make up the patterned social behavior. Even while exercising our higher rational faculties though, we are often influenced to varying degrees by our emotions. This can result in actions which we believe to be rationally based, but actually reflect the influence of the herding impulse on our decisionmaking process (a rationalization if you like).

To the extent that an individual operates on the conscious, rational level, and is aware of the operation and influence of the irrational herding impulses AND chooses to resist those impulses, the actions of that individual will not register or contribute to the overall pattern/trend of social mood.

I view the pattern of social mood to be an aspect of reality. Because of the nonrational basis of its existence and operation, according to Objectivism, one should view it as bad, (since the logical consequences of irrational behavior for society will be harmful for the individual and society).

I mention the theory in this forum because to Objectivists, reality is supposedly a friend. There is no better place I can think of where it would be more welcome, appreciated, understood and expanded upon than among a group of people who seek to live according to a philosophy based on reason. But don't take my word for it. A better synopsis of the wave principle than my inadequate description can be found here:manifesto

The more people who become aware of the existence, nature and operation of this phenomena, the better it is for society as a whole (not to mention the psychological benefits the individual can derive from the knowledge that will benefit his own survival and prosperity).

(I suggest this topic be moved to a thread of its own if it generates too much dicussion unrelated to the present topic).

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But don't take my word for it.  A better synopsis of the wave principle than my inadequate description can be found here:manifesto

I'm sorry to say that Prechter's Wave Principle is neither a principle nor a theory, but rather a conglomeration of socio-psychological babble couched in pseudo-scientific trappings.

I am somewhat embarrassed that Prechter's Elliotwave Theorist links to my articles on quantum theory. I wish they would remove it. The last contact I had from that group combined their Wave Principle with my quantum mechanics to alter the physical architecture of the human body.

In my opinion, these people are quacks.

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I view the pattern of social mood to be an aspect of reality.  Because of the nonrational basis of its existence and operation, according to Objectivism, one should view it as bad, (since the logical consequences of irrational behavior for society will be harmful for the individual and society).

I find what socionomer is saying to be interesting allthough I'm not sure that I would ascribe to it scientific status. But as a professional speculator I have certainly seen the "herd-like" behavior that socionomer refers to. I can't vouch for Elliot Wave Theory but I would say that there are definite repeating patterns of human behavior that are at work in the financial markets (and probably elsewhere). This is what makes Technical Analysis so useful. It is a way of predicting and identifying these common patterns of behavior.

I also believe that much of what Elliot Wave theorists incorporate into their forecasts is the inevitable economic consequences of intervention. The "boom-bust" cycle inherent in the socialized monetary system with its fiat curency and credit expansion is one such factor which will cause similar patterns of financial market activity again and again. Human economic behavior in such a context will inevitably repeat itself. The systemic problems and distortions of interventionism will see to it. As for speculations based on "limbic system" activity, well of this I can't say. I believe this would fall under the sciences of neurobiology and evolutionary biology. There may be something there and that something may contribute to "herd" behavior but I can't say.

On that subject, I have been recommended the book "Blank Slate" which supposedly deals with many of these evolutionary urges and impulses. Is this a good book and how strong are such "impulses" in light of human reasoning? I hesitate to give them too much credence lest we get into something too reminiscent of Timothy Leary's Eight Circuit imprinting theory.

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As previous posters mentioned, these "corporate scandal" cases have been prosecuted cynically. The right connections and the right payoffs have made huge difference. Guliani made his career scavenging off Milken and friends. Now, Spitzer wants to do the same. (Look at how much Sandy Weill has had to pay to be let off the hook. He gave up his job and Citigroup is paying out billions.)

There is no doubt that many people have been duped out of their money. There is also no doubt that some of these were stupid to give their money to these shysters in the first place, but that does not excuse the con-men.

I would love to hear an opinion from an objectivist with a deep understanding of law regarding whether these cases should be criminal or civil, and why.

Eliott Spitzer has no right to Richard Grasso's salary.

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Eliott Spitzer has no right to Richard Grasso's salary.

True but Grasso is no John Gault. He actually resembles Orren Boyle more than anyone else. He has been, in one sense, on the payroll of the Specialist firms of the NYSE for years. Understand that the NYSE is not a free market entity. Its euphemistically called an 'SRO' or a "Self Governing Organization." Right, self governing with the SEC and the NASD breathing down its back. Grasso has fought to maintain the NYSE's monopoly status as the premier exchange for years. He has done everything in his power to limit or curtail the rise of the ECNs (Ilsand, Instanet, Archepelico, etc). He has acted as the political pull pedler for the Specialist firms of the NYSE. The specialist firms date back to the openining of the exchanges in the late 1700s and in my opinion they are an antiquainted way of making markets in securities. In a free market, NASDAQ and the whole movement of non-physical, electronic exchanges would have overrun the NYSE a long time ago. This hasn't happened because of the political power these old money Wall Street firms hold which is symbolized and represented by Grasso.

I know that Objectivists have been defending Grasso on the philosophical grounds that a man has the right to the product of his labor and that's a valid argument in principle. However, Grasso does not represent Laissez Faire. As I said, it would not be a stretch to think of him as an Orren Boyle type businessman. I wish it were different but that's the history. If you want to read more details of Grasso's pull peddling and the monopoly characteristics of Specialist Firms read the archives at Don Luskin's blog site. I reffered to Luskin in the thread on Greenspan and he's just as accurate in his description of Grasso. Luskin is one of the most rational minds you will encounter in the world of finance.

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True but Grasso is no John Gault. He actually resembles Orren Boyle more than anyone else. He has been, in one sense, on the payroll of the Specialist firms of the NYSE for years. Understand that the NYSE is not a free market entity.

You obviously you don't know how the exchanges work. The NYSE is a business. Grasso was the CEO. He was paid to make the owners money. He made them billions. Your argument is he didn't sacrifice his business to the collective of weak competitors.

Give ONE example how he is like Orren Boyle.

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You obviously you don't know how the exchanges work. The NYSE is a business. Grasso was the CEO. He was paid to make the owners money. He made them billions. Your argument is he didn't sacrifice his business to the collective of weak competitors.

Give ONE example how he is like Orren Boyle.

I am an equity trader for a major trading firm. I know how exchanges work. My argument is that he is not primarily a market oritented businessman but a political pull pedler. Incidently, this is an attitude that is shared with many knowledgable traders on Wall Street for legitimate reasons.

I referrenced Don Luskin in my post. Here is a link to a November entry on his web site. In my post, I said that many O'ists defend Grasso on principles of free market compensation but that in actuality these don't apply strictly to the NYSE or to Grasso. It is not an error of principle but one of application.

http://www.capmag.com/article.asp?ID=3207

Grasso has a history of using political pressure to limit the competition to the NYSE from electronic exchanges. Luskin had first hand knowledge of this as he was a head of a leading ECN.

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I am an equity trader for a major trading firm.

Luskin had first hand knowledge of this as he was a head of a leading ECN.

This information, and your posts, make you and Luskin resemble Orren Boyle.

ECN's want to "produce Rearden Metal" after the NYSE creates it.

Again you imply the NYSE is equal to "the commons" of the middle ages. It is a business.

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This information, and your posts, make you and Luskin resemble Orren Boyle.

ECN's want to "produce Rearden Metal" after the NYSE creates it.

Again you imply the NYSE is equal to "the commons" of the middle ages. It is a business.

You haven't a clue and you're being beligerent just to be beligerent. Think what you will. It means nothing to me.

Regards

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You haven't a clue and you're being beligerent just to be beligerent. Think what you will. It means nothing to me.

Regards

LOL

You didn't even know the NYSE is a private institution. IT IS a SRO under government regulation, not "euphemistically known as."

How does Grasso "actually resemble Orren Boyle more than anyone else?"

How is "the NYSE is not a free market entity?"

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LOL

You didn't even know the NYSE is a private institution. IT IS a SRO under government regulation, not "euphemistically known as."

How does Grasso "actually resemble Orren Boyle more than anyone else?"

How is "the NYSE is not a free market entity?"

If you read all my posts collectively, it is clear that I am arguing for Laissez Faire and not for any type of "commons." You are yet another example of a pompous loudmouth quoting Ayn Rand. I understand now Nietche's saying "forgive a philosopher for the first generation of his followers."

If you had simply said: "I see that you are defending capitalism and yet claiming that Grasso is an example of a political businessman and that the NYSE is quasi-governmental. This runs counter to my understanding of things. Could you explain further. Perhaps you are right in principle and wrong in application in which case you need to modify your opinion or perhaps I am ignorant of certain details that could better allow me to judge this issue," you would have been behaving as a curteous, inquisitive and decent person and we could have had an exchange. However, being the "know-it-all" (actually know-nothing) loudmouth that you are, your first words had to be insults; ie "you are an Orren Boyle" and "you have a medieval worldview" and the rest. So I'll respond to you the way you deserve.

Grow up.

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You are yet another example of a pompous loudmouth quoting Ayn Rand. I understand now Nietche's saying "forgive a philosopher for the first generation of his followers."

If you had simply said: "I see that you are defending capitalism and yet claiming that Grasso is an example of a political businessman and that the NYSE is quasi-governmental. This runs counter to my understanding of things. Could you explain further. Perhaps you are right in principle and wrong in application in which case you need to modify your opinion or perhaps I am ignorant of certain details that could better allow me to judge this issue," you would have been behaving as a curteous, inquisitive and decent person and we could have had an exchange. However, being the "know-it-all" (actually know-nothing) loudmouth that you are, your first words had to be insults; ie "you are an Orren Boyle"

I didn't know that people who quote Ayn Rand are "pompous loudmouths" you seem to have set the bar kind of low. But are you calling yourself a loudmouth-know nothing, because the first words you use for Grasso was he "actually resembles Orren Boyle more then anyone else."(I think that counts as an insult)

You didn't understand Nietche's statement until now?

Your example of what I should have said is kind of mental. Why would I say, "...Grasso is an example of a political businessman...NYSE is a quasi-governmental." These are YOUR arguments, and there wrong!

But,

How does Grasso "actually resembles Orren Boyle more then anyone else?"

How is "the NYSE is not a free market entity?"

I can't really have an "exchange" with someone who does not know the industry.

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WGD and argive99,

I have a strange feeling that you two did not hit it off too well. :D

Since you both seem to make sense in parts of each of your posts, maybe this is a good time to call a truce on this subject and perhaps start afresh on a different subject another time. Just a suggestion, meant to be helpful.

(Of course, there is always the danger of having the two of them gang up on me for interfering in their fight. But, what the heck, I have broad shoulders. ;) )

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Well, perhaps you have broad shoulders, but it would certainly help were you to develop a sense of humor! :rolleyes:

When I was a kid we were very poor. We were so poor that we lived in a neighborhood bypassed by the the Good Humor truck. I have felt deprived ever since. :angry:

p.s. I wonder how many people here even know what the Good Humor truck was? I suspect that most were not born until after the demise of Good Humor. See http://www.icecreamusa.com/goodhumor/know.asp

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