Makers and Takers

Makers and Takers

The Rise of Finance and the Fall of American Business

Book - 2016
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Is Wall Street bad for Main Street America?

In looking at the forces that brought our current administration to power one thing is clear: much of the population believes that our economic system is rigged to enrich the privileged elites at the expense of hard-working Americans. This is a belief held equally on both sides of political spectrum, and it seems only to be gaining momentum.

A key reason, says Financial Times columnist Rana Foroohar, is the fact that Wall Street is no longer supporting Main Street businesses that create the jobs for the middle and working class. She draws on in-depth reporting and interviews at the highest rungs of business and government to show how the "financialization of America"--the phenomenon by which finance and its way of thinking have come to dominate every corner of business--is threatening the American Dream.

Now updated with new material explaining how our corrupted financial sys#65533;tem propelled Donald Trump to power, Makers and Takers explores the confluence of forces that has led American businesses to favor balance-sheet engineering over the actual kind, greed over growth, and short-term profits over putting people to work. From the cozy relationship between Wall Street and Washington, to a tax code designed to benefit wealthy individuals and corporations, to forty years of bad policy decisions, she shows why so many Americans have lost trust in the sys#65533;tem, and why it matters urgently to us all.

Through colorful stories of both "Takers," those stifling job creation while lining their own pockets, and "Makers," businesses serving the real economy, Foroohar shows how we can reverse these trends for a better path forward.
Publisher: New York : Crown Business, [2016]
Edition: First edition.
Copyright Date: ♭2016
ISBN: 9780553447231
0553447238
Characteristics: xi, 388 pages

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r
roystreet
Jan 04, 2017

Former Novartis Pharma-Unit Head Joins Venture-Capital Firm
Novartis’s former pharmaceuticals head has joined a biotech-focused venture-capital firm, in what is becoming a well-trodden path for drug-industry bosses.

This headline from the Wall Street Journal should be all you need to know about the corrupt and incestuous relationship between the real world and the the world of finance.

r
roystreet
Jan 03, 2017

And yet, by increasing inequality and undermining economic growth over the last several decades, financialization has actually only made those questions [of who gets what in our society] more pressing. . . .

"The one percent in America right now is still a bit lower than the one percent in prerevolutionary France but is getting closer." -- Thomas Piketty.

"We've indulged [ourselves] in this fiction that we can build a vibrant economy by deregulating the financial sector, and cutting taxes, and putting off investments in things like infrastructure and education and our kids." -- Senator Warren.

r
roystreet
Jan 03, 2017

During my reporting for this book, one consultant who worked with the firm joked to me that Pfizer was really a "financial strategy in the form of a company," since it made most of its revenues acquiring other firms that actually knew how to create drugs, rather than investing in its own drug discovery. Another consultant said that Pfizer would be better off taking all the money it spent on R&D and burning it to heat its buildings in winter, given the general level of payoff from the firm's own research efforts.

r
roystreet
Jan 02, 2017

Bogle [founder of Vanguard]: "I remember one of the guys from some big [fund manager] firm said, 'We all know what you're trying to do, Jack. Why don't you just leave it to the markets? Leave it to Adam Smith's Invisible Hand[?]!'

"And I said, 'Don't you realize that we [mutual fund managers] ARE Adam Smith's Invisible Hand?'"

r
roystreet
Jan 02, 2017

"The staggering economies of scale that characterize money management have been largely arrogated by fund managers TO THEMSELVES, rather than shared with their fund shareholders," concludes Bogle [founder of Vanguard]. (My emphasis)

Or, as the great economist Paul Samuelson put it presciently in 1967 [! ! !], "I decided that there was only one place to make money in the mutual fund business -- as there is only one place for a temperate man to be in a saloon, behind the bar and not in front of the bar. And I invested in . . . [a] management company."

r
roystreet
Jan 01, 2017

If the markets are an ocean, private equity firms like Blackstone are the great white sharks that have perfected the use of debt, leverage, asset stripping, tax avoidance, and legal machinations to maximize profits for themselves at the expense of almost everyone else -- their investors, their limited partners, their portfolio companies and the workers in them, and certainly society at large.

r
roystreet
Jan 01, 2017

Yet private equity brings its own very significant risks to the housing market, as well as a business model that is the very epitome of financialization -- one where the only motive is profit for its own sake, not wealth creation in the broader economy. . . .a business model that is designed to extract as much wealth from every target company with as little capital or risk to themselves as possible.

r
roystreet
Jan 01, 2017

. . . the percentage of Americans who can call themselves homeowners is still declining from its peak in 2004, and many experts expect it to fall further as credit continues to be tight, young people struggle with higher-than-average levels of unemployment, and baby boomers begin moving into retirement housing.

Fixing this housing crisis, as Warren Buffett once told me, is a fundamental prerequisite for fixing our economy.

The national housing market is in recovery, but. . .it is incredibly bifurcated. . . .the top 10 percent richest markets, ranked by the aggregate value of owner-occupied homes, held 52 percent of housing wealth, equivalent to nearly $4.4 trillion. The bottom 40 percent, by contrast, held only 8 percent.

. . .one Fitch analyst said that "the growth is being propelled by INSTITUTIONAL MONEY" rather than the growing wealth of households. (my emphasis)

r
roystreet
Dec 31, 2016

The CFTC [Commodities Futures Trading Commission] has certainly done its best to make it harder for US financial institutions to hang their dirty laundry in the Caribbean.

r
roystreet
Dec 31, 2016

As if Wall Street's ability to buy as many grain or oil futures as it wants -- often with our retirement money -- and contribute to run-away inflation weren't enough, there's another problematic wrinkle that finance has brought to the commodities market: Today bankers can both trade commodities AND buy up the physical goods being traded. . . .

It. . . puts them in direct competition with the businesses that actually need such raw materials to make products. . . The financialialization of commodities markets means that AMERICAN BUSINESS NOW HAS TO COMPETE WITH ITS OWN BANKERS.

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k
kpelish
Jun 03, 2017

Comprehensive and well-written overview of how our financial system fails everyone--even the financiers who are short-termedly rakin' it in. Foroohar uses engaging case studies to analyze both bad and good practices. For example, the pervasive use of stock buybacks was considered illegal until 1982 (as market manipulation), & Goldman Sachs unwisely pissed off Coca-Cola by its manipulation of the aluminum supply. The mortgage meltdown, as always, is hard to read given taxpayers' money was used to bail out the very banks that profited--and still profit--from bad mortgages. Some readers may be put off by the book length. She winds up with an optimistic summary of what we, as citizens, can do.

2
21288004246712
Mar 08, 2017

detailed critique of a flawed US financial system

r
roystreet
Dec 23, 2016

Essential reading. Hands down, one of the ten most important books about economics for 2016.

If you're the type of reader who likes to dip into a book, rather than read it cover to cover, a good place to begin is with the story of Detroit, the biggest municipal bankruptcy in American history, and the high-profit pensions fight at the heart of it. (pp. 251-255)

z
zipread
Dec 01, 2016

Let's face it, this book isn't going to be as much fun to read as a Baldacci or a Cornwell. Iit is, none the less, something that should be read. In fact if Americans were to read this book en masse they'd be in the streets en masse.
Stranger than fiction, this is the story of how large-scale banking and the near-banks have acquired over three quarters of the nation's wealth. This wealth, generated by the efforts of the entire nation is being used, not to foster greater national prosperity but rather to enrich the pocket books of the favoured few. And so who's responsible for the economic melt-down of the Great Recession? Who's responsible the widening income chasm between the CEOs and the hired hand on the factory floor? Who's responsible for the decrease in spending on R&D? Why do average Americans carry a debt load that's greater than ever? Why have wages stagnated since the 1970s? Why are jobs being outsourced to wherever labour is cheapest?
According to Foroohar, the culprit behind all of these problems are the mega financial industries who are in business not to lend money to Main Street but rather to enrich Wall Street..These are the "institutions" that are "too large to fail" so when they do fail they can count on nervous governments to bail them out.
She calls it "the fanancialization of America"
A remarkable book. Read it and get angry.

n
naturalist
May 19, 2016

not necessarily related to this book, but here are some items of the author from Media Matters for America:
https://mediamatters.org/people/rana-foroohar

s
StarGladiator
May 08, 2016

[Update, regarding the mediamatters link above, to anyone who chooses to believe the stories from a CNN analyst, everytime any CNN reporter tried to report the news accurately these last ten years, they were summarily fired {just ask Amber Lyon and the last fellow they fired} - - being a CNN analyst - - you know those types who claimed MH370 went down near Australia - - is highly suspect. Also, Media Matters was founded by David Brock, former republicon who now supports the neocon, HRC.]
Originally, this book appeared interesting, but after perusing it, I feel the reader will be none the wiser. A soft-glove approach to predatory capitalism, where the author really never explains anything [she is correct on repeating one or two facts, but the book is 300 plus pages?] but is constantly insinuating her opinions as fact!
You will be none the wiser on CDSes, and how they were structured as the largest insurance swindle instrument in human history!
She mentions that Vanguard Group, Fidelity and BlackRock control substantial stock in American corporations, but did not mention that Vanguard Group, Fidelity, BlackRock and State Street are the majority shareholders in the majority of major corporations in North America and Europe!
Have to rate this book poor. . .
[For a fuller explanation of what the author should have explained, please see my comments under Sebastian Mallaby's book, More Money Than God {Mallaby being a CFR stooge, BTW}.]

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