From: "Miss L. Toe" 
Newsgroups: uk.finance
Subject: Re: What Is The Point Of Investing In The Future If There Is No Future To Invest In?
Date: Sun, 10 Sep 2006 17:58:16 +0100


"Earth Blog"  wrote in message
news:9t-dnWsr69a_mJnYnZ2dnUVZ8tKdnZ2d@pipex.net...
> Hi Miss Toe
>
> I think I know where you are coming from now, and 98% seems to be a
measure
> of your ideological objection to my ideas, rather than a quantitative
> figure, which is not borne out by your response.
>

The 98% was more a reaction to your 'facts' I didnt really get as far as
your ideas for example one I spotted later one:

"Over time, all countries will have to converge towards a similar standard
of
living. This will not happen whilst rich countries have an unequal share of
the Earth's resources"

If you havent noticed it is actually (currently) the poor countries that
have most of the Earths resources

But just for interest I have commented on some of your comments.

> It's good to have a healthy debate, so I will attempt to answer your
issues,
> as this will help me to understand better the impact of my own ideas.
>
>
> "Miss L. Toe"  wrote in message
> news:45035983$0$97243$892e7fe2@authen.yellow.readfreenews.net...
> >
> > "Earth Blog"  wrote in message
> > news:xoCdnWL95ohmMJ3YRVnygA@pipex.net...
> >> I am fortunate enough to have a pension that will give me something to
> > live
> >> on in old age, if I live that long. Like hundreds of millions of
people,
> >> I
> >> also have a bank account which keeps my money safe
> >
> > hopefully - few banks are guaranteed (absolutely)
> >
> >> and pays a little
> >> interest,
> >
> > Define little
> >
> A couple of %.
>

Where are you /
I get 5% minimum on deposit.



> >> and some insurance which will pay out if something unfortunate
> >> happens to me.
> >
> > Most insurance is a waste of money.
> >
> It is if the premiums are too high, but then it is just another business
> built around the market economy, whereas it could be something far more
> attuned to reality - fairness and modest payments rather than promising
huge
> payouts for specific conditions.
>

The payments are generally in proportion to the premiums.

> >> If I have enough money then, like many people, I might even
> >> decide to invest it in some other savings fund to get a bit of extra
> >> interest.
> >>
> >
> > The fact that you make no mention of capital growth shows you know
little
> > of
> > what you are talking about.
> >
> Sorry? That is the whole premise of my argument. I purposefully avoided
the
> "C" word because Capitalism is a more than just an economic system.
Capital
> growth has to come from somewhere - and that is what I base my objections
> on.
>

Yes, capital growth comes from something getting bigger, normally at the
expense of something else getting smaller, usually the newer better things
get bigger and the older less efficient things dissappear.

Do you think the world would be a better place now if Motor cars had never
been invented and we all had horses ?

I have been told that there were predictions of London being buried in 20
foot of horse manure by the year 1960 if something wasnt done about the
pollution !

> >> Most of this money is invested in stock (equity) markets and bond
> >> markets.
> >> According to the Office of National Statistics, pensions, insurance and
> >> savings accounts for 64% of all UK stock market investment by UK
> > investors.

I forgot to ask what the other 36% was ?

> >> This pattern being repeated around the world
> >
> > Which pattern ?
> > and how is it repeated in India and China two of the major growing
markets
> > ?
> >
> The growth in bulk, popular investments  in both the local and foreign
money
> markets. Yes this is most definitely being repeated in India and China
> (where, admittedly, there is far more centralisation, but foreign
investment
> is growing massively in both directions)
>

You say that as if foreign investment is a bad thing ?
Surely me spending money in a poor foreign country and providing jobs over
there is a good thing (I am not claiming that is my sole motivation).

> >> effectively cancels out foreign
> >> investment,
> >> meaning that a very few, commonly used services dominate global
> >> finance. If it were not for pensions, savings and insurance then the
vast
> >> majority of companies would have to be either privately, or
> >> co-operatively
> >> owned.
> >>
> >
> > I dont see that being a problem - for the lucky private owners.
> > That was the situation a few decades ago.
> > and this 'great share owning mdemocracy' that we are rapidly moving
> > towards
> > is merely a form of cooperative ownership (of the greater economy).
> >
> Do you mean that a few decades ago we didn't have insurance, pensions and
> other investments (such as endowment mortgages)? Certainly there was far
> more private ownership years ago, but that was in a far smaller market.

What I meant was that in the 1940's & 50's most ordinary people didnt have
shares, endownment mortgages and few had pensions and those that did were
not structured in the way they are now.

> Private investors are now being swamped by corporate (i.e. the ones I
> mention) investments, and the resulting growth is very evident. We don't
> want to go back to a situation where a few large private investors
> controlled large parts of the economy (although again, companies were also
> often owned by employees - something that is very rare nowadays); this can
> only be beneficial to the economy if everyone is a philanthropist; but in
> both types of model, growth is still the overriding factor - no growth =
no
> investment.
>

I would say no change = no need for investment.
One can still invest in companies that have little room for growth, they
tend to be stable, and pay reasonable dividends - just look at some of the
privatised utilities.

> >> As the world economy has moved on from being just a safe place to put
> > money,
> >
> > When was it ever safe ?
> >
> Compared to putting your savings under a mattress, yes.
>

Are you saying it is less safe than it was before ?
With government schemes protecting bank deposits, and compensation for
misselling of endownments etc.

> >> the primary factor has been the need to grow.
> >
> > The need of what to grow ?
> > Each individual company ?
> > My savings ?
> >
> The entire capital base and everything that is dependent on it.
>

Personally I think that things like GDP should be measured more on a per
capita basis, and yes we would all like to be richer and have easier lives -
Is that a problem ?

> >> Between 1990 and 2006, the Dow
> >> Jones Industrial Average, a measure of the average value of key US
> >> stocks,
> >> grew from 2,800 to 11,300, an increase of over 400%.
> >
> > Does that include reinvested dividends ?
> > How much of that growth is due to Mergers ?
> >
> I purposefully went far enough either side to avoid the absurd growth
> between 1998 and 2001. In 2000 the Dow Jones hit 11,600 and then plunged
to
> below 8,000 in 2002 - which you will no doubt be aware of. Mergers result
in
> another example of unjustifiable value; company values rarely maintain
> pre-merger growth following a merger. Reinvested dividends are surely just
> the same as buying more shares with profit - is this real value, though?
>
> >> If this is a reflection
> >> of the appetite of the market for growth,
> >
> > I dont see how it is a reflection of appetite
> >
> It is if that is what the market demands. I find it absurd that a system
can
> exist that now only sees  a growth in growth (a second differential!) as
> good news. Simple growth and (heaven help us!) stability, are not
> acceptable. This is a ravenous appetite!
>

Who do you see as not being happy with simple growth and stability ?

> >> then that is a truly ravenous
> >> appetite!  If the value of investments does not grow according to
> >> customer
> >> demand then they will cease to be viable;
> >
> > Stock prices go down as well as up, and sometimes companies go bust what
> > is
> > the point you are trying to make ?
> >
> Yes, but the industrial average continues to go up despite this. This is
the
> value of the market.
>
> >> insurance and pension companies
> >> will have no basis on which to pay out money,
> >
> > I think you forgot about gilts and premiums.
> >
> No, I discuss bonds later on. Gilts and premiums are special types of
> bonds - which I am sure you already know.
>

I was talking about the Insurance premiums, that you pay to the insurance
company, most claim payments, most years are funded purely by premiums.

> >> and banks and fund managers
> >> will stop paying interest on savings.
> >
> > that is more linked to borrowers than markets
> >
> Borrowers are just investors - your statement does not refute my argument.
>

Savers are investors, not borrowers (unless they are borrowing to invest)

> >> In the end people will stop investing
> >> in any form of market. If growth does not happen then the market
economy
> >> simply ceases to exist.
> >>
> >
> > People do tend to slow down on investing after a crash or downturn.
> > (which is usually the time they should start to invest)
> >
> And so the macro-cycle starts again, just higher up in the longer cycle.
>

The long cycle of growing prosperity - do you have a problem with that.

> >> The problem is that growth has to come from somewhere, and it can
either
> >> come from some artificially created value, such as property prices,
which
> >> could collapse at any time, or some resource, such as oil, coal,
> >> cropland,
> >> rock or metal, that is continually being used at an increasing rate. In
> >> short, if companies do not accelerate their use of resources then the
> > global
> >> economy will not be able to carry on as it is. The economy is hell-bent
> >> on
> >> consuming the Earth's finite resources in order to survive.
> >>
> >
> > That is more to do with the growing population than growing economies.
> > Recycling will become more profitable as resource prices rise.
> >
> I address population in detail in another of my articles
> (http://earth-blog.bravejournal.com/entry/17204) - you might find it
> interesting.
>

I shall bookmark it for a more boring day.

> Recycling : http://earth-blog.bravejournal.com/entry/15780
>
> I have thought about this, and recycling has to be a virtually enclosed
> system with only truly sustainable inputs, including energy.
>

The world is an enclosed system but with truely sustainable input of energy
from the sun.

> >> But do we have to have an economy that works like that?
> >>
> >
> > We could try communism, or fascism ?
> >
> They are political systems. There is a dangerous assumption that anything
> that suggests co-operative living is creeping towards communism; that is
> just fear of a politcal outcome, which does not need to happen.
>

Most thinkers do not see the ideals of cooperative living as bad, just as
unworkable, unfair, and counter productive.

They do however often work very well in small groups - Such as most family
groups.

> >> There are two ways to look at this : either we try and make the
existing
> >> system sustainable enough so that the future of the planet is assured,
or
> > we
> >> change to a system that can assure the future of the planet.
> >>
> >>
> >> Making The Market Economy Sustainable
> >>
> >
> > Lets sort out part 1 of your sayings before we move on to part 2.
> >
> >
> >
>
>
>