Between 1993 until early 2006, American and international capital, hedge fund investors, and more importantly shareholders went on a wild ride of financial great return and even greater bust not seen since the heady days of the Gilded Age. The simple rules of investing in publically traded companies have always acquiesced around return on the invested sum. The principle of investor return has literally become the tail that wags the dog.
What should be the true role of the investor? In certain periods, should short-term return be decreased for the overall long-term growth (corporate or overall economy? With the economy showing no real job growth, however corporate balance sheets are flush with reserve capital and profits even in the midst of the nearly 3 years of recession followed by two years of economic stagnation, why haven’t corporations turned into job creation sectors? Some have blamed the intrinsic battlefield in Congress. Others have blamed the free markets lack of flexibility in the face of the changing state of the World economy.
The national debt has become a convenient scapegoat for those who are not fans of FIAT currency systems. Still, with an aging population, many of whom are being forced into a pool of the underemployed, the failure of tax revenues to match outgoing obligations can only increase if the economy remains stagnant. Moreover, the failure of investors to obligate boards to see long-term benefits against short-term balance sheet equalization has been puzzling.
The unique reality of seeking resources in start-up financing and operations in the age of economic stagnation is one of gaining capital in a period of fairly unrealistic expectations from investors. Is there truly a place for all of the unused capital funding to continue to on the sidelines? When and if as in the early 1980s will the financial powerhouses of capital finally show their hands?
References:
Bébéar, C. (2003, May 01). Killing capitalism?. Retrieved from http://www.economist.com/node/1756156
Fink, L. (2011, October 02). Learn about the gilded age. Retrieved from http://www.digitalhistory.uh.edu/modules/gilded_age/index.cfm
Investopedia. (2011, October 01).Fiat money. Retrieved from http://www.investopedia.com/terms/f/fiatmoney.asp
Medina, M. (2011, October 01). Panics, depressions, and economic crisis prior to 1930.. Retrieved from http://www.thehistorybox.com/ny_city/panics/panics_article1a.htm
Venable, R. (2011, October 01). The impact of government and policy making. Retrieved from http://www.rwbaird.com/bolimages/Media/Video/Keys/RoundTable_Government_V2.wmv
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