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Facebook Could Spawn Thousands of Milionaires

samzenpus posted more than 2 years ago | from the show-me-the-money dept.

Businesses 434

Hugh Pickens writes "Retuers reports that the world's No. 1 online social network is preparing for a blockbuster initial public offering that could create thousands of millionaires as Facebook employees past and present begin hatching plans on how to spend their anticipated new wealth. 'There's been discussions of sort of bucket list ideas that people are putting together of things they always wanted to do and now we'll be able to do it,' says one former employee who expects his shares to be worth $50 million and is planning to book a trip to space with Virgin Galactic that would cost $200,000 or more. 'It's been a childhood dream.' Another group of Facebook workers has begun laying the groundwork for its own jungle expedition to excavate a relatively untouched site of Mayan ruins in Mexico that sounds like Raiders of the Lost Ark. But for many of Facebook's staffers, the IPO will provide the means to pay off school loans and buy a house or new car and many homeowners and real-estate agents are eagerly anticipating a surge of new buyers that could push prime real estate to new heights. 'If a Facebook guy buys a house and wants to remodel it, maybe the contractor will buy another car,' says Buff Giurlani. 'Maybe the realtor will put a car in. There's a trickle-down effect.'"

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434 comments

Yeah right. (5, Insightful)

Alex Belits (437) | more than 2 years ago | (#38335284)

This is exactly what everyone needs, a bunch of people believing they are going to be rich soon.

Re:Yeah right. (5, Insightful)

Dunbal (464142) | more than 2 years ago | (#38335484)

It's the only way you can sell tech IPO's nowadays.

No bubble here. (5, Informative)

Colin Smith (2679) | more than 2 years ago | (#38335586)

Noo. Up up and away. Yes the company is worth 100 billion, more. Just step right up and get your share certificates, hot from the press.

Nooo bubbles here. Social 1.0 isn't a fad or a bubble at all. Bet your grandchildren on it.

P. T. Barnum would be proud.

Note: Facebook is valued at a P/E of ~125. 12 is about average.

Re:No bubble here. (2, Interesting)

Anonymous Coward | more than 2 years ago | (#38335852)

"valued at" â "worth"

Semantics whine yes, but as you pointed out, the company is extremely over valued. Certainly not one that would be the target of someone like the "Cash McCall" character James Garner once played. This is not to say the stock price won't rise, after all the people who are inflating this bubble believe things like "good government" is possible and look how much those are inflating.

Re:No bubble here. (5, Informative)

MalleusEBHC (597600) | more than 2 years ago | (#38335998)

Note: Facebook is valued at a P/E of ~125. 12 is about average.

That's the average for an established company. IPOs and other companies with strong growth potentials often have much higher P/E ratios. For example, Google's P/E was well over 100 when they went public, and now it is down to 21 as they are a much more mature company. That said, distinguishing between companies with strong growth potential and irrational exuberance is extremely difficult. I think Facebook falls in the latter camp, although certainly not with enough confidence to put my money where my mouth is.

Re:Yeah right. (5, Insightful)

lightknight (213164) | more than 2 years ago | (#38335530)

Nonsense. This article only serves as a warning for everyone to prepare 'new' prices for when it actually does IPO. Read the article...these people speak of trickle-down economics, but they're really salivating at the prospect of luring an idiot into their store with waaaay too much money and apparently very little common sense. Long-lost relatives and forgotten friends will come running with their hats in their hands, doing what they can to get some of that money.

A fool and his money, soon parted. And you've got the cream of the crop of thieves reporting in here...let's see...real-estate agents...car salesmen....home contractors....all we're missing are some dead-end charities and a handful of political operatives, and that money will be gone.

Fun on two levels: 1.) there's only one IPO, not a dozen of them in quick succession (don't expect the good times to last) 2.) I still question what Facebook's worth will be in 3 years.

Re:Yeah right. (5, Funny)

Alex Belits (437) | more than 2 years ago | (#38335582)

Sarcasm is truly lost on anything related to stock market, or US economy in general.

Trickle down? (5, Insightful)

hedwards (940851) | more than 2 years ago | (#38335292)

As opposed to the spending that would have been done had the money not been looted from the workers to begin with. If we're serious about getting out of the recession, perhaps we ought to do something radical like beef up worker protections and protections for small businesses.

As for FB, my bet is still that it goes the way of MySpace before too long.

Re:Trickle down? (5, Funny)

Anonymous Coward | more than 2 years ago | (#38335364)

As for FB, my bet is still that it goes the way of MySpace before too long.

Especially when the staff is off playing Raiders of the Lost Ark in the Yucatan.

Re:Trickle down? (1)

Anonymous Coward | more than 2 years ago | (#38335674)

As for FB, my bet is still that it goes the way of MySpace before too long.

Mod parent up. It's about time for the next big fad...all we have to do is figure out what it is.

Re:Trickle down? (-1)

Anonymous Coward | more than 2 years ago | (#38335814)

Mobile Gaming!

What money? (4, Informative)

unassimilatible (225662) | more than 2 years ago | (#38335454)

The money will come from an IPO, not "stolen" from any workers (my understanding is that FB actually pays their workers and does not use slave labor). Investors - many if not most of them will likely be these poor little "workers" you speak of and their pension funds - will buy the stock on IPO day.

There are ways to make money apart from someone else handing you a paycheck.

Re:What money? (1, Troll)

Alex Belits (437) | more than 2 years ago | (#38335718)

Where do you think, those money come from? They are created by Federal Reserve for the purpose of being given to "investors" (in the form of margin loans on other stocks, plus whatever is scraped off them by intermediate financial companies), thus being injected into economy with no product backing them. This causes inflation, and unless everyone else's salary is immediately changed to compensate, money indeed end up being stolen from everyone in the long term.

Re:What money? (-1, Flamebait)

heinousjay (683506) | more than 2 years ago | (#38335772)

Were you born this retarded or did you work at it?

Re:What money? (-1, Troll)

iserlohn (49556) | more than 2 years ago | (#38335922)

So it's fashionable now to call people that are actually well-grounded in economics retarded. Stay classy, troll.

Re:What money? (-1, Offtopic)

heinousjay (683506) | more than 2 years ago | (#38335994)

It's always been fashionable to brand someone a troll when they don't blindly accept populist Slashdot tripe.

Re:What money? (2)

aix tom (902140) | more than 2 years ago | (#38335742)

Well. What should an "IPO" be about anyway?

The original goal of the stock market would be to get *investors* to give their money that the company can *invest* in some future technology/whatever, so that the investors then get a share of that when the company makes money of that technology/whatever.

So, basically, Facebooks business plan is to take the investors money and go blow it away on toys? Yeah, that will be really great for the future value of their stock.

Re:Trickle down? (1)

avgjoe62 (558860) | more than 2 years ago | (#38335658)

"looted from the workers" - in what way? The workers made an investment in time and effort and now they will reap the rewards for their patience. In what way were they "looted"?

Re:Trickle down? (4, Informative)

bev_tech_rob (313485) | more than 2 years ago | (#38335790)

I think the OP was thinking about Zynga......where you give up your options or face termination....was an article about that recently...

Re:Trickle down? (3, Insightful)

iamhassi (659463) | more than 2 years ago | (#38336004)

I really hope those Zynga employees quit. If someone came to me and said "give us your millions in stock or lose your $60,000 a year job" I'd laugh in their face. Who would be dumb enough to give up the stock? If they did give up the stock Zynga should have fired them anyway for being dumb and giving up the stock, obviously the employee had very poor decision making skills.

Re:Trickle down? (0)

Anonymous Coward | more than 2 years ago | (#38335980)

The managers of 401k fund xyz will by these shares, face book is ok but where is the business model? Its on its way down and its an ipo, and presumably the creators are top 5 of the top 10 wealthiest people in the planet, maybe have already sold their positions. It is a good medium for advertising but even with deals look at group on.

Re:Trickle down? (4, Interesting)

poena.dare (306891) | more than 2 years ago | (#38335832)

"As for FB, my bet is still that it goes the way of MySpace before too long."

I'm hoping for something more mature, but the internet has this way of recycling ideas...

"There was a kind of ghostly teenage DNA at work in the Sprawl,
something that carried the coded precepts of various short-lived
sub cults and replicated them at odd intervals."

Thousands of millionares? (-1)

Anonymous Coward | more than 2 years ago | (#38335300)

So maybe the 1% will become the 1.1%?

Re:Thousands of millionares? (3, Informative)

Alex Belits (437) | more than 2 years ago | (#38335494)

So maybe the 1% will become the 1.1%?

0.1% of US population is 300,000 people. Even if those were "only" millionaries (that are actually about 5% of US population), that would require 300 billion dollars, or almost the whole Apple market cap (Google wouldn't suffice).

Re:Thousands of millionares? (1)

bev_tech_rob (313485) | more than 2 years ago | (#38335810)

Ok...maybe 1.001 % then...

Thousands of millionares? (5, Funny)

mikkaboy (930496) | more than 2 years ago | (#38335326)

So maybe the 1% will become the 1.1%?

No, that is not how it works (5, Insightful)

SmallFurryCreature (593017) | more than 2 years ago | (#38335384)

Instead, IF this were to even happen, and I thought trickle down economics died when Reagan's body finally followed his brain, then what would REALLY happen is that the 1% become 0.9%.

Average income, ever heard of it? Well, average income is the total of all income divivded by the number of people with an income. The more people have a high income, the more people need to make a low income to compensate.

If you got 10 people and they average an income of 1000 then the total is 10.000. But if one of them makes 10.000, then the average is still a 1000 as long as the others make zero.

Now, do a fun lookup. Research the average wage in the US and look up how much say a Bill Gates make. Then realize how many people are begging on the street so Bill Gate can be so rich.

That is how the whole 1% vs 99% works. And more people becoming millionaires doesn't do anything but make far more people poor.

Re:No, that is not how it works (-1, Flamebait)

tgd (2822) | more than 2 years ago | (#38335472)

The hypocracy being, the protesters sitting in the public parks, parks paid for with taxpayer money, sucking down taxpayer dollars in security and later to clean up the mess are all largely in the 1% world-wide, and are sitting there in their tents and sleeping bags made in near-slave-labor, blogging about their trials with their iPhones, made with near slave labor, wearing clothes made with near slave labor.

They're not complaining about the rich hoarding wealth, they're just complaining about people doing it better than themselves.

Re:No, that is not how it works (4, Informative)

FatLittleMonkey (1341387) | more than 2 years ago | (#38335840)

The hypocracy being, the protesters sitting in the public parks, parks paid for with taxpayer money

Zuccotti Park is privately owned. That's why it was chosen, it wasn't subject to NYC's public park curfew laws.

Re:No, that is not how it works (4, Insightful)

iserlohn (49556) | more than 2 years ago | (#38335938)

It's hypocritical that you know what the problem is but you're bitching about the people that are actually raising awareness of the problem.

Re:No, that is not how it works (0)

Anonymous Coward | more than 2 years ago | (#38335520)

Right. Because the entire species is all as rich as we were 10,000 years ago. Sigh.

Re:No, that is not how it works (0)

Anonymous Coward | more than 2 years ago | (#38335538)

It's not "Begging on the so Bill Gates can be so rich". It's begging on the street *while* Bill Gates is so rich, and there is an abject lesson there. You make less begging than you do by being CEO and founder of a critical piece of corporate technology, also how many people do beggars employ vs. how many people are employed by Bill Gates's enterprises.

Re:No, that is not how it works (1)

pentalive (449155) | more than 2 years ago | (#38335566)

Except it is not a zero sum game. The average income itself is not set in stone. It can rise. If 10 people are making 1000 each. and one gets a raise, none of the others are forced to take a pay cut. If 10 people are making 1000 each and one gets fired, the rest don't get an automatic raise. If 10 people are making 1000 each and a new one gets hired (now 11 people) the are no pay cuts for the original workers.

Re:No, that is not how it works (1)

joocemann (1273720) | more than 2 years ago | (#38335660)

You don't know about pie, clearly.

Re:No, that is not how it works (4, Insightful)

Alex Belits (437) | more than 2 years ago | (#38335664)

Average income does not rise for a very, very long time -- there is slow and somewhat uneven inflation, but same job's salary buys same things, so it's just inflation, and therefore US economy is a zero-sum game.

It also can be seen by the importance of advertising in modern US economy -- when products are already known to the consumers, spending on advertising is the closest thing a company can do to biting a chunk out of a competitor.

Re:No, that is not how it works (1)

Alex Belits (437) | more than 2 years ago | (#38335986)

Correction: average income for most of the population. Crazy things happening on top, stay on top, and don't even go far enough to affect domestic production -- it's import, IP, defense and other bullshit.

Before someone says "not fixed pie" (2)

sethstorm (512897) | more than 2 years ago | (#38335580)

That is how the whole 1% vs 99% works. And more people becoming millionaires doesn't do anything but make far more people poor.

When opportunity is largely taken away by virtue of things like offshoring and the general contempt of regular, nonbusiness-owning people through things like contracted labor, you are correct.

The damage is done through their influence, not their wealth though. Any perceived expansion of the pie is negated by the influence that converts a dynamic pie into a near-fixed pie.

Re:No, that is not how it works (2, Insightful)

russotto (537200) | more than 2 years ago | (#38335736)

Research the average wage in the US and look up how much say a Bill Gates make. Then realize how many people are begging on the street so Bill Gate can be so rich.

Nobody is begging on the street so Bill Gates can be so rich. It's not zero-sum.

Re:Thousands of millionares? (0)

Anonymous Coward | more than 2 years ago | (#38335410)

More likely the 1.00000012%

And once the facebookers blow their fortunes on space travel and the rest, it'll be back down to the 1% again.

Re:Thousands of millionares? (0)

Anonymous Coward | more than 2 years ago | (#38335746)

"space travel"? How is going up on a sub-orbital unpowered trajectory in a tiny, flimsy tin can anything even remotely resembling "space travel"?

Re:Thousands of millionares? (0)

larry bagina (561269) | more than 2 years ago | (#38335612)

No, you see the top 1% don't pay their fair share. Or something like that. Ignore the 47% that pay no income tax. So these thousands of new millionaires will push out some of the top 1% into the bottom 99% and despite no change in income or taxes paid, the ex-1% will suddenly start paying their fair share.

Re:Thousands of millionares? (1)

scamper_22 (1073470) | more than 2 years ago | (#38335724)

welcome to the innovation economy :)

Bull (5, Informative)

Spad (470073) | more than 2 years ago | (#38335346)

That's not a "trickle-down effect", it's just economics. If *I* buy house and want to remodel it, then I might get someone to do it, who will - shock, horror - be paid for it and they might then spend that money on something. That's how our economy works.

The idea that because these people will have lots of (potential) money in the form of Facebook shares means that they're going to spark some kind of economic boom is ludicrous; sure, some of them might go on spending sprees, others will probably invest it, others will keep all their shares in the hope the prices will go higher, but on average it won't make any significant difference to the economy as a whole.

Re:Bull (1)

justforgetme (1814588) | more than 2 years ago | (#38335416)

If *I* buy house and want to remodel it, then I might get someone to do it, who will - shock, horror - be paid for it and they might then spend that money on something.

You suggest that people do things for money ?!??!?!?!?!?

Re:Bull (5, Insightful)

Dunbal (464142) | more than 2 years ago | (#38335528)

No, the way the economy works is you can't afford a house, so a bank put you in debt and gave the money to a developer. So when you want to remodel, you take out an additional loan or renegotiate your current loan and pay cash to a contractor who is maxxed out on his credit cards. He takes your money and gives it back to the bank to pay down his debt, and so the slavery continues. And here you were thinking you were going to break out of your servitude by remodeling because you were fooled by greed into thinking that house prices will go up forever and there will be eternal demand for homes - especially taking into account the inverted population pyramid.

Actually it will (1)

Colin Smith (2679) | more than 2 years ago | (#38335634)

Most stocks are bought on credit.
Credit is borrowed into existence and then spent into the economy.

=> More money(and debt) will be around after the IPO.

Having said that.

The FED has pumped 2+ trillion in and the Treasury was borrowing into existence 50 billion a week during the QEs and effectively giving it to stock and bond traders (did you get your free money?), so 50 or 100 billion really isn't what it used to be. I wouldn't get very excited about it.

Re:Bull (2)

wanzeo (1800058) | more than 2 years ago | (#38335636)

The idea that because these people will have lots of (potential) money in the form of Facebook shares means that they're going to spark some kind of economic boom is ludicrous

Yes. I think a better idea is to ask where all this "new" money is coming from. Ultimately, it comes from average people, most of whom have no idea that their money is being used to buy Facebook stock. But the contractor whose bank is buying Facebook stock is not going to benefit at all from rich people playing in the rainforest or joyriding into space.

This is the reality of our economy, all of the wealth at the top comes from the bottom, but not all of the wealth at the top trickles down to the bottom.

Re:Bull (1)

trout007 (975317) | more than 2 years ago | (#38335784)

You have to follow the money. The shares will only be worth what someone is willing to pay for them. With the easy money policy we have I'm sure big wall at guys are going to take that free money and buy shares. But where does the real wealth come from? Since the money was created from nothing it just adds to the money supply which devalues everyone else's dollars. So basically with the help of the Federal Reserve these people are getting rich off of the everyone holding dollars. Isnt crony capitalism great!

The smart ones... (5, Insightful)

damn_registrars (1103043) | more than 2 years ago | (#38335350)

... will sell their stocks ASAP. Social networking is the next bubble and those who hold on to their stock as speculators will end up taking a bath. I would recommend the first ones who get their stock sell it within a month or less and then figure out what they want to do for a real job once the bubble bursts.

Re:The smart ones... (4, Insightful)

Trepidity (597) | more than 2 years ago | (#38335418)

Typically employees can't sell their shares until at least six months post-IPO. Which, yes, can put you in a very bad position if you start spending "your" money right after the IPO in anticipation of the future wealth, and then the stock tanks and you're now in debt.

Re:The smart ones... (4, Interesting)

damn_registrars (1103043) | more than 2 years ago | (#38335524)

can put you in a very bad position if you start spending "your" money right after the IPO in anticipation of the future wealth, and then the stock tanks and you're now in debt.

That is an excellent point. We don't know how financially knowledgeable most of the employees who will receive stocks are. They may well be taking advice from fools and end up believing themselves filthy rich before they ever see any actual money from their stock.

Even worse would be if employees invest in it for their retirement accounts. Back when I worked at CompUSA (back when it was American-owned and publicly traded), I knew someone who invested heavily in company stock for his retirement. Thankfully I was not that person, although I was tempted. The company folded before he reached retirement, as I recall - I just don't know if he got anything back from the buyout.

Re:The smart ones... (2)

CtownNighrider (1443513) | more than 2 years ago | (#38335428)

Wouldn't all of them selling their stock make the price plummet?

Re:The smart ones... (4, Interesting)

damn_registrars (1103043) | more than 2 years ago | (#38335476)

Wouldn't all of them selling their stock make the price plummet?

Possibly. That depends on how much of the original stocks are distributed to the employees versus how much is sold to raise money, and how much is sold in the IPO. The total percent owned by employees could potentially be a small portion of the total volume.

If, for some reason, the employees actually held most of the total sock volume, then yes if they sold it off immediately that would be bad for the price.

Though frankly I'd be astonished if it was worth anything at all by 2016.

Re:The smart ones... (2)

Alex Belits (437) | more than 2 years ago | (#38335764)

More important question is, wouldn't the fact that Facebook is not all that valuable make the price plummet?

Re:The smart ones... (1)

TheRaven64 (641858) | more than 2 years ago | (#38335972)

A company doesn't have to be valuable for a share to be valuable, you just have to be able to persuade someone that the company will become valuable in the future.

Re:The smart ones... (4, Interesting)

TheRaven64 (641858) | more than 2 years ago | (#38335960)

Depends on how they do it. The clever ones bought the Goldman Sachs fund that was backed by a privately sold share in Facebook a while ago. After GS hyped the fund sufficiently, they quietly started dumping them and palming them off on ordinary investors. Some of those may be able to dump their stock at the IPO, others will hang onto them too long. The smart investors already made their 100+% ROI in a couple of months effectively risk free and are now moving on to the next bubble, while keeping this one hyped for just long enough that the plebs don't realise that it's already burst.

Re:The smart ones... (0)

houghi (78078) | more than 2 years ago | (#38335444)

It would be fun if ALL decide to first quit their job and then sell their stock.
It would be fun for me. No more facebook anymore as well as no millionaires.

Re:The smart ones... (0)

Anonymous Coward | more than 2 years ago | (#38335536)

Yeah, because if everyone quit Facebook would just be left to rot and no one would give a damn...
 
Another dumb fucking Slashtard trying to look witty. Fail.

Re:The smart ones... (5, Insightful)

somersault (912633) | more than 2 years ago | (#38335550)

Social networking itself is not the bubble. Facebook might die out, but it needs a real competitor first. Saying social netsorking will die out is like saying word processing applications will die out. Sure, they may turn into digital scribes with us just speaking what we want to write or something, but the basic function they provide is something that lots of people find useful, and will continue to find useful. Even Slashdot itself is a kind of social network, all web forums are. People like to share news and ideas.

A month? (4, Insightful)

Colin Smith (2679) | more than 2 years ago | (#38335830)

Really ? I think you have maybe a couple of hours.

Note, there will almost certainly be a hold clause on the stock for normal employees. The ordinary employees will have to hold the shares for a specfic minimum period. This allows the management to dump their shares at the peak price, before the bulk of the supply of shares kicks in.

Groupon dropped from 26 to 16 inside a week. They're still making a loss but there's some muppet out there buying them.

Trickle Down Effect? (0)

rogueippacket (1977626) | more than 2 years ago | (#38335352)

You mean investment, don't you? That thing the United States forgot all about amidst slashing budgets to hand out bailouts?

Sell Sell Sell (0)

Anonymous Coward | more than 2 years ago | (#38335430)

Cash in the initial boom then run like hell, before investor realize they've bought yet another fiction...

Re:Sell Sell Sell (1)

poormanjoe (889634) | more than 2 years ago | (#38335890)

Tulip mania!

Trickle down doesnt mean you deify the wealthy. (4, Insightful)

sethstorm (512897) | more than 2 years ago | (#38335448)

That doesnt mean you treat the people on top like deities while treating regular US citizens with contempt.

RE (0)

Anonymous Coward | more than 2 years ago | (#38335452)

hmm "revenue of $1.6 billion in the first half of 2011" so say 4 billion annual revenue and valued at over 100 billion... Think they are over-valued already? Ya...

Trickle down (4, Interesting)

roman_mir (125474) | more than 2 years ago | (#38335458)

The only real 'trickle down' is in production, not in consumption. People who invest their savings into businesses create opportunity for new products, new services, new jobs and new investments for others. That's the only real trickle down and what is called 'trickle down' in modern society is no such thing. 'Trickle down' based on spending is very limited, very narrow and is sporadic (so somebody spends a few hundred thousand dollars today, he is not going to spend the same amount tomorrow).

Besides, any spending that takes place disperses the investment capital and makes it less likely to be used as an investment. The real trickle down is working very well, but it's working in China, not in US or Europe. It's working where people invest and produce.

As a side note any taxes also destroy investment capital and prevent economy from growing for the same reason - this stuff is not used for meaningful production, only to subsidize consumption one way or another.

--

PS. I said it on 16th of September that holding deposits in banks has become dangerous, because banks will just steal the deposits. [slashdot.org]

On October 25, 2011 MF Global reported a $191.6 million quarterly loss as a result of trading on European government bonds. [wikipedia.org] On October 31, 2011 MF Global filed for Chapter 11 bankruptcy. Depositors lost money, not 'investors' or traders - depositors. The bankers are now stealing deposits as I said they would, so stay clear of banks.

Re:Trickle down (0)

Anonymous Coward | more than 2 years ago | (#38335640)

The bankers are now stealing deposits as I said they would, so stay clear of banks.

which is exactly what banks will do if there are no effective regulations to stop them from doing it. so how will your lord and savior ron paul prevent this from happening by removing all regulations?

Re:Trickle down (0)

roman_mir (125474) | more than 2 years ago | (#38335752)

You are a shill but you can't change the reality. The reality is that before all of the regulations and the Fed existence and before FDIC the banks never failed institutionally, as in - they never had a government giving them free money and preventing any potential competition. Banks are now your government but that only happens when government meddles with business, but it's inevitable. Once government starts 'regulating business', it means it's there to steal power and sell it and the business that is closest to the trough (the Fed) becomes the government. Since it becomes a part of government that is not beholden to the voters, it can steal without any impunity. The correct solution is to get rid of all regulations and protections and stop destroying the money.

But you know that, the reason why you sniff out every one of my comments is because you are an AC shill.

Re:Trickle down (0)

Anonymous Coward | more than 2 years ago | (#38335846)

The reality is that before all of the regulations and the Fed existence and before FDIC the banks never failed

wow, you really are an idiot. your lord ron paul has sucked out whatever you previously had resembling a brain and replaced it with the notion that the free market, left with no controls whatsoever, is somehow incapable of failure or deceit?

The correct solution is to get rid of all regulations

that is pure insanity. we've been consistently getting rid of regulations as it is, which lead us to the mess we are in.

you sniff out every one of my comments

that is a bald-faced lie. there are plenty of comments you have written that nobody has replied to. just because i reply as AC, doesn't mean that every AC reply to your comments is from me. of course, your lord and savior ron paul probably told you otherwise, and you believe everything he says without question.

Re:Trickle down (4, Insightful)

Anonymous Coward | more than 2 years ago | (#38335870)

Before the Fed (which was instigated by the business community who wanted the regulation), the economy was extremely volatile and risky (which business hated). We didn't have recessions and expansions - we had booms and busts where people were filthy rich one month and then begging for food the next.

Once government starts 'regulating business', it means it's there to steal power and sell it and the business that is closest to the trough (the Fed) becomes the government. Since it becomes a part of government that is not beholden to the voters, it can steal without any impunity.

That's overstating it a bit. Before the Fed you still had very powerful people controlling the economy - see any Bio of JP Morgan.The Fed was also created to remove power from people like that.

I like Ron Paul. He brings up some very interesting points and I agree the Fed system needs to be tweeked. But when I read what Ron Paul and the things you have written, there's an obvious lack of knowledge of pre-Fed economic history.

If you haven't read this yet, read Lords of Finance [amazon.com] . It's about the Post WWI World Economic collapse and has a wonderful explanation of why we can't be on the gold standard, btw.

I would honestly like to see your take on it. - you're a sharp person who just needs to take a break from the Ron Paul Kool-Aid.

Re:Trickle down (3, Informative)

TheRaven64 (641858) | more than 2 years ago | (#38336002)

The reality is that before all of the regulations and the Fed existence and before FDIC the banks never failed institutionally, as in - they never had a government giving them free money and preventing any potential competition

No, they went bust individually and people who happened to have accounts with those banks suddenly found that they were broke. Loans owed to the bank would be transferred to whoever bought them from the bankruptcy, but people in credit at the bank would have their savings wiped out. Customers had no way of evaluating how safe banks were, because the banks were not required (by evil regulations) to disclose how much capital they had nor what form it took.

Re:Trickle down (0)

Anonymous Coward | more than 2 years ago | (#38335802)

Yet most investments do nothing of the sort. The role of capital in capitalism has become grossly perverted as top-heavy corporations take on even more-top heavy brass with payouts for malpractice that dwarf most union's pensions for 40 years of labor.

Your capital buys hammers. Hammers alone cannot build a house. Labor builds a house. Labor with hammers build a house twice as fast, with twice as many houses being built. But if twice as many houses are built, won't they be worth half as much? Management buys spoons for the labor force then rewards themselves for "preserving value". R&D is cut at corporation after corporation, ensuring that their labor will never go forth with a better spoon.

--

You're right on the banks. Take a look at Bank of America (a *real* bank, unlike MF Global which was an investment broker) dumping all their toxic waste derivatives into the FDIC-insured depository branch where they can exchange them for deposited cash and if anything goes wrong, well, mommy gubment will save them and the CEO gets a huge payout to convince him to provide "stable leadership" in these "trying times" as he finds the next iceberg to ram the company into.

Re:Trickle down (1)

Ly4 (2353328) | more than 2 years ago | (#38335898)

The only real 'trickle down' is in production, not in consumption.

Yeah - that's while all the .com companies are doing so well, they produced something. The fact that there were not any customers was just a side note (the preceding lines are sarcasm, in case that isn't obvious).

That's an insanely simplistic model you're spewing there. Reality is more of a balancing act, with investment meeting demand. At the moment, there is no shortage of investment capital, but high unemployment and other factors have really put a crimp on the demand side of the equation.

Henry Ford understood this balance - that's why he raised his worker's salaries. These days, we get a lot of pressure to keep capital gains and other taxes on the wealthy low, mostly from folks who do not understand this balance.

Re:Trickle down (1, Flamebait)

roman_mir (125474) | more than 2 years ago | (#38335992)

Yeah - that's while all the .com companies are doing so well, they produced something.

- no, the .com bubble was spawned by the federal reserve, the culprit of the time was Greenspan and as he was flooding the market with cheap money and lowering interest rates, the same principles applied at the time, the investment funds didn't know where to find any meaningful return that would not be negative (and the real interest rate has been negative for a very long time now, certainly more than 2 decades).

The cheap money gave people the wrong incentives, the .com bubble was created the same way that the agriculture equities bubble before the great depression, the housing bubble of two-thousand's and the final currency/bond bubble that's being inflated now. It's all in the hands of the federal reserve and their ability to counterfeit currency. .com companies weren't producing anything much of value, buying pencils at $1 and selling for 50 cents on line and having a business model that basically said: we'll make it up in volume was disastrous then, as it is today, but the people were buying the .com bubble just as readily and weren't able to admit it was a bubble in the same way that the house mortgages were bought and nobody wanted to admit that was a bubble.

Same thing is happening with US bonds right now, and it's funny how people are thinking that sovereign debt of a nation that prints currency as defense against is non-existent economy, all because of faith in government's ability to do something...

Let's put it this way: if the currency is weakening now, you don't want to be in that currency. But you don't buy Treasuries in that currency, because those Treasuries are the exact same thing as that currency, as they pay in that currency.

The shortage of the investment capital is due to the money printing and negative return rates that are artificially created by the governments. The real interest rates today are insanely high, but that's what markets figure - if the amount of money that can be printed is infinite, then there is no reason why return rate on real investment shouldn't be set infinitely high as well.

That's why no business can get a loan and only governments are swimming in worthless cash, since they print it.

As to Henry Ford - the guy was working in a sound monetary system, no federal reserve and no income taxes.

I actually have a few things written about it as well. [slashdot.org]

Re:Trickle down (1)

Halo1 (136547) | more than 2 years ago | (#38335932)

As a side note any taxes also destroy investment capital and prevent economy from growing for the same reason - this stuff is not used for meaningful production, only to subsidize consumption one way or another.

I'd argue that various kinds of public infrastructure (depending on where you live, this can include parts of transportation, power, communications, education, health care) are quite fundamental to be able to have any production at all.

You can of course be of the opinion that leaving all of that up to the private market would be more efficient (based on what I've seen, I'd disagree with that), but saying that any taxes by definition only subsidize consumption is several bridges too far, as far as I'm concerned.

It's been spent already (1)

Xoebe (2529302) | more than 2 years ago | (#38335460)

The money will wind up being returned to banks in the form of interest and fees on consumer and business debt.

so a bunch of real estate wackos.. (1)

gl4ss (559668) | more than 2 years ago | (#38335468)

..are trying to hype up the market _now_, rather than when it actually comes.
here's a hint: a thousand millionaires takes a thousand millions+ of cash.

and they're also implying that they would be spending more than needed on their purchases - so that the real estate agent could pocket a big(too big) commission and that they would pay the contractors extra bonuses just because...

"happy days are just around the corner".

Score one for the engineers (0)

Anonymous Coward | more than 2 years ago | (#38335478)

I've held some resentment towards the finance community, which I've perceived as being rewarded with disproportionate wealth for providing services of limited actual value to the long-term health of our nation's economy. And I've struggled to justify engineers earning a relative pittance. Yet, hearing about these Facebook wanks getting rich feels like a hollow victory.

Re:Score one for the engineers (4, Informative)

Dunbal (464142) | more than 2 years ago | (#38335542)

Yet, hearing about these Facebook wanks getting rich feels like a hollow victory.

Don't worry, the banks and lawyers that are negotiating the IPO deal are getting far, far richer and up front, too. Feel cynical again?

Re:Score one for the engineers (1)

larry bagina (561269) | more than 2 years ago | (#38335690)

Don't worry, IPOs are handled by the investment bankers. The hedge funds and other monied interests getting in at the IPO price (and pre-IPO price in some cases). Too bad Google's dutch auction approach didn't catch on -- the company gets to keep more of the IPO money* and the wall street insiders don't have any advantage over anyone else.

* Consider VA Linux: the IPO price was $30/share but the actual opening price was $300/share, closing at $240/share. $30/share went to VA Linux, $270/share went to the bankers.

Facebook shareholders, google "stock dilution" (1)

Anonymous Coward | more than 2 years ago | (#38335496)

Bad stock dilution

In 2006, Phaser decides to engage in the worst of the three main ways that companies dilute their shareholders: It issues 100,000 stock options to its CEO. For the time being, Phaser has a "basic share count" of 100,000 shares actually outstanding. But because its CEO will eventually exercise his stock options (i.e., tell the company to issue 100,000 shares to him and then sell them on the open market), Phaser now has a hypothetical, or "diluted," share count of 200,000 shares.

That's bad news for Joe. While he will still own his 10,000 shares, his ownership stake will be diluted once the company issues that extra stock. What does that mean? Well, when Phaser's share count stood at 100,000, and it earned $100, Joe was entitled to 10% (10,000/100,000) worth of those profits, or $10.

But when Phaser issues those 100,000 extra shares, Joe's shares will not equal 10% but just 5% (10,000/200,000) of all shares outstanding. If Phaser earns $100 again in 2005, Joe's take from that haul is just $5. Poor Joe.

The CEO, on the other hand, gets 100,000/200,000 worth of the profits, or $50. Lucky CEO!

Thus, the primary reason Fools dislike stock dilution is that it often represents a transfer of wealth from outside shareholders -- you and me -- to insiders.

But Facebook are a very trustworthy company who wouldn't dream of employing such schemes - right?

http://www.fool.com/investing/high-growth/2006/04/28/foolish-fundamentals-stock-dilution.aspx

"Trickle down effect"... a myth and joke! (1)

Anonymous Coward | more than 2 years ago | (#38335498)

If there truly were a significant "trickle down effect", the gap between the super rich and poor wouldn't widen year after year. It's a myth and joke to keep poor souls shut up and accept blatant injustice in the wrong hope of getting rich too, one day.

Enough said.

"Trickle-down" is more like a "torrent down" (2)

sco08y (615665) | more than 2 years ago | (#38335512)

Virtually all of that money will go into the general economy. The only part that won't will be a relatively tiny portion that will be invested in precious metals, typically less than a percent. All the rest will:

* be invested in other companies, either directly through stocks or indirectly through the banking system
* be spent on consumer goods and services
* be spent on real estate and the upkeep of real estate
* be donated to charity
* be paid to the public sector as taxes
* be invested in the public sector as bonds

The notion that wealth "trickles" down is total bullshit. It's like a flat-earth theory of economics.

simple (0)

Anonymous Coward | more than 2 years ago | (#38335522)

stocks go up if people BUY. stocks go down if people SELL.
so if you buy facebook IPO you are putting your money into THEIR pockets ...

That's trickle-down-economics. (1)

roguegramma (982660) | more than 2 years ago | (#38335546)

It has been pointed out to me, so I'd like to point it out myself:

trickle-down-effect is being used to refer to the movement of technology, products, and behavior from wealthy people to less wealthy people.

trickle-down-economics or trickle-down-theory refers to the argument that by making wealthy people more wealthy, the income trickles down to the entire economy.

I would guess the latter is meant here.

Trickle-down effect is a lie. (1)

Anonymous Coward | more than 2 years ago | (#38335552)

Trickle-down effect is a lie. Because "a trickle" means exactly the very it: that only a fraction of the whole sum will reach the lower or lowest levels of society, thanks to well maid rain gutters made of closed circuits and networks of friendly business interests, prepared to capture the big down-pour before leaving only the mist for lower classes of a society. I will personally never forget the smirk on the face of GWB, when he and his cohorts Chenney & Co. announced their tax cuts with words: "This wealth will trickle down." And where are you now? In a bigger gutter than ever before. Foreclosures, menial jobs, general decay of a society's fabric, especially in certain areas of today's USA...

Tor Funding Smoke Screen By: Alan Taylor (-1)

Anonymous Coward | more than 2 years ago | (#38335608)

http://www.pgpboard.com/viewtopic.php?f=2&t=573 [pgpboard.com]

Just recently, there has been considerable interest concerning the origin of the Tor projects funding. Never really explored in depth, and dependent upon the information released by the Tor organization themselves; Tor's financial structure has always lacked clarity. PGPBOARD has always been of the opinion that examination an organizations tax returns provides a pretty good indication of income streams, and it was to this end we published Tor's 2008 and 2010 tax returns. The 2010 tax return and commentary can be found here: https://eta.securesslhost.net/~pgpboar/viewtopic.php?f=2&t=563&sid=bd36f28cb0b73dc1231f1d814c151ca2 [securesslhost.net] . The US Government was responsible for 86% of Tor's funding in 2008, and 81% in 2010. See also: http://www.boston.com/news/nation/washington/articles/2009/07/26/us_to_increase_funding_for_hackivists_aiding_iranians/ [boston.com]

Tor's management (see: https://eta.securesslhost.net/~pgpboar/viewtopic.php?f=2&t=418&p=590&hilit=lewman&sid=e5dd0ee5637dba1983d55e339e26880e#p590%20 [securesslhost.net] ) has been less than transparent in revealing just who funds Tor, and their individual contributions, whilst Tor's 2008 and 2010 tax returns are crystal clear in this respect. It's quite clear that Tor comprises the Harvard, MIT, Stanford, Google, EFF cryptorati, with crusty hacker Appelbaum thrown in to give these technocrat elites the necessary street cred amongst the hacker kids. It's the revolving door between NGOs, Corporate Universities, corporations and the USA government, with a dash of hacker underground to give the blandness a bit of a bite.

Andrew Lewman's presentation (attached) demonstrates the Tor projects total lack of transparency and misrepresentation in describing its funding base. Uncle Sam DOES own Tor, and NO organization can preach independence of thought and action when 81% of their funding is from just one source; namely the US Government.

eof
Alan Taylor

PGPBOARD Administrator
London,England

Attachments

Advancing Privacy And Security.pdf [pgpboard.com]
Andrew Lewman's Presentation
(1.55 MiB)

excellent! (0)

Anonymous Coward | more than 2 years ago | (#38335632)

can't wait to short that pipe dream valuation!

Totally non-plussed (0)

Anonymous Coward | more than 2 years ago | (#38335662)

Just wait till we realize that stock isn't worth CRAP and we have another bubble.

No, here's what will happen (0)

Anonymous Coward | more than 2 years ago | (#38335670)

If somebody has just begun to think that Bay Area real estate is affordable, a bunch of FB millionaires will come along and spoil it for them. They'll just reinforce housing inflation in a market that's already overpriced. Inflation is a regressive tax. That's just one of the many reasons why trickle-down doesn't work.

Reaganomics was dead. It was forgiveable to believe this as a young person from suburbia in the 80s. I didn't know any better. A lot of people didn't know any better. Here it is 30 years on, and it's demonstrably false that this will work. Enough already.

As for the FB millionaires, they earned it fair and square. I really don't have a problem with them. I do have a problem with policies like prop 13, which have simply diverted tax dollars to interest paymeents and trashed CA's school system in the process.

The Good. The Crazy. The Disgusting (5, Interesting)

sgt scrub (869860) | more than 2 years ago | (#38335684)

The good. the IPO will provide the means to pay off school loans and buy a house or new car.
It is good to get out of debt and solidify yourself.
The Crazy. one former employee who expects his shares to be worth $50 million and is planning to book a trip to space with Virgin Galactic that would cost $200,000 or more
It is crazy to become wealthy then chance it all on being shot into space.
The Disgusting. real-estate agents are eagerly anticipating a surge of new buyers that could push prime real estate to new heights
Agents that can't wait to pump up the prices on homes in anticipation for a very small number of potential clients.

Re:The Good. The Crazy. The Disgusting (1)

khipu (2511498) | more than 2 years ago | (#38335796)

"s shares to be worth $50 million and is planning to book a trip to space with Virgin Galactic that would cost $200,000 or more" It is crazy to become wealthy then chance it all on being shot into space.

$200k out of $5M is hardly "all", it's like 4%. Many people spend a larger fraction of their savings on a new iPhone.

4,143,077 Texans live in poverty. 1,655,085 of them are children. http://www.census.gov/ [census.gov]

You should look up some time what "in poverty" actually means.

Re:The Good. The Crazy. The Disgusting (0)

Anonymous Coward | more than 2 years ago | (#38335940)

I wonder if the "chance" the GP may have been referring to was the probability of coming back alive.

Hey I just wish (0, Troll)

Osgeld (1900440) | more than 2 years ago | (#38335694)

My degree wasnt worthless and I could find a job that puts me slightly above the national average poverty line so I can buy a crackerbox house to die in ... but you guys go right ahead and go fuck yourselves on your "useless ad information gathering" bubble which is just going to end up fucking our economy just a little bit more.

Meanwhile, the crooks are preparing, too (1)

petes_PoV (912422) | more than 2 years ago | (#38335762)

Not only are the prospective shareholders thinking of ways to spend their dosh, probably 10 times as many scammers are cooking up schemes to relieve them of it. Given that the scammers have way more experience of separating victims from their money than these doe-eyed (soon to be) millionaires have of holding on to it - I'd bet on the baddies.

It will interesting to see what happens to the street price of recreational chemicals (where-ever Facebookers live) after the storm of money hits.

Goldman Sachs (1)

dave562 (969951) | more than 2 years ago | (#38335912)

Goldman Sachs must be getting desperate to get this IPO off the ground if they are resorting to articles like this that promote supposed trickle down economics. They need to launch this IPO before the Euro completely craters and takes the rest of the world economy with it. Once the shit hits the fan, there will not be any money left over to piss away on a social networking site.

Facebook = complete & utter bullshit (0)

Anonymous Coward | more than 2 years ago | (#38335968)

Crap like this is EXACTLY why the US economy is in the toilet.

Things like Facebook produce NOTHING of value, and
people get paid for it anyway.

As for me, it will be a cold day in hell before I have anything to do with Facebook, because
it provides no value for me.

Potential stockholders, don't say I didn't warn you ...

Trickle down economics. (4, Informative)

FatLittleMonkey (1341387) | more than 2 years ago | (#38335970)

The reason why people are suspicious of trickle down economics is that when you're being trickled upon, the only thing you see above you is cunts and assholes.

Monetizing (1)

Anonymous Coward | more than 2 years ago | (#38335974)

The 10 billion figure values each user at $125. How are Facebook going to make that back? By selling more and more personal data. By linking into more and more networks so that Facebook continues to be more pervasive. I think it's quite clear that any company trying to increase it's own value so aggressively can not have the interest of their users at heart. I think it's quite terrifying the effect this could have on the internet.

More and more I see Facebook turning into the authentication protocol for the web. Want to post comments? We need access to your Facebook account to let you do so. Soon I'm sure you'll need access to even read websites. Why? Well, surely any website would want your Facebook data to get targeted advertising with that data. It's only a small barrier, once everyone else is involved, and Facebook making opt-in for that trivial.

In the days of the social web, I am very much starting to miss the anti-social web which made the internet great. Over time, I can't see this having any benefit to the world.

Lots of hate (1)

koan (80826) | more than 2 years ago | (#38336008)

Lots of hate for Facebook, not that it isn't deserved but it is amusing in that it makes me wonder how many here use it and why it is so popular when most of what I read suggest people dropped it and simply can't stand it.

I recently created a FB account to use as an easy log on to other sites, using a false name, a Photoshopped photo made up of various facial parts of celebrities and found that when I tried to log on to other sites using the FB account they all want to add an app that gets full access to my contacts (there are none) and a variety of other information.
Funny that just by having friends in Facebook you wind up getting raped sideways because they allow access to their contacts.

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