On Sat, 14 Mar 2009 13:40:54 -0700, "Wayne C. Gramlich"
wrote:

As recent events have shown, most such "investments" have proven
to be highly speculative financial manipulations rather than any
reinvestment in the core businesses, frequently based more on
short-term tax avoidance/evasion than any real "value added"
potential.

There is a real qualitative difference between investing in
derivatives and individual stocks. Buying into derivatives
is not real investing, whereas I would claim that buying
individual stocks is.
---------
The point here is not an investment in individual stocks, but
what the corporate management of that stock does with the
corporations' money, raised either from stock sales or "profits,"
[or even spodulick creation].

As for the tax evasion see
http://www.guardian.co.uk/business/2...-tax-avoidance
Note that this is *ONE* international bank over *ONE* year, and
that the US banks and financial firms seem to be as deeply
involved as anyone else.

The available evidence also indicates wide use of "transfer
pricing" to conceil/shield "real" profits from US taxes by
nominally American corporations such as GM.


FWIW - Individual tax evasion also seems to be rampant. UBS by
itself has admitted to abetting up to 20,000 Americans in tax
evasion, and there are many other international banks/branches in
other tax havens such as Liechtenstein, Aruba, and Macau.
http://www.nytimes.com/2008/06/20/business/20tax.html

In too many cases, a stock purchase was a direct derivative play,
e.g. AIG, as most of the spectacular "profits" that were driving
the stock prices higher were derived from CDS derivatives and
other high risk/high leverage activities such as the lower
tranches of mortgage backed CDOs purchase with "carry trade"
borrowed money.

The corporations that engaged in this activity chose to ignore
the catastrophe that occurred to the S&Ls that borrowed short at
low interest and lent long at higher interest, when the short
term interest rates suddenly climbed, and their depositers left
in droves for the money market funds [among other opportunities
offering higher returns].


Unka' George [George McDuffee]
-------------------------------------------
He that will not apply new remedies,
must expect new evils:
for Time is the greatest innovator: and
if Time, of course, alter things to the worse,
and wisdom and counsel shall not alter them to the better,
what shall be the end?

Francis Bacon (1561-1626), English philosopher, essayist, statesman.
Essays, "Of Innovations" (1597-1625).