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> Two months before the collapse of Bear Stearns, the first investment bank claimed by The Great Recession, The New York Times ran a story entitled, "Can banks

> Two months before the collapse of Bear Stearns, the first investment bank claimed by The Great Recession, The New York Times ran a story entitled, "Can banks self-regulate?" Clearly, the answer was no. Yet, in the face of new regulations that followed, the surviving big banks have grown bigger and more powerful than before. A similar situation may play out with big tech companies. I turned skeptical when I read this plus the Upton Sinclair quote. Nothing about Amazon's marketplace or ad business or even fake reviews is even remotely close to the financial system pre-financial crisis. AAFG are not holding the bill for trillions in potential liabilities on highly leveraged positions in complex derivatives. They're operating a market that doesn't involve any credit whatsoever outside of payments. Seems like the author has something of an axe to grind rather than a rational assessment of the risk and problems. I don't think it's good that this system is the way it is, but caveat emptor seems like a perfectly fine solution. I've become more skeptical about what I buy on Amazon, and I imagine most other consumers have done the same. If Amazon wants more business from me again, they can improve the quality of offerings.

Mirioron 7y ago
>Two months before the collapse of Bear Stearns, the first investment bank claimed by The Great Recession, The New York Times ran a story entitled, "Can banks self-regulate?" Clearly, the answer was no. To nitpick on this quote further: recessions are the market correcting itself. A recession can mean that a bubble was growing in the market and it burst. In that sense, if banks are allowed to fail then they are self-regulating: the market decides which banks can survive and which can't. The downside is that due to how fractional reserve banking is set up and how the banks are interconnected that the failure of one can cause a cascade. In regards to tech companies, I wonder if they're not simply overvalued. If the value of tech companies gets cut in half then I can see it causing quite a few problems.
- JohnFen 7y ago
  > In regards to tech companies, I wonder if they're not simply overvalued. I believe, by and large, that they're not only overvalued, but often very greatly overvalued.
- Supermancho 7y ago
  > recessions are the market correcting itself. That's a reductive oversimplification. There is no proof that a semi-capitalist market "corrects itself" in all cases, nor that a recession is even an event that brings "the market" (for some arbitrary quality) into alignment with some other arbitrary baseline or expectation.
TheOtherHobbes 7y ago
How is an emptor supposed to caveat if the so-called review system is systemically dishonest? Caveat emptor doesn't work, because Amazon has no incentive to improve review or product quality. Bezos is rewarded whenever an item is sold. Most items won't be returned unless grossly faulty or misdescribed. Accurate reviews and more selective product filtering would decrease his earnings - a strong negative incentive, if you're someone like Bezos. With current legislation, the only thing that might improve the situation for buyers is aggressive competition. As a de facto monopoly, Amazon doesn't need to worry about that. Putting it crudely, e-commerce automates and amplifies scamming and dishonesty. There's limited accountability for sellers and virtually no accountability for the owner of the marketplace. In the non-virtual world there are trading standards and other consumer protection mechanisms. They're not infallible, but they do at least exist. The online equivalent would be some kind of blanket consumer-good-faith system which punished fake news, manipulated reviews, and substandard products. Good luck getting that written and passed as coherent legislation with adequate enforcement.
- SpicyLemonZest 7y ago
  Amazon isn't a de-facto monopoly by any reasonable definition. Most big box retailers have online shopping, and Walmart even offers the same delivery speeds in many areas.
  - jerf 7y ago
    One of the biggest long term risks for Amazon's retail business is that they don't really have a moat. They can beat people logistically, but eventually, other companies will catch up, and there's probably a diminishing returns effect on money poured into that. They have Amazon Prime, which was probably created to try to be a moat, but I think they've had more difficulty making that a moat over the long term than they may have initially hoped. Why would I pay for faster shipping if Wal-Mart pretty much offers it by default? Tacking on a lot of mediocre streaming services is a weird way to add value to that. (AWS has a lock-in moat. Once you're in, you will find it harder and harder to leave over time. True of all the clouds, but that plays in favor of the biggest which at the moment AWS is.) If you look, you can kinda see a lot of flailing on Amazon's part over the past several years trying to figure out how to build a moat around their retail in a lot of ways; Amazon Basics, various games around Prime, trying to convince people to buy retail through Alexa which is hard-coded to Amazon, of course, etc. Almost everything the retail side is doing amounts to that in the end.

Mirioron 7y ago

>Two months before the collapse of Bear Stearns, the first investment bank claimed by The Great Recession, The New York Times ran a story entitled, "Can banks self-regulate?" Clearly, the answer was no. To nitpick on this quote further: recessions are the market correcting itself. A recession can mean that a bubble was growing in the market and it burst. In that sense, if banks are allowed to fail then they are self-regulating: the market decides which banks can survive and which can't. The downside is that due to how fractional reserve banking is set up and how the banks are interconnected that the failure of one can cause a cascade. In regards to tech companies, I wonder if they're not simply overvalued. If the value of tech companies gets cut in half then I can see it causing quite a few problems.

JohnFen 7y ago
> In regards to tech companies, I wonder if they're not simply overvalued. I believe, by and large, that they're not only overvalued, but often very greatly overvalued.
Supermancho 7y ago
> recessions are the market correcting itself. That's a reductive oversimplification. There is no proof that a semi-capitalist market "corrects itself" in all cases, nor that a recession is even an event that brings "the market" (for some arbitrary quality) into alignment with some other arbitrary baseline or expectation.

TheOtherHobbes 7y ago

How is an emptor supposed to caveat if the so-called review system is systemically dishonest? Caveat emptor doesn't work, because Amazon has no incentive to improve review or product quality. Bezos is rewarded whenever an item is sold. Most items won't be returned unless grossly faulty or misdescribed. Accurate reviews and more selective product filtering would decrease his earnings - a strong negative incentive, if you're someone like Bezos. With current legislation, the only thing that might improve the situation for buyers is aggressive competition. As a de facto monopoly, Amazon doesn't need to worry about that. Putting it crudely, e-commerce automates and amplifies scamming and dishonesty. There's limited accountability for sellers and virtually no accountability for the owner of the marketplace. In the non-virtual world there are trading standards and other consumer protection mechanisms. They're not infallible, but they do at least exist. The online equivalent would be some kind of blanket consumer-good-faith system which punished fake news, manipulated reviews, and substandard products. Good luck getting that written and passed as coherent legislation with adequate enforcement.

SpicyLemonZest 7y ago
Amazon isn't a de-facto monopoly by any reasonable definition. Most big box retailers have online shopping, and Walmart even offers the same delivery speeds in many areas.
- jerf 7y ago
  One of the biggest long term risks for Amazon's retail business is that they don't really have a moat. They can beat people logistically, but eventually, other companies will catch up, and there's probably a diminishing returns effect on money poured into that. They have Amazon Prime, which was probably created to try to be a moat, but I think they've had more difficulty making that a moat over the long term than they may have initially hoped. Why would I pay for faster shipping if Wal-Mart pretty much offers it by default? Tacking on a lot of mediocre streaming services is a weird way to add value to that. (AWS has a lock-in moat. Once you're in, you will find it harder and harder to leave over time. True of all the clouds, but that plays in favor of the biggest which at the moment AWS is.) If you look, you can kinda see a lot of flailing on Amazon's part over the past several years trying to figure out how to build a moat around their retail in a lot of ways; Amazon Basics, various games around Prime, trying to convince people to buy retail through Alexa which is hard-coded to Amazon, of course, etc. Almost everything the retail side is doing amounts to that in the end.