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Source: Yahoo


Real Economy Avoids Risk-Taking as Wall Street Embraces It:

“Has the intrepid American entrepreneur turned timid? Is the courageous, risk-embracing business pioneer becoming like the cowboy: a popular icon of a bygone time rather than a reflection of what America has become?

We might not be quite there. But there is a broad array of evidence, much of it hashed out in a long Wall Street Journal feature, that American workers and companies have grown more risk-averse in recent years.

Companies are less eager to expand payrolls to grow; the rate of small-business creation has ebbed; investment in startups is sluggish; workers are less likely to leave a job for a better opportunity; families aren’t as willing to move to a part of the country with more vibrant economic prospects. If these trends persist, it will restrain the pace of long-term economic growth.”

Category: Employment, Venture Capital, Video

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9 Responses to “Risk-Taking: Real Economy vs Wall Street”

  1. stonedwino says:

    No shit?! Yeah, we realized that being a high-flying trapeze artist with no real safety net does, is a very bad idea…one mistake and you could be done for good. Remember the Turtle and the Hare? We’ve become the Turtle…

  2. BottomMiddleClass says:

    Let’s go through the list…

    Companies are less eager to expand payrolls to grow – and they’re hoping/encouraging employees to quit so they can hire someone to do your job for less money.

    the rate of small-business creation has ebbed – the past few years have been BRUTAL and I’ve seen businesses place money-losing bids on projects. It’s better to lose a little bit of money and keep your business running than to have a bunch of idle employees. (Plus you can always try to go “over budget” later)

    investment in startups is sluggish – see above, companies are offering to do work for very cheap and they’re getting work from their employees for very cheap. There aren’t many sectors that have an easy entry point to start a new business.

    workers are less likely to leave a job for a better opportunity – or they’re stuck in an underwater mortgage? Moving across state for an extra 2 dollars an hour isn’t such a great idea if you’re going to lose 50,000 dollars on your home.

    families aren’t as willing to move to a part of the country with more vibrant economic prospects – see above. Compounded by the fact that areas with good economic prospects weren’t hit as hard by the housing drops, so the poor sap has to sell his home at a loss and then buy/rent another home at a high price? Yeah, better to stay in my current job.

  3. [...] Risk-Taking: Real Economy vs Wall Street [...]

  4. lefty gomez says:

    I’m a card carrying blue-stater but I’d be more likely to take the leap if:
    1. I could count on affordable health care or health insurance, and
    2. regulation, licensing, payroll taxes didn’t add 30% to my costs, in addition to a general sense of fear and bewilderment.

  5. willid3 says:

    maybe its wall street that has become timid? after all they dont invest like they used too. and we know that banks are still trying to recover, from self inflicted wounds, so they aren’t either,. and customers aren’t exactly beating down the doors of almost all businesses, but then since the vast majority of them are employees, and their falling (ok collapsing incomes and exploding work days) aren’t to interested in buying more than they have too

  6. Maybe we need to get the risk-takers off of Wall Street (where they’re a negative-sum monkey on the nation’s back), and get them out taking risks on Main Street (where they might actually generate positive real net returns for the nation)?

  7. RC says:

    In the real economy when one takes risk, it is involves more often than not significant amount of their own money. On wall street, its all other people’s money that you get to speculate on. The more you speculate the more you are rewarded. What as ass backwards situation ……
    Finance and Financial services as a component of total economy of the US should get down to its historic average.

  8. Biffah Bacon says:

    The goal is to unstick worker wages in the developed countries. This is done the same way you remove barnacles from a boat.

  9. victor says:

    Risk taking on Wall Street should be OK as long as losers are not bailed out on account of being too big to fail which is what happened in recent past. It is not clear what % of WS’ earnings come from the type of risk taking as discussed here. You have also the type of risk taking which is punished and rewarded, see JPM’s London whale loss and several hedgies who took the other side of the bet profits respectively. But a huge source of revenue for WS involves its approx. 30% take from the S&P 500 profits as estimated by Warren Buffett in a 1999 Fortune article. This value is extracted with little or no risk taking via a myriad of fees, loads, mark ups, spreads, etc. leaving the retail investor with a much reduced slice of the economy’s profits pie.