The share prices of Facebook, Apple and Google have slumped. Apple’s is down almost 20 per cent in a few weeks, and the story for the other two isn’t much better.
Over the past few weeks, the so-called Faangs – Facebook, Amazon, Apple, Netflix and Google – have lost $1 trillion in value.
Before examining the situation on Wall Street, let’s step back and examine the process whereby world-beating companies go from rude health to fragility in short order; the process is so much more interesting than the event.
You may remember a time, not so long ago, when Nokia was one of the most valuable companies in the world. In 2007, the Finnish company was worth $150 billion. It was far ahead of most of the pack in the burgeoning mobile phone business and was regarded as a model company at chief executive conferences all over the world.
A few years years later, Nokia was flogged off for just $7 billion.
In 2006, the Canadian company RIM, maker of the revolutionary Blackberry device, was the darling of Toronto’s financial community, worth $70 billion at its peak. The device was so addictive among globe-trotting executives that it became known as the “Crackberry”.
In 2013 it was sold for less than $5 billion.
What happened?
Put simply, these world-beating companies were overtaken. This constant churn and relentless innovation whereby one company powers ahead only to be assailed by a more innovative competitor, is what the Austrian economist Joseph Schumpeter described as the “perennial gale of creative destruction”.
Creative destruction is the essence of capitalism but it is also the core of innovation in the arts, literature and music. In fact, anywhere that creativity is valued, creative destruction is the force that propels individuals to greater and greater feats of innovation.
This is why the eclipse of once great companies is not too dissimilar to the ebb and flow of great artists, directors, writers. When an artist is going through what is often termed a “purple patch”, he or she is being more creative than all the rest. Typically this lasts a while and then they are overtaken by someone more creative who comes up with something new, a new storyline, a new melody or a better insight that resonates – and off we go again.
Success is transitory
The great innovation cycle is buffeted by the perennial gale of creative destruction, where the creativity involved in one product destroys the last one.
In economics this means that the business cycle is constantly being revolutionised by companies coming and going. Success is transitory, and longevity depends on where the next attack comes from.
This explains why the top 10 companies in the Dow Jones Index are very different today from the top 10 companies 20 years ago. The capitalist world is in a constant state of innovative flux.
Going back to art, although not always appreciated, unremitting innovation in economics and commercial endeavour is similar to unremitting innovation in the arts. The creative act that is setting up a company is similar to the creative act that is writing a book, a play, a movie or any piece of art.
When a writer such as Sally Rooney pens a novel, it may engender envy in other novelists (although they might not say it publicly, unless drunk at an award ceremony) precisely because they think it might put their work in the shade. Such a prospect may incentivise and spur them on to greater imaginative feats.
The economy works in a similar fashion, with companies and individuals constantly tinkering around to improve products. Trying to stop this innovative process to preserve the status quo is a bit like telling a writer that her new work is too good and can’t be published because it will get other writers’ noses out of joint.
In the same way as creative artists and writers make the world immeasurably better for audiences and readers, creative commercial innovators can enrich people’s lives. In a world of creative destruction, monopolies must be temporary because a monopoly can last only if others don’t copy its approach. But they do.
Creative destruction
So for example, Ryanair came into the market and pushed down prices by pushing down costs relentlessly. For a while this drove Ryanair uniquely as it won market share from the incumbents. In time, competitors arrived into the market, copied Ryanair and started beating Ryanair at its own game.
The upshot has been a dramatic increase in air travel for millions of people, with all the attendant spin-offs for tourism. Thus, in the aggregate, millions of people have benefited from Ryanair’s initial competitive innovation. You can’t stop this process.
This brings me to the big tech firms. Wall Street bet that their dominant position was permanent, in direct contradiction to the law of creative destruction which contends that success is always and everywhere temporary. Share prices are falling now because Wall Street has woken up the inevitability of creative destruction, which implies that no commercial success is permanent.
Given what we know about the ceaseless convulsions that drive the capitalist system rendering competitive advantage transient, isn’t it amazing that Wall Street bets the house on the presumption that these companies will never falter?
In the past few years the wizards of finance have borrowed to gamble on the Faangs’ imperiousness, leading to massive overvaluation. This wager now seems to be unravelling.
The companies may react by bringing out better products, who knows, but betting against creative destruction – in literature or commerce – is a bit like betting against human nature itself. Any takers?
Could it not be an American economy that is over borrowed ?
Corporate buybacks when markets are on their highs (GE good example). Creative destruction right there.
U2s creative destruction phase was probably about 1982 – 1987 and they’ve been churning out utter shite (in terms of music) since then (for nigh on 30 years) yet they still fill stadiums all over the worlds with chumps who have more money than sense.
Creative destruction? Mankind has existed all this time without a need for the phrase. Perhaps there was an equivalent in Sumerian, etched into the bones of reindeer or daubed on the walls of caves but I doubt it. It seems to be just another modern cliché whose effects are more destructive than creative. Perhaps this is what has been happening to Ireland recently, as enthusiastic newbies in the Great Utopian Project to Remake Everything. I can see plenty of destruction, all right (it can bring tears to you eyes) but where is the creative bit? Smartphones? Big deal.
Creative destruction as in the corporations borrowing billions. Adding the debt to the balance sheet Using the money to buy back the company shares Therefore adding to demand and pushing the stock price higher Then executives exercise options received as bonuses and pay themselves (m)billions. This is the rocket boost to share prices Followed by the inevitable share price collapse as the small investor is taken to the cleaners with huge losses The insiders make off with the raided funds. The corporations are left with the debt In addition the PTB use government induced, central bank free money to buy… Read more »
Unless DMW opens his eyes to the true nature of the corruption in the economy all his commentary is invalid and pointless.
Mr. President Trump: I have outlined in a few words, a plan that if pursued, will immediately invigorate the United States of America, as each American does his very best to work and produce the wherewithal to become the owner of silver ounces, for his and his family’s wellbeing.
Mr. President Trump, Sir: Do you have it in you, to achieve such greatness as President, as will endure for centuries in the collective memory of the United States of America? Then –
MAKE AMERICA GREAT AGAIN WITH SILVER MONEY
Respectfully yours,
Hugo Salinas Price
http://plata.com.mx/enUS/More/364?idioma=2
“Massive amounts of covert money pumping up the stock markets” Catherine Austine-Fitts
Financial expert Catherine Austin Fitts says, “I don’t know why the government is shifting massive amounts of money out of the U.S. government and out of the U.S. economy and taking it dark.”
https://www.youtube.com/watch?v=4Rv27tbz-7M&feature=player_embedded_uturn
An educational hour spent here David is worth the time!!
“The cost of secrecy and tyranny is massive. The negative return and destruction of productivity of secret government operations is huge. The wealth creation of the people is being stifled”
Hello Dathi,
Another faux pas following up on the last one. A technical analysis of the s&p 500 shows the 20 ma moving south through the 200 day ma for the first time in ages. So here’s my two pence worth; We are at the end of the year for the hedge funds with the cost of capital rising from the fed increases. Money is being taken off the table and wind is leaving the bag unlike the situation with some economists I know. Cryptos are in free fall. Gold is up approx 15% since Jan 2016.
Yet another criminal fiddle of the PM trade. Anything to prevent real demand for real product. More paper promises that shuffle numbers back and forth . This is really creative destruction of the marketplace. Benefits to the bankers. Who else? Dear Friend of GATA and Gold: The TF Metal Report’s Craig Hemke, writing today at Sprott Money, does the math on the last year’s worth of the use of the “exchange for physicals” mechanism of settling gold futures contracts on the New York Commodities Exchange. Hemke calculates that nearly 2.4 million Comex gold contracts have been settled this way since… Read more »
Posted at http://www.lemetropolecafe.com Another description of the daily fraudulent operations of the CRIMEX er… COMEX or the CRIME SYNDICATE . The James Joyce Table Midas du Metropole Topic du Jour Follow Bill Murphy on Twitter Follow Midas on Twitter November 27 – Gold $1211.20 down $9 – Silver $14.06 down 12 cents Gold/Silver Open Interests PLUNGE “The government was created to protect the nation from outsiders. The Constitution was created to protect us from the government.” … Richard Russell GO GATA! The omnipresent lockdown of the gold/silver markets just goes on and on. Both rallied overnight with the gold price… Read more »
I think Google’s monopoly is still good and who knows another on the way (Waymo). The US interest rate rise has probably encouraged people lock in profits and move to bonds…
I reckon that all the negative news about FB has had major consequences, almost half of younger users have deleted the app from their phones, they’re destined to become the digital version of the yellow pages now. Most people understand the major issues associated with internet usage and social networks in particular. Just in case you haven’t seen this… https://youtu.be/3E7hkPZ-HTk YouTube have also made some monumental mistakes by censoring some major content producers all over the world. While shiteFlix has some good content you’d have to say the majority is… basically shite Up and coming phone makers like Xiaomi are… Read more »
The article is proof of the political aspect of how the news gets analysed in The ISIS Times. There is a grand theory (almost Fintanesque], with much explanation, and drama [ very Fintanesque]. And the entire argument is missing vital logical connections. Perhaps deliberate. The ISIS Times never takes on consumer confidence or investor confidence unless it has already been devastated, by existing news. There are no visible replacements eating into the “market” share of facebook. And Apple and Google compete with one another for the only verifiable revenue stream from Google (the Android OS). These are effective monopolies. The… Read more »
The competition for Netflix…..and Television is not gaining anything on Netflix.
Netflix is in the same competitive landscape as at the peak. The problem is not the competitive landscape – but the peak valuation. It was absurd.
The same applies with regard to Facebook.
Apple and Google compete with one another for Mobile Phone OS share.
Amazon is overvalued, but is demolishes it’s competition. And it is also abusive of it’s labour force. It has received little adverse force against it. It occupies a certain political perspective, and it has politicians following it’s commands. And serving it’s needs.
There is a confrontation building between Jerome Powell, and Trump.
And it looks like Powell will do the one thing that was beyond the capability of the Clintons, the Bushes, the Corporate Democrats, the GOPers, the media, Stormy Daniels, the Steel dossier, the Deep State, the false witnesses for the Judge Kavanaugh process, etc…..
It looks like Powell will make Trump unelectable.
In addition to the FANG’s both GE and GM have been gutted by the share buy back stupidity. Share prices have plunged wasting billions of corporate cash.
http://theeconomiccollapseblog.com/archives/general-motors-and-general-electric-were-both-victimized-by-the-same-ponzi-scheme-and-they-are-both-telling-us-the-u-s-economy-is-in-huge-trouble
“”Housing and auto sales appear to have hit a wall over the last 8-12 weeks. To be sure, online holiday sales jumped significantly year over year, but brick-n-mortar sales were flat. The problem there: e-commerce is only about 10% of total retail sales. We won’t know until January how retail sales fared this holiday season. I know that, away from Wall Street carnival barkers, the retail industry is braced for disappointing holiday sales this year. A subscriber asked my opinion on how and when a stock market collapse might play out. Here’s my response: “With the degree to which Central… Read more »
https://usawatchdog.com/weve-reached-the-point-of-debt-saturation-bill-holter/
Trump strikes back.
https://twitter.com/The_Trump_Train/status/1067687857400229888/photo/1
https://goldsilver.com/blog/mike-maloney-video-i-found-a-new-recession-indicator-that-says-look-out-below/ From Rhody… The United States may already be in a recession….. Here’s an 11 minute video from Mike Maloney about indicators of recessions. We may already be in a recession, as recessions take 9 months to develop. (A recession is defined as three consecutive quarters of negative growth in the economy) So, a recession is a lagging indicator that is declared 4 months after it started. The point is, we may already be in a recession and that makes the stock market a very dangerous place to be investing. On the other hand, the data is now so doctored… Read more »
Stock in Facebook, Apple, & Google, — Facebook & Google, for sure, from 1st instance being Mshd Operations — has fallen earlier than their Overlord [ Rothschild Syndicate ] itself scheduled …. is because of inquiries & revelations by ……… THE ALTERNATIVE MEDIA
aka
the “so-called “Fake News / part of the so-called “Hate-Groups” ;
A “Hate” Group being a group whom u are instructed by the Banksters [ Capitalists & Communists ], & their Flunkies, to “hate”
For those that need to be spoon-fed,- the little boy in the picture below is analogous to the “Alternative” Media
Meanwhile, why does not Bernie Sanders chase this angle about Trump ?
–
Kill-ary Clinton cannot ;
Because,- her name is on Epstein’s “Black Book” of visitors to “Lolita Island”.
..
https://twitter.com/HenryMakow/status/1068172121807966210
Facebook, & Google, & Twitter, & RTE-Pravda, & more, have conspired to :
>
get Irish State aborigines enslaved with DMW’s impassioned advice to give Sovereign Guarantee on the Loan-Books of the Ireland associated banks in Irish State
>
arrange Irish Referendum on Abortion to result in legalised genocide of Pre-born Babies, & Infant Babies
>
BUT, ULTIMATELY, EVIL COMES FROM WITHIN A MAN’S HEART
[ Lest it be conflated as sexist 8-) ; “Man” above is reference to generic person ]
Not forgetting the propaganda wing of “The City of London” ; Their Credibility Stock has fallen ; But, alas,- they will continue to be a big-big player. > AND,- NOT FORGETTING : Jimmy Savile is admitted by his brother as being a Pedophile [ The brother also says that Jimmy was sexually abused as a young boy by a homosexual relatve ] And, Savile is attested by his nephew as being a Pedophile I supplied recording to this Blog of Savile passionately trivializing the offence after Gary Glitter was caught with Pedophilia on his computer, which he confessed to having… Read more »
Is Trump the White Knight exposing the corrupt.
https://michaelsavage.com/listen-trump-is-fundamentally-a-romantic-and-an-idealist/
Facebook & Apple & Google [ F-A-G ] up ur Arse !
>
They are facilitated by “Double Irish with a Dutch Sausage”
Yes,- the Irish State’s Civil SERPENTS & Politicians have conspired with F-A-G to :
cheat the nations of the world outside of USA & Irish State from getting fair tax revenue from F-A-G
Surely there is a secret cash kick-back to certain Civil SERPENTS & Politicos [ incl. Politicians ] & “Professionals” for greasing this sordid practise ?
>
Also,- ………………
>
https://www.zerohedge.com/news/2018-11-30/leaked-google-emails-reveal-internal-discussion-buring-search-results-conservative
>
>
http://www.bbc.co.uk/newsbeat/article/34474798/meet-twitters-second-biggest-shareholder-saudi-prince-alwaleed-bin-talal
F-A-G relishes the prospect of Europe being flooded with exotic youth & young men [ most of whom will have been selected & groomed by The Dreadful Few ; In some cases,- these males are not representative of the current milieu nations they come from nor “purport” to come from ].
>
Coming to Dalkey, & Dun Laoighaire etc. ?
>
Naw,- rather coming to the neighborhoods of the Underclasses of Direland [ incl. city-centres ]
>
>
And, sooner than u think !
>
https://voiceofeurope.com/2018/11/un-migration-pact-will-flood-europe-with-59-million-migrants-mep-warns/#.XAFuVDzFZ9A.twitter
@Truthist
THERESA MAY BREXIT DEAL TO BE VOTED ON
=> DECEMBER 11th
UN MIGRATION COMPACT TO BE SIGNED ON
=> DECEMBER 11th
.
.
-> THIS IS DELIBERATE
-> CAN YOU GUESS WHICH WILL BE BURIED THE NEWS?
.
.
.
=> THE UN POWER GRAB
.
.
1. SAY YOU ARE OVERPOPULATED
2. SAY YOU ARE UNDERPOPULATED
3. FLOOD YOU WITH MIGRANTS TO DESTROY NATION STATES
.
.
=> ALL WITH ZERO PUBLIC DEBATE
https://www.youtube.com/watch?v=IUMR6B8PbYI
U betcha that a great many of the F-A-G fanboy Rich Hypocrites residing in Foxrock, Dalkey, & Dun Laoghaire etc. have guns & live bullets to shoot stone dead any trespassers on their private properties ;
Meanwhile,– back in the ranch [ literally 8-) ] ;-
–
Ref.
Ian56
?@Ian56789
>
George HW Bush bought a huge ranch in Paraguay in case they had to flee from America b/c Americans had found out the truth.
>
https://twitter.com/Ian56789/status/1068814427091333120?ref_src=twsrc^tfw|twcamp^embeddedtimeline|twterm^profile%3AHenryMakow|twcon^timelinechrome&ref_url=https%3A%2F%2Fwww.henrymakow.com%2F
>
Useful Photo + Blurb ;
>
>
BLURB [ Slightly redacted by Truthist ] ;
>
EU Leaders agree May’s deal in just 38 MINUTES
[ It does not take long to agree when u get everything u want ]
>
https://pbs.twimg.com/media/DtVZqU8U8AAFcO5?format=jpg&name=360×360
Good stuff Tucker Re ; An important agent of Facebook & Google & Twitter & Intel & more fronts And,- maybe Apple too. > @TuckerCarlson – “If they’re rich enough, they can even, I don’t know, molest children without being seriously punished. Ask Jeffrey Epstein. He did that.” > https://twitter.com/1_Musashi_1/status/1068900085893922816?ref_src=twsrc^tfw|twcamp^embeddedtimeline|twterm^profile%3AHenryMakow|twcon^timelinechrome&ref_url=https%3A%2F%2Fwww.henrymakow.com%2F >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> AND, PLEASE DO NOT FORGET THAT THE IRISH STATE GAVE TO THE CHILD-MURDERERS & PEDOPHILES KILL-ARY CLINTON & BILL CLINTON MANY MILLIONS OF OUR NATION’S CURRENCY AND, EPSTEIN WAS ABLE TO ENTICE & ENTRAP & BLACKMAIL & GUIDE KILL-ARY & BILL TO PERFORM ACCORDING TO THE WISHES OF THE… Read more »
RETWEET :
ONLY 10 DAYS TO GO BEFORE BRITAIN SIGNS THIS APPALLING UN MIGRATION AGREEMENT
>
criminalizes anti-immigration speech
>
shuts down media and social media
>
legalise all illegal immigration
>
forces mass immigration on us
>
Contact your MP NOW
>
>
https://petition.parliament.uk/petitions/232698 …
>
>
https://twitter.com/SocialM85897394/status/1068836473145892864?ref_src=twsrc^tfw|twcamp^embeddedtimeline|twterm^profile%3AHenryMakow|twcon^timelinechrome&ref_url=https%3A%2F%2Fwww.henrymakow.com%2F
“The world is governed by very different personages from what is imagined by those who are not behind the scenes.”
— Benjamin Disraeli [ Former British Prime Minister ]
Massive Job Losses in Automobile Manufacturing would have major destructive repercussions for society > But,- even elimination of F-A-G [ Facebook & Apple & Google ] should actually have major constructive results for society. > > SADLY, THE NEWS IS OMINOUS > BUT, DOES FORD NOT RAMP UP USA PRODUCTION OF THEIR USA BASED PICKUP “150” [ a very highly rated truck ], & EXPORT IT WORLDWIDE ? EVEN THE CHINESE WOULD BE CLAMORING FOR IT. > > Ford To Announce 25,000 Job Cuts: Morgan Stanley by Tyler Durden 03 Dec 2018 On a day when US and European auto… Read more »