The Alibaba IPO frenzy: Symptom of a diseased economic order
22 September 2014
The initial public offering (IPO) of shares in the Chinese Internet trading company Alibaba, which led to a frenzy on Wall Street last Friday, is the latest, and one of the most spectacular, expressions of the parasitism that is now the dominant feature of the global financial system and the world economy more broadly.Initially priced at $68 per share, the stock began trading on the New York exchange at $92.70, with 100 million shares changing hands in the first ten minutes, before closing at $93.89. The 38 percent rise took the market value of the fifteen-year-old company to $231 billion, more than Amazon, Proctor & Gamble and JP Morgan.
The IPO reportedly made Jack Ma, the company’s founder, China’s richest man, with a net worth of $26.5 billion. It is hard to ascertain what is more repugnant: the scale of the plunder or the extent of the hypocrisy that accompanied it. Ma told the CNBC business TV channel that the issue was not money, but getting “trust from the people.”
Silver Lake Management, which focuses on trading in technology firms, reaped five times its initial outlay on Alibaba. Silver Lake bought into the company in October 2011 in a series of deals that put Alibaba’s market value at around $30 billion. At the end of Friday’s trading, it had reaped profits of $4.6 billion. Likewise, Yahoo stands to gain about $5.1 billion after selling its 121.7 million shares in the company.
The 35 underwriters of the deal collectively raked in around $300 million in fees, with five major banks securing about $45 million each.
The entire operation was a graphic demonstration of the putrefaction of the profit system. The IPO itself was an exercise in insider trading, with some 25 institutions securing more than 50 percent of the shares and the biggest portion of the profits on offer.
Fabulous fortunes were made in a matter of minutes as a result of share trading in a company that produces nothing, but is engaged in e-commerce, that is, facilitating buying and selling through the Internet. The naked display of avarice occurred under conditions of stagnation and slump in the real economy and relentless attacks on the conditions of workers, justified by the claim that “there is no money” for jobs, decent wages or basic social services.
The overall indebtedness of the city of Detroit, now in bankruptcy and at the centre of the assault on the working class, including the shutoff of water to thousands of households, is put at around $18 billion—less than the profits raked in during the first hour of trading in Alibaba shares.
The parasitism involved in the IPO is underscored by a consideration of why the “market value” of Alibaba is so inflated. It is not because it has developed some new form of technology, facilitated an important innovation, or brought forward a more advanced production technique.
Its attractiveness flows from its monopolisation of Internet services in China. It dominates operations that in other countries are run by different companies. It owns Chinese firms that are the equivalent of Amazon and eBay and earns money from transaction fees flowing from the Chinese equivalent of PayPal.
This monopoly position has been facilitated by the company’s close connections to the Chinese Stalinist regime. An article in the Australian Financial Review noted that Jack Ma had fostered “warm relations” with Chinese President Xi Jinping. “Truth be told,” the newspaper reported, “Alibaba couldn’t have reached the heights it already has without the support of the upper echelons of the Communist Party.”
This is a striking revelation of the role played by the Chinese regime in propping up world capitalism, with all its socially destructive consequences, and the global character of the international financial aristocracy.
The Alibaba IPO came at the end of a week in which a report by Wealth-X and UBS showed that the world’s billionaires had an accumulated wealth of $7.3 trillion, an increase of 12 percent in the last year. This increase of wealth at the very top is accompanied by worsening social conditions for the working class in all of the major capitalist centres. These are not parallel processes, but causally connected.
Since the eruption of the global financial crisis in 2008, the economic policies of the ruling elites have proceeded on two main lines: the supply of ultra-cheap money to the banks and financial institutions to finance speculation, and the driving down of the social position of the working class.
The connection between the two has again been illustrated. Within a day of the Alibaba IPO orgy on Wall Street, halfway round the world at a meeting of G-20 finance ministers and central bankers in Cairns, Australia, International Monetary Fund Managing Director Christine Lagarde insisted on the necessity for so-called “labour market” reforms—code words for the destruction of what remains of legal protections for workers.
The frenzy on the financial markets, the surge in corporate stock buybacks, IPOs and takeovers, and the return of the same practices that led to the crisis of 2008 are themselves expressions of the deep and ongoing crisis of the world capitalist system.
The euro zone economies are either stagnating or in outright recession, with production levels still below where they were in 2007. The Japanese economy has experienced no growth this year, despite the massive financial stimulus package carried out under “Abenomics.” Chinese growth is slowing, with mounting questions arising over the stability of the country’s financial system. The American economy has failed to return to anywhere near the growth levels reached before the financial crash.
In other words, money is pouring into the financial system because it has nowhere else to go. The rise of speculation, parasitism and the monopolisation of socially produced wealth by a money-crazed and semi-criminal elite are manifestations of the deep-going historical crisis of the capitalist economic order.
The Alibaba IPO exemplifies the manner in which the capitalist market and monopoly domination turn the Internet, a technological advance that potentially opens up vast prospects for social advancement, into a means for generating fabulous wealth for a mere handful. It is another demonstration of the necessity for the complete overturn of the profit system and the reconstruction of the global economic order on socialist foundations.
Nick Beams
THE 1% DEMAND
THE FINAL SOLUTION TO THE AMERICAN MIDDLE –CLASS and IMPOSITION OF THE DEATH
PENALTY... their counting the spoils now!
IT’S ONLY OBAMANOMICS AT WORK
HILLARY CLINTON’S VOW: To serve the 1% and let Wall Street
rule and ruin the economy.
She calls it OBAMANOMICS.
ILLEGALS WILL STILL GET OUR JOBS TO KEEP WAGES DEPRESSED TO
THIRD-WORLD LEVELS.
TOP INVESTORS.com LA RAZA ABOVE THE LAW – CONSULATES
LOOTING
Democrat
politicians partner with Mexico and the Mexican Fascist Party of LA RAZA “The
Race” to loot America and then send the tax bills to the American middle-class
whose jobs LA RAZA owns.
Hillary
Clinton’s promise to illegals: 49 more
Mexifornias.
Mexifornias.
The
staggering cost of Mexico’s looting of America
THE
LOOTING OF DETROIT: A case study on the methods the 1% use to loot America.
Your
city, job and your pension next on the line for the slaughter!
With colossal impertinence, the Mexican
government attacked Texas Gov. Rick Perry for sending National Guard troops to
guard our Southern border, saying that Mexico "deeply rejects and condemns
the deployment." The Mexicans accused Perry of taking this action to
advance his political ambitions.
As Obama's Wall Street cronies continue to
loot and Obama hands the American middle class the tax bills for their economic
crimes:
The WSWS continued: “A sea change is unfolding
in the US and world economy that portends a catastrophe of dimensions not seen
since the Great Depression of the 1930s.” It warned that for the working class,
the financial meltdown meant “rapid growth of unemployment, poverty,
homelessness and social misery,” while “many of those who precipitated this
economic disaster… will profit handsomely from the debris they have left
behind.”
LA
RAZA SUPREMACIST MARK ZUCKERBERG WANTS OPEN BORDERS…. except for his!
Today, Sen. Jeff
Sessions (R-Ala.) blasted pro-amnesty billionaires whose fondness for open
borders ends at the doors of their "gated compounds and fenced-off communities,"
noting how Facebook CEO Mark Zuckerberg bought other four houses surrounding
his own just because he wanted "a little privacy."
tech
says no to hiring AMERICANS
OPEN BORDERS AND
ENDLESS HORDES OF IMMIGRANTS POURING IN IS ONLY ABOUT KEEPING WAGES DEPRESSED
To
cite just one example, if there is a shortage of U.S. engineers, are 1.5
million Americans with engineering degrees either unemployed or working in
other fields? In all too many cases, U.S. tech companies prefer foreign workers
on temporary visas because they are cheaper and more exploitable than
Americans.
AMNESTY: America’s death warrant
THE CONSPIRACY to DESTROY AMERICA’S BORDERS… Obama
and his Wall Street banksters
“This nation no longer is a democratic
republic...rather it has become a tool of the super-rich members of the above mentioned elite who
preselect our presidents based on their cooperation and complicity with the
elite’s ultimate goals. Obama has, in their opinion done superbly carrying out
the plans well laid out for him by his backers.”
BILLIONAIRES partner with MEXICO,
OBAMA and the U.S. Chamber of Commerce to assault the AMERICAN WORKER….
Amnesty, it’s all about keeping wages depressed and passing along the real cost
of all that “cheap” mex labor to the American middle class.
OPEN BORDERS AND
ENDLESS HORDES OF IMMIGRANTS POURING IN IS ONLY ABOUT KEEPING WAGES DEPRESSED
To
cite just one example, if there is a shortage of U.S. engineers, are 1.5
million Americans with engineering degrees either unemployed or working in
other fields? In all too many cases, U.S. tech companies prefer foreign workers
on temporary visas because they are cheaper and more exploitable than
Americans.
UNDER OBAMA, TWO-THIRDS
OF JOBS GO TO HIS PARTY BASE OF ILLEGALS!
“At
the hearing, Dr. Rakesh Kochar, Associate Director for Research at the Pew
Hispanic Center, testified that in the year following the official end of the
recession (June 2009), foreign-born workers gained 656,000 jobs while
native-born workers lost an additional 1.2 million jobs.”
"We
have a situation where the job market — the bottom fell out, yet we kept legal
immigration relatively high without even a national debate," he said.
"As a consequence, a lot of the job growth has been going to
immigrants."
Mr.
Obama did take action this year to grant many illegal immigrants up to 30 years
of age a tentative legal status that prevents them from being deported and
authorizes them to work in the United States.
Some
Republicans in Congress have criticized Mr. Obama's policy, saying it violates
his powers and will mean more competition for scarce jobs.
WE KNOW WHAT OBAMA’S CRONY BANKSTERS HAVE DONE TO
THE AMERICAN ECONOMY… but will Obama’s amnesty hoax to legalize mexico’s
looting and destroy the GOP, also destroy the DEMOCRAT PARTY?
HE’S WORKING ON IT…
BANKS
and GEITHNER ….He was the banksters' HOPE & NO CHANGE man in the white
house!
CRONY CAPITALISM: HOW
OBAMA AND HIS CRONY BANKSTERS LOOTED AMERICA – It’s a work still in progress!
As he puts it, “We did save the economy, but we
lost the country doing it.” Geithner adds, “Conventional wisdom still holds
that we abandoned Main Street to protect Wall Street.”
THE OBAM MELTDOWN is here:
OBAMANnomics: HOW HIS CRONY BANKSTERS LOOTED AMERICAN AND
WERE PAID MASSIVE BONUSES FOR DOING SO!
“Tech tycoons like Larry Ellison and
Mark Zuckerberg have gotten rich while wages in the technology sector have
stagnated.”
Silicon Valley Poverty Is Often Ignored By The Tech Hub's Elite
Silicon Valley Poverty Is Often Ignored By The Tech Hub's Elite
TECH
GIANT APPLE COMPUTER SAYS HELL NO TO PAYING TAXES and HELL NO TO HIRING
AMERIANS! KEEP THE BOATLOADS OF CHINESE AND INDIANS COMING!
Tech firms fight hiring rules in
immigration bill…. NO AMERICANS NEED APPLY!!!
Americans would "be shocked to know that most
of the H-1B visas … are going to outsourcing companies," Sen. Dick Durbin,
D-Ill., said during a recent hearing.
Story Highlights
- Bill provision that would require
firms to post jobs for Americans is targeted
- Technology firms have spent millions
on lobbying on immigration
- Judiciary Committee set to start
working on bill
WASHINGTON
– Technology firms, exercising new political clout on Capitol Hill, are
lobbying against a measure in the leading Senate immigration bill that would
make it harder for them to recruit workers from abroad without first taking
steps to hire Americans for highly skilled jobs in programming, engineering and
other fields.
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