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Wednesday, October 1, 2008

"Industrial Capitalism" versus "Financial Capitalism"

Clearly, "Industrial Capitalism" is the backbone...that creates infrastructure, creates employment. Most importantly, it creates a "chain reaction" to create more industries.

Also, innovative and creative spirit has to be there behind this brand of capitalism.

Any economy that is making a transition from a "socialist model" should benefit mostly from the clean, efficient, planned implementation of this brand of capitalism.

"Financial capitalism" is speculative....recent developments showing the collapse of many stalwarts have led to panic. But still, it is necessary as the tool for raising/pumping in money into the industry.

Let us take 3 hypothetical industries : RAMO, SAMO and TAMO.

RAMO is on a high...
TAMO stocks are currently low...

Now, a shrewd investor, seeing TAMO's potential would buy it...Quite a few would...

This would result in much needed influx of capital into TAMO....which can increase productivity.

But the problem with "Financial Capitalism" is the fast-buck approach that has led to the collapse of the giants...sub-prime lending being amongst them....

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