The problem is the way the system is rigged.
Kroger is a publicly traded company, their stock price right now is 46.71 / share.
You can see their most recent earnings report here:
Operating Profit of $912 million; EPS of $0.88
Now then… for NEXT quarter… It doesn’t matter if they are profitable or not. Because they are publicly traded, they are going to be expected to make MORE profit than they did this quarter.
Let’s say next quarter they “only” have $890 million in profit… Most of us would KILL to be that profitable.
The stock market analysts will look at it and go “yeah, but you ‘lost’ $22 million from last quarter…” and they will punish Kroger for failing.
Even worse…
Let’s say Kroger raised their prices and pulls in a profit of $915 million next quarter… they can STILL get punished if the market goes “Yeah, but our analysts expected you to bring in $921 million in profit.”
Failing to meet or beat “expectations” is just as bad as raking in less of a profit than last time.
So prices go up, because they have to make more money than the same time last month, last quarter, last year.
As someone that has worked on Wall Street as a professional trader I can agree with what you’re saying and I agree that it needs to change. We need to get rid of this idea of endless growth. It’s just not reasonable to expect that from every industry considering that industries have cycles and eventually they mature.
You hit a point of maximum (Pareto) efficiency where people are actually driving the most possible benefit from a business and there’s a good healthy return financially. And then businesses feel the need to overshoot that and water down the quality of the product until people stop buying it entirely.
Then they just blame changing consumer demand rather than taking responsibility.
It’s a real problem and it’s going to impact our lives going forward much more aggressively as corporations win the culture war.
I remember back in the day Exxon set some kind of quarterly record, not just for them but for ANY company. Everyone was going “Wooo!” and I was like “Yeah, but now they have to beat that…” Nobody seemed to get it.
And disregarding those expectations can carry personal liability for anyone in a position to do it, because the executive leadership of the company has a legal responsibility to act in the interest of the shareholders above all else.
they can STILL get punished if the market goes “Yeah, but our analysts expected you to bring in $921 million in profit.”
This happened to the company I’m in. We had record profits, were positive for the first time in years, and beat our goals by a decent bit. Stock prices tanked anyway because “the best we’ve ever done” wasn’t good enough for the shareholders.
It’s all so dumb. I’m sorry for the language, but it’s just really, really dang dumb. There, I said it.
Try working for a publicly traded company and having stock shares.
I had a decent chunk of stock. One quarter we failed to meet expectations by 0.23%. The stock price went down 30%. Grrr!
You must have joined the work force in 2021. Stock drops like that are extremely not normal.
So like, I’m no stock broker, but if I understand right, a company doesn’t directly benefit in any way from a higher stock price, right? They could split it, but for the most part, once their shares are bought up, the only people benefiting from the stock are rando shareholders and the handful of employees with stock options.
The stock price determines the overall value of the company and has all kinds of ramifications, purchase ability, loan agreements, etc. etc.
Ah, I see. Interesting.
Adding to this:
Executives are often paid in stock so they’re invested in seeing the price go up.
A corporation’s board of directors (who lead the company and can fire/hire executives) are also paid in stock or have very large stock holdings already.
All the people at the top benefit from seeing that stock price go higher. They care more about stock price than whether or not customers are happy, or if they’re doing right by their employees.
I always imagine the stockholder that trades off quarterly expectations to be someone sitting in an overly large home getting all bent out of shape because someone else’s labor didn’t make them enough money RIGHT NOW!
It isn’t one guy adjusting one portfolio relative to a single quarterly change in profits. You have to look at this as thousands of hedge funds with tens of billions of dollars in investor cash comparing Kroger to Safeway and Walmart and saying “I want 8% exposure to the cyclical consumer retail sector and I have $X-Billion to invest, how much of that do I want to distribute across these three companies?” And then if Kroger underperforms Safeway and Walmart, my algorithm tells me to sell Kroger stock and use the proceeds to buy up Safeway/Walmart.
This gives Safeway/Walmart a lower rate of effective borrowing, which means they can build new stores in territory adjacent to Kroger locations or expand into territory none of them dominate. It sets off a cascading effect in which Safeway gets to grow while Krogers treads water. Eventually, Safeway can start installing stores directly adjacent to Kroger and selling everything in this one storefront at 10% under cost-of-purchase until Krogers goes out of business from cut-rate competition. Then Safeway jacks up their prices at this one store and returns to rising profitability.
That’s the market mechanism in effect. Low lending rates mean you can drive your competitors out of business. So everyone needs to run a competitive profit margin in order to avoid getting swallowed up by their neighbors. And the folks who decide if you’re “competitive” are a handful of mega-investment banks that decide how much of your stock they’re going to buy.
And the folks who decide if you’re “competitive” are a handful of mega-investment banks that decide how much of your stock they’re going to buy.
This one statement says a lot about the American economy
And thank you for the explanation
The “expectations” aspect became especially apparent when Tesla was valued higher than the next top 10 auto manufacturers combined.
It was literally that Tesla is new shit that we can bet on. It has nothing to do with Tesla’s actual value.
It’s also the issue with buying stocks based on a company’s performance. If you do that, you’re already too late because investors with more information have already bought based on a prediction of that performance (or insider information).
That was just people chasing fomo and the “greater fool”. Basically some people are dumb and don’t want to miss out. Other people know the company is crappy but think they can sell to a dummy at a higher price. Eventually people think “it’s different this time” and pay way too much money. Last dummies are left holding the bag.
Exactly what’s happening with Bitcoin and all other cryptocurrencies. There’s no value attached to the currency besides hype, which eventually fades. The USD is reliable because the US government only accepts it as payment for taxes. You need it. No one important accepts only Bitcoin. So you don’t need it.
No one important accepts only venmo, yet it is a popular platform for payments. Nobody outside of the US has to pay taxes to the US govt yet they still choose USD. The value of the currency come from the same things that bring value to all currencies: people’s faith in its monetary policy and network effect (how many places you can spend it). All currencies are speculated on by traders, this is not unique to Bitcoin.
Bitcoin has maintained it’s monetary policy in a stable state and worked 365 days a year, 24 hours a day for 15 years without a single day of downtime and without being hacked. And for reasons of math and physics, it will continue to do so. Nobody, no matter how powerful you are, can print Bitcoin that isn’t meant to be printed or spend money you don’t have the private key to.
With Bitcoin lightning, you can send a transaction across the globe in under a second with pennies in transaction fees. This can be accessed by anybody with a cell phone and halfway reliable internet access, regardless of whether they have access to stable banking infrastructure, which Billions of people, with a B, do not.
Bitcoin’s total market cap is over 800 billion which puts it in the top 25 countries by GDP. Higher than Sweden. Higher than Israel. Higher than Vietnam. On average, adoption and market cap grows every year no matter which metric you use to measure it.
Every day, every single block on the bitcoin blockchain is full of transactions. People pay for that space, there is no empty space left in any of the blocks. People are sending money from A to B with it. It secures those transactions. That is its use case and value.
abolish the stock market. put these hogs on a fucking island with no natural resources but sand and salt water. set up a camera and let us watch.
You should absolutely not abolish the stock market because it’s the single way most average people have to becoming wealthy. What you should do is change how it operates. Here’s a novel idea I’ve had for a long time.
Make more and more companies worker co-ops going forward by incentivizing them the attacks credits and local government health in getting them started. Preserve 75% of the company for the people who actually work there which is what makes it a worker’s co-op.
Reserve 25% of the company for speculation on Wall Street and to raise capital if they need to.
This way you can have sort of a socialist economy that avoids abuses and a stock market at the same time that provides liquidity and efficiency.
It’s interesting how recent the stock market really is:
https://www.sofi.com/learn/content/history-of-the-stock-market/
"The first modern stock trading market was created in Amsterdam when the Dutch East India Company was the first publicly traded company. To raise capital, the company decided to sell stock and pay dividends of the shares to investors. Then in 1611, the Amsterdam stock exchange was created. For many years, the only trading activity on the exchange was trading shares of the Dutch East India Company.
At this point, other countries began creating similar companies, and buying shares of stock was popular for investors. The excitement blinded most investors and they bought into any company that began available without investigating the organization. This resulted in financial instability, and eventually in 1720, investors became fearful and tried to sell all their shares in a hurry. No one was buying however, so the market crashed.
. . .
Although the first stock market began in Amsterdam in 1611, the U.S. didn’t get into the stock market game until the late 1700s. It was then that a small group of merchants made the Buttonwood Tree Agreement. This group of men met daily to buy and sell stocks and bonds, which became the origin of what we know today as the New York Stock Exchange (NYSE).
Although the Buttonwood traders are considered the inventors of the largest stock exchange in America, the Philadelphia Stock Exchange was America’s first stock exchange. Founded in 1790, the Philadelphia Stock Exchange had a profound impact on the city’s place in the global economy, including helping spur the development of the U.S.’s financial sectors and its expansion west."
I don’t know if my highschool education is failing me, but the US declared independence in 1776, so I feel like the US not having a stock market until the late 1700s makes a lot of sense.
That’s not the interesting part. The interesting part is that the Dutch East India Company was under a legal charter where they could make war with and enslave whoever they wanted to as a quasi-independent entity.
That’s what the stock market concept is based upon. Slavery and murder.
That’s what anything is based upon. Murder and the threat of it.*
I mean, that’s a bit unfair. The stock market is a concept that’s based on expected annual growth paid out in a steady return on investment. Slavery and murder just happen to be incredibly lucrative industries, such that you could confidently invest in firms like Dutch East India and expect more than you put in.
Pick up a copy of Picketty’s “Capitalism In the 21st Century” and you can see how this played out over the long term. Prior to Capitalist market mechanics, you’d have these feudal estates that would levy rents with a steady-state expectation of returns. You had 10,000 acres being worked by 100 farmers and they tithed you their surplus in food. You warehoused that food and traded it back to them for their labor, with which you built churches and castles and recruited soldiers for your next war. But the real economy was stagnant, outside fluctuations in population from plague or invasion or natural disaster.
Then you get this idea of cumulative return on investment, and there’s this sudden rapid expansion of commerce and capital that simply had no historical parallel. This didn’t need to be predicated on bloodshed or occupation. The textile industry boom in the UK, for instance, was this more-or-less bloodless conflagration of productive forces. Huge industrial looms turned a desperately scare resource into a cheap consumer commodity within a span of a few decades. And a big part of that was the feedback loop of investment -> capital production -> lucrative returns -> re-investment.
Similarly, the boom in agricultural productivity thanks to the advent of modern fertilizers has functionally ended natural famines. This was, incidentally, a knock on effect of the Loom Boom, as the first industrial fertilizers were derived from pesticides which were derived from clothing dyes.
The pain and suffering that followed the Dutch East India Company was not a consequence of the market mechanic nearly so much as it was the consequence of an aristocracy with no countervailing force among the proles. It was consistent with the behavior of lords and kings going back thousands of years, just industrialized.
How old are you that 500 years is still recent?
Well, when you consider that humans go back 300,000 years or so, and “civilization”, such as it is, goes back 10,000 - 12,000 years, 500 years is really not much at all.
Eggs are again steadily rising in price. Wal-Mart “great value” prices isn’t all that ‘great’ to begin with, with most of it’s products.
But can we stop calling things inflation? Call it for what it really has been - G-R-E-E-D
Eggs are again steadily rising in price.
This one can still be pinned on poultry farming greed, but it’s not a pure price gouge.
Avian flu devastates California’s poultry farms as new wave of outbreaks roils industry
Let me preach about the holy sites known as Costco stores.
Also look for locally sourced eggs and meat, dairy, etc. You can probably find some small farms that sell direct to consumer.
Costco is great… But not everything works best when bought in bulk, and not everything freezes well. Eggs for instance, most people probably aren’t going to go through 72 eggs in a reasonable timeframe. But it’s great for shelf stable items and things you use a lot of.
Yes it is cheaper per unit because you’re buying a larger quantity, but nearly every item is going to be $20+. This also assumes that you can afford the membership cost and the up front budget to be able to start to build that bulk stock, and that you have room for holding that bulk stock at home,
These are things that many people take for granted with so many more people living paycheck to paycheck now with increases in so many other costs now as well.
I bought a giant can of powdered eggs, i love it; you just have to add water, no dealing with shells or fluctuating prices
Inflation literally means prices going up. Calling it as greed isn’t useful, because greed can lead to both price increases or decreases, depending on the context. For example, firms that are greedy for market share can drive prices down (a phenomenon that American consumers have benefited from greatly, over decades).
No, inflation means purchasing power decreasing. Prices going up is an effect of that rate but they are not directly tied. Not everything goes up by a flat percentage every month or year.
The food price increases were never at the rate of inflation. The worst inflation the US saw was 9% in June 2022, but that was just for that month period.the overall rate for 2022 as a whole was 8%. For 2023 the annual inflation rate was back to almost normal, at 3.5%, just above the 3.2% long term inflation rate.
So even if we assume costs jumped immediately, if a price went up more than 9% it was bullshit.
Picking out one price rise, and calling it out because it’s higher than the average inflation rate, is silly. Since inflation is the rise in the price level, averaged over all goods, almost by definition there will be some prices rising by more than average (and others less than average).
In fact, it’s well known that inflation hits very unevenly across different prices in an economy. The 1970s inflationary episode, for example, started with gas prices going up due to the oil embargo, before bleeding through into other prices. There are entire fields of economics dedicated to looking at inflation through different segments of the economy, precisely because price rises can be so uneven.
The bigger issue is that inflation is a problem of monetary and fiscal policy, which means pointing to greed is totally beside the point. Inflation was quiescent during the 2010s, and it’s not like people and companies were magically non-greedy during that period.
Kroger has 2750 grocery stores. 912 million divided by 2750 is 0.3316 million in profit per store
or
each store they own generates $331,636 in profits a quarter.
This is 2.7% of their overall revenue.
What profit margin is acceptable? 0.1%? 0.0%?
I would say something around 10 to 15% would be an appropriate profit margin. But they would need to not try and get around that just by boosting executive pay. Now if they give the workers themselves better pay…
10-15% would be 3.7 times higher than what they have been making.
So they should have made 3.38 billion per quarter, instead of .912 billion.
Stop taking aim and fire
Politicians are all words no action, when it helps the poor. When it helps the rich, they don’t say a word, just silently pass a bill.
Must be an election year
That’s good because they are. Sometimes they don’t even have the prices accurate I’ve actually had to report my local Target to the department of weights and measures because they don’t even have prices at the register that match what’s on the shelves.
Government grocery stores would solve this and food deserts…
What are you, some kind of Communist? You can’t have government run retail outlets. It would be inefficient! It would prevent innovation! It would desaturate the market! It would cause millions of farmers to go bankrupt overnight! The employees would all be rapists and arsonists and unionists, while the managers would be bloated government bureaucrats who only care about their cushy government jobs!
You would cause famine and poverty across the entire nation. It would be the worst thing to happen to the country since the Postal Service!!!
But then the government would have to remedy the surplus of food by implementing food banks. Then markets would crash because everyone would go to food banks instead of grocery stores. Then money would be worthless and the government would have to step in and offer some type of work for rations program. And if that’s successful, it would spread to other industries for furniture and other goods. Is Biden going full Kropotkin?
Based and Breadpilled.
I feel like I’ve heard a lot of bias placed against the idea of government in the US as something that’s the source of problems in the country, where private organizations are usually seen as being the solution and not at all related somehow. It doesn’t always strike the mark when criticizing private organizations… people will even jump to the defense of billionaires. Agree that mentioning government grocery stores would result in something like “what you want the government to run groceries? they can’t do anything right, why would you want them to do that?”
I mean when you have one of two major political parties who are dedicated to making the government suck, it’s not surprising that the government sometimes sucks. And when you have a lot of low information (or bad information) people, it’s not surprising that they don’t connect those dots.
Republicans are an existential problem for the United States.
It certainly is NOT a conservative problem. Both republicans and democrats behave this way.
I’ll remind you of what Biden said to billionaires behind closed doors during his presidential campaign: “Nothing will fundamentally change.”
Why does Biden go after anything but minimum wage? Just because min wage isn’t a winning issue doesn’t make the problem go away.
Because only Congress can change the minimum wage. You know, the one half controlled by Republicans.
Sure, that is why. Poor Biden, he would help the working class, only if he could. Give president absolute power to use it when they need to help the rich, but when it helps the working class, all of a sudden they are powerless.
You remember the whole student loan forgiveness situation? The executive can only do things that the legislature has granted it power to do. And even then, the supreme court can show up and stop it for whatever reason they pull out of their ass.
Despite what Trump says, the President is not a king. The legislature is by the far the most powerful branch and is most to blame for the current situation. Blame them and especially the filibuster in the Senate.
Didn’t democrats vote in executive power for president during Obama administration so the president can act on their own? Kinda funny how democrats complain republicans are authoritarian, when they give presidents power of kings.
All presidents used executive power for lesser reasons. These are just PR games for naive voters.
No, that’s something Fox News made up. And I have no idea why you’re replying to a 3 week old comment.
Oh, but it’s easier to make corporations not be greedy?
More in the news: government official complains about matters within their jurisdiction.
You have to be some kind of moron to think it would be a good idea for the president to start dictating prices to grocery chains. Unfortunately Lemmy is largely populated by idiots and delusional fools, so I expect this observation to be unpopular.
Read a history book sometime. It’s been done in the past.
I’m not sure why you’d advocate for it if you’ve actually read the history, it’s a terrible idea that has failed spectacularly in the past
mate half the food you eat is subsidized.
Talking about price controls which are not the same thing at all. Read about the Nixon shock, for example.
Just because you say it, doesn’t make it true.
You have to be some kind of moron
idiots and delusional fools
Do not respond to my comments again with personal attacks. If you do this again, or respond before fixing this comment, I will unfortunately have to report you to the community moderators.
Until you fix it, your comment is not worth addressing.
Ad hominem aside, TheSanSabaSongbird’s basic point, that price controls are an economically illiterate idea, is right. Prices are an economy’s way of signalling scarcity, so messing with that signal prevents the underlying problem from being solved. Inflation has to be tackled through monetary and fiscal policy; the alternative approach, micromanaging prices, is how you get to the economy of Argentina.
deleted by creator
No, you don’t understand. The invisible hand is attached to the wrist of God. Prices are never manipulated and gouging is a good thing.
Did he say anything about the Albertsons+Kroger merger that’s in the works? ‘Cause that’s not going to make things better and they are acting like it’s a done deal.
Through the magic of capitalism, removing competition will drive prices down! No further questions
This is hands down some of the stupidest shit to focus on.
The big expense in our lives isn’t gas and groceries. It’s fucking healthcare. Let’s all just fucking ignore INSANE pharma profits and INSANE profits for health insurance companies who are legally required to not earn more than 20% of the 100% pie of healthcare spending for treatments.
We pay more for drugs, medical devices and treatments than anywhere else in the world because we do not collectively bargain. We don’t regulate price changes AT ALL like almost every country in the world does.
Insurance companies are encouraged to raise the prices for treatments - and thus premiums - because they cannot make more than 20% of said treatments. So if a treatment is $100, they can only profit $20. If a treatment is $10000 - the insurance company can profit $2000. DOES ANYONE SEE THIS AS A PROBLEM!?!?!?
Healthcare expenditures are about 8% of average expenditures by Americans. Food is 12%, transportation is 16%. Housing is 34%. Maybe you can argue that healthcare prices have the most scope for reduction, but it’s literally incorrect to say that healthcare is “the big expense in our lives”.
