TheMacroView Episode 31: Understanding Financial Markets Part 4 of 5

The Macro View

In the second to last episode of this 5 part series we discuss the role of losses, bankruptcy and the so called distressed asset market! Listeners will gain a firm foundation to understand why each of these cooperative forces help increase economic efficiency, abundance and prosperity. Often folks talk about the profit motive, or about corporate profits and their enormity without even mentioning losses or bankruptcy and the role taht it plays. Losses, bankruptcy and the resulting distressed asset market are the mechanisms by which scarce resources are reallocated away from entrepreneurs that have proven themselves incapable of delivering through the use of such resources, on consumer demands, or the most urgent consumer demands. New entrepreneurs replace them, often ones with better foresight and a more accurate finger on the pulse of consumers. This process, though it can be painful for those involved, is irreplacable. It is by far the most efficient manner by which capital and resources find their most efficient uses.