Wednesday, November 06, 2013

Wall St. Recovery floats only big boats

The Wall Street Recovery has been very good for the casino capitalists and the mega-corporations they call people. The investor class is swimming in cash and it keeps pouring in. Dow closed at an all time high just this very afternoon. Meanwhile, the majority of America is trying to stay afloat from month to month. So how did this titanic economic disaster happen?
How are companies managing to earn so much money in a sluggish economy? And why aren't their profits goosing the economy?

For starters, weak job growth has held down pay. And since the recession struck six years ago, businesses have been relentless in cutting costs. They've also stockpiled cash rather than build new products or lines of business. And they've been earning larger chunks of their profits overseas.

All of which is a recipe for solid profits and tepid economic growth. The economy grew at a meager annual rate of just 1.8 percent in the first half of 2013. The unemployment rate is 7.2 percent, far above the 5 percent to 6 percent considered healthy.

Even so, corporate profits equaled 12.5 percent of the economy in the April-June quarter, just below a 60-year high reached two years ago. Profits of companies in the Standard & Poor's 500 have nearly doubled since June 2009. Earnings appear to have risen again in the July-September quarter.
Rising tide lifts all ships was a lie. Anything smaller than  luxury yachts gets swamped in their wake and slowly sinks. Time to bail out the people barely clinging to the life rafts. [ photo]

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Blogger Capt. Fogg said...

I have to laugh. I'm sure this thing has lifeboats bigger than my "luxury yacht"

But it trickles down after all -- to yacht builders in Taiwan, to the Oil barons every time it takes on 10,000 gallons, to marina owners in Sint Maartin, Marbella, Monte Carlo. . .

8:58:00 AM  
Blogger Libby Spencer said...

Ha Fogg. Your yacht is certainly lovely but you're the exception to the greedy wealth holder rule anyway. And that is the point. The profits of the Wall St. Recovery are largely being spent outside of the US, so not helping.

12:06:00 PM  
Blogger Capt. Fogg said...

Oh, I'm as greedy as the next guy -- at least -- but there's a great yawning gulf between me, my little 33 foot SeaRay and the guy with the 30 million dollar megayacht. But there are all types --- like Computer guy Paul Allen with his $200 million 400 foot behemoth. Local Hobe Sound guys like Greg Norman (230 foot, $70 million) and Tiger Woods with his 155 foot bargain boat at only $20 Million don't come close.

Most of these things, as you might suspect, are built abroad, although Tiger's was built in Washington State, I believe.

None of these rowboats would even be noticed next to Roman Abromovich's 536 foot 'Eclipse' or Sheikh Khalifa bin Zayed al-Nayan's 590 foot floating palace. Price tags are probably in the billion range, but as they say, if you have to ask. . .

Yep, the other half lives pretty damned well and is doing better all the time although they're really the other .01% You know, none of them really ever thought it would trickle down - I mean that would be like Communism or something, right?

I went to a benefit for Planned Parenthood last week - 5 or 6 million dollar house, (country music star) which is small for that neighborhood so at the moment, the last thing I feel is wealthy. Middle class and content is rich, and rich enough, to mangle Shakespeare just a bit.

8:38:00 AM  

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