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New data shows that the total wealth of the top 1% of Americans just hit a record $44 trillion. Corporate profits are also hitting record highs, raking in $2.8 trillion in the last three months of 2023 alone. And that’s after taxes. It won’t surprise you to hear, given these massive numbers, that inflation is being driven primarily by corporate greed and these staggering, record profits. By raising the cost of food, housing, and every basic need corporations are facilitating a gargantuan transfer of wealth from the working class to the 1%. In doing so they’re cementing this era’s position as the second Gilded Age.

For most of you, that’s probably not new information. Inequality has been soaring since the Reagan era, and even though workers have been creating more and more wealth, we’re seeing a smaller and smaller share of the value we produce. But this Gilded Age is slightly different from the first, and more importantly our remedy for this era should be separate and distinct.

The Gilded Age of the late 1800s is typically defined by extreme inequality and the monopolistic consolidation of industries. A handful of men, the Robber Barons, controlled the railroads, mines, newspapers, and, ultimately, the country. The concentration of wealth was so extreme that one man, John D. Rockefeller, is estimated to have been worth approximately $400 billion at the peak of his wealth, which was about 2% of the entire U.S. economy. Others like Andrew Carnegie, J. P. Morgan, and Cornelius Vanderbilt also pillaged and ruled the country with ruthless business tactics, exploitation of workers, and political corruption.

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See You on the Dark Side of the Moon

December 2, 2019

SEE YOU ON THE DARK SIDE OF THE MOON

And if the cloud bursts thunder in your ear
You shout and no one seems to hear
And if the band you’re in starts playing different tunes
I’ll see you on the dark side of the moon

Brain Damage, Pink Floyd

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And if the dam breaks open many years too soon
And if there is no room upon the hill
And if your head explodes with dark forebodings too
I’ll see you on the dark side of the moon

Brain Damage, Pink Floyd

Pink Floyd’s 1973 Dark Side of the Moon album is considered one of the greatest albums of all-time. It stayed on the Billboard 200 charts for 937 weeks. Roger Waters concept was for an album that dealt with things that “make people mad”. The Dark Side of the Moon’s themes include war, conflict, greed, the passage of time, death, and insanity, the latter inspired in part by former band member Syd Barrett’s worsening mental state.

The five tracks on each side reflect various stages of human life, beginning and ending with a heartbeat, exploring the nature of the human experience, and empathy. The themes of this album are timeless and are as germane today as they were forty-six years ago, if not more relevant. The country and world are awash in conflict, driven by the greed of evil men. Decent, law abiding, hard-working, critical thinking Americans see the world going insane as the passage of time leads towards the death of an American empire.

Waters and Gilmour lyrics have always captured the falsity of the world, whether it be the music industry, the ruling elite, educational system, politicians, the military, or our own delusions that keep us from accepting the truth. Their cynicism about our world appeals to my natural inclination towards skepticism about mankind and those constituting the invisible government, controlling the levers of our society.

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We Are All Hostages of Corporate Profits

July 7, 2018

We Are All Hostages of Corporate Profits

We’re in the endgame of financialization and globalization, and it won’t be pretty for all the hostages of corporate profits.

Though you won’t read about it in the mainstream corporate media, the nation is now hostage to outsized corporate profits.

The economy and society at large are now totally dependent on soaring corporate profits and the speculative bubbles they fuel, and this renders us all hostages: “Make a move to limit corporate profits or speculative bubbles, and your pension fund gets a bullet in the head.”

Not just pension funds, of course; tax revenues will also be taken out and shotas most of the state and federal income taxes are paid by high-earners and those skimming capital gains from stock options and stock-based compensation packages.

Political and financial authorities have caved in to the implicit threat, lest their share of the corporate swag be tossed in the ditch. To appease public anger, various bureaucratic thickets have been created, but as you can easily see, corporate profits have not been affected.

The global downturn resulting from China’s tightening of credit in 2016 caused a remarkably under-reported panic in central banks, which pulled out all the stops to keep corporate profits high.

Subsidies, tax breaks and exclusions keep the profits flowing not just to corporate managers and owners but politicos, lobbyists and the entire food chain that serves the top of the wealth-power pyramid in America.

Notice the difference between normal and abnormal profits? The enormous speculative boom of the dot-com era doubled corporate profits in a mere decade, but those gains pale compared to the tripling in profits since the 2002 downturn:

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Bad — But Better Than What’s Coming

March 27, 2016

Bad — But Better Than What’s Coming

Talk about diminished expectations. This morning’s estimate of 1.4% Q4 GDP growth is being hailed as a pleasant surprise. Which is odd, considering that for most of the past century a number this low would have been seen as weak enough to require emergency action.

And that’s just the headline number. Dig a little deeper and the picture — at least when viewed through a non-Keynesian lens — is of a system in crisis. Consider:

Corporate profits are, as today’s Bloomberg puts it, sliding.

Meanwhile (also from Bloomberg),

A firm labor market and low inflation encourage households to keep shopping. Today’s fourth-quarter growth figure reflected more spending on services, particularly on recreation and transportation. “It’s really U.S. consumers who are powering the global economy forward at this point,” said Gus Faucher, an economist at PNC Financial Services Group Inc. in Pittsburgh.

But if companies are earning less money, how likely is it that they’ll step up hiring going forward? Not very. And since today fewer Americans have full time jobs than in 2007 (making the current stellar 4.9% unemployment rate look like a cruel joke) a new round of mass layoffs will make the job market even more dire for anyone hoping to support a family with full-time work.

“If profits remain depressed, the prospects for capex and hiring will come under greater pressure,” Sam Bullard, a senior economist at Wells Fargo Securities LLC in Charlotte, North Carolina, wrote in a research note.

What are the chances of profits remaining depressed? Pretty good, considering that two of the big growth drivers of the past few years have been student debt and car loans. The former is, as everyone by now knows, at levels that consign a whole generation of kids to life in their parents’ basements — not a recipe for robust consumption.

…click on the above link to read the rest of the article…

Are We Entering an Earnings/Sales Recession?

January 12, 2016

Are We Entering an Earnings/Sales Recession?

Are corporate profits due for a retest of the lower channel line? If so, what happens to equity valuations when corporate profits plummet?

Is the U.S. economy in recession? Is it heading for recession? These questions can only be answered in hindsight, but it’s worth looking for clues to what might be just ahead.

Longtime correspondent B.C. recently submitted a chart of corporate earnings and one of real demand and time deposits (a measure of money) and real final sales.

(Explanation of demand deposits).

Unsurprisingly, all three of these metrics tank in recessions.

Corporate profits have been hugging the upper line of a long-term channel for years.

While real final sales have not yet plunged to recession levels, the annual change in real demand and time deposits has fallen into negative territory.

While the annual change in demand and time deposits has swung between positive and negative for decades, the annual change in real final sales only enters negative territory in recessions.

While the two series don’t align perfectly, there is a clear correlation between the expansion of money supply and sales.

For this reason, the recent decline in demand and time deposits might serve as an early warning of an impending drop in real sales to recession levels.

Corporate profits have remained in a rising channel for 85 years, with one exception: the Global Financial Meltdown of 2008-09.

Interestingly, all three recent equity bubbles–in 2000, 2007 and the current bubble–align with corporate profit peaks above the upper channel line.

Are corporate profits due for a retest of the lower channel line? If so, what happens to equity valuations when corporate profits plummet? These questions may be answered later in 2016.

…click on the above link to read the rest of the article…

Falling Interest Causes Falling Profits

January 6, 2016

FALLING INTEREST CAUSES FALLING PROFITS

Most people assume that prices move as a result of changes in the money supply. Instead, let’s look at the effect of changes in interest. To start, consider a hamburger restaurant. Suppose that the average profit in the burger business is ten percent of invested capital. If MacDowell’s is thinking about expanding, it has to consider the interest rate. Why?

Typically, most of the capital to expand a business is borrowed. MacDowell’s has to borrow the cash to build out its new store. If the cost of capital is greater than the return on capital, then it makes no sense to expand. Let that sink in, because it is vitally important. You cannot borrow at 10% to earn 8%.

Of course not all of the capital is borrowed. MacDowell’s also puts up some of its own funds (or at least it would in a normal world without a central bank drowning the markets with liquidity). The company has to consider what else it could do with that cash. If it could earn more on a bond portfolio, why should it take business risk? Let this sink in also. You should not invest in business equity to earn less than the yield on bonds.

We have just looked at two connections between interest and profit margins. It is both impossible and undesirable, to expand a business which earns less than the interest rate. Now let’s look at the connection in the other direction. MacDowell’s profit-seeking behavior actually affects interest.

What happens to the interest rate if MacDowell’s borrows at two percent to build a hamburger stand that makes ten percent? The very act of borrowing pushes up the interest rate slightly (in a normal world). The very act of opening another hamburger store pushes down the rate of profits on hamburger stores.

…click on the above link to read the rest of the article…

Ignore the Media Bullsh*t–Retail Implosion Proves We Are In Recession

October 15, 2015

Ignore the Media Bullsh*t–Retail Implosion Proves We Are In Recession

Here we go again. The dying legacy media will continue to support the status quo, who provide their dwindling advertising revenue, by papering over the truth with platitudes, lies, and misinformation. I have been detailing the long slow death of retail in America for the last few years. The data and facts are unequivocal. Therefore, the establishment and their media mouthpieces need to suppress the truth.

They spin every terrible report in the most positive way possible. They blame lousy retail results on the weather. They blame them on calendar effects. They blame them on gasoline sales plunging. That one is funny, because we heard for months that retail spending would surge because people had more money in their pockets from the huge decline in gasoline prices.

September retail sales were grudgingly reported by the Census Bureau this morning and they were absolutely dreadful. This followed an atrocious August report. The MSM couldn’t blame it on snow, cold, flooding, drought, or even swarms of locusts. So they just buried the story in their small print headlines. The propaganda media machine had nothing. They continue to spew the drivel about a 5.1% unemployment rate as a reflection of a booming jobs market. If we really have a booming jobs market, we would have a booming retail sector. The stagnant retail market reveals the jobs data to be fraudulent. The 94 million people supposedly not in the job market can’t buy shit with their good looks.

Despite the storyline about consumer austerity being the reason for sluggish spending, the facts prove otherwise. Consumer spending accounted for 68% of GDP in 2008 at the peak. Seven years later it still represents 68% of GDP. The difference is the spending has shifted dramatically towards services since the Wall Street created financial crisis. Spending on services has grown by 31% versus 20% for goods since 2008. Guess what has caused that surge?

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It’s Official – UK Admits “Human Rights” No Longer a Priority of British Foreign Policy

October 5, 2015

It’s Official – UK Admits “Human Rights” No Longer a Priority of British Foreign Policy

Not that they ever were, but they’ve finally decided to be explicit about it. Which to be honest, is pretty scary.

From the Independent:

Human rights are no longer a “top priority” for the Government, Britain’s most senior Foreign Office official has admitted, as ministers put resources into supporting trade deals ahead of tackling injustice in other parts of the world. In a remarkably frank admission to MPs, Sir Simon McDonald, Permanent Secretary at the Foreign Office, said that human rights no longer had the “profile” within his department that they had “in the past”.

Yes, you read that right. Trade deals. You know like…

Forget the TPP – Wikileaks Releases Documents from the Equally Shady “Trade in Services Agreement,” or TISA

And he added that the Conservatives’ “prosperity agenda” was now “further up the list” of areas on which the department was concentrating its dwindling resources.

Last night human rights charities said Sir Simon’s comments were as “astonishing as they were alarming” and described the change in focus as “deeply regrettable”.

Sir Simon made his remarks to Mr Blunt’s committee when he was questioned about how his department was prioritising resources. Asked whether human rights were now one of its “lower-priority activities”, Sir Simon replied: “Well, answering as Permanent Secretary, I say that although it is one of the things we follow, it is not one of our top priorities.” He added: “In a more constrained environment, the need to concentrate on Europe, Eastern Europe and Russia, and the Middle East has supplanted it to an extent.”

So starting World War 3 is now the priority. Go it.

And furter corporate profits, naturally…

While Sir Simon said human rights was part of that work, he also admitted it was secondary also to the need to promote British companies abroad.

…click on the above link to read the rest of the article…

How Fascist Capitalism Functions: The Case of Greece

July 12, 2015

How Fascist Capitalism Functions: The Case of Greece

There is democratic capitalism, and there is fascist capitalism. What we have today is fascist capitalism; and the following will explain how it works, using as an example the case of Greece.

Mark Whitehouse at Bloomberg headlined on 27 June 2015, “If Greece Defaults, Europe’s Taxpayers Lose,” and presented his ‘news’ report, which simply assumed that, perhaps someday, Greece will be able to get out of debt without defaulting on it. Other than his unfounded assumption there (which assumption is even in his headline), his report was accurate. Here is what he reported that’s accurate:

He presented two graphs, the first of which shows Greece’s governmental debt to private investors (bondholders) as of, first, December 2009; and, then, five years later, December 2014. This graph shows that, in almost all countries, private investors either eliminated or steeply reduced their holdings of Greek government bonds during that 5-year period. (Overall, it was reduced by 83%; but, in countries such as France, Portugal, Ireland, Austria, and Belgium, it was reduced closer to 100% — all of it.) In other words: by the time of December 2009, word was out, amongst the aristocracy, that only suckers would want to buy it from them, so they needed suckers and took advantage of the system that the aristocracy had set up for governments to buy aristocrats’ bad bets — for governments to be suckers when private individuals won’t. Not all of it was sold directly to governments; much of it went instead indirectly, to agencies that the aristocracy has set up as basically transfer-agencies for passing junk to governments; in other words, as middlemen, to transfer unpayable debt-obligations to various governments’ taxpayers.

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