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FreeRepublic , LLC PO BOX 9771 FRESNO, CA 93794
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Posted on 01/18/2003 1:03:18 PM PST by arete
A good read for anyone interested in hearing some truth about the economic recovery.
Richard W.
Comments and opinions welcome.
Richard W.
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FreeRepublic , LLC PO BOX 9771 FRESNO, CA 93794
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" A I would say prepare for much worse to come."
I don't want the truth......now just go way!
A Corporate cost cutting, for one. The widespread measures that individual firms take to improve their own profits have, in the aggregate, the opposite effect on the profits of other firms. Business spending is the key source of business revenues, not consumer spending. A retrenchment in business spending cuts business revenues. Higher profits and higher prosperity cannot possibly come out of general cost cutting.
Q What else impacts profits?
A Rising depreciation charges on plants and equipment are a drag on profits.
Q And?
A Corporations took on an enormous amount of new debt and the interest charges are a record high expense. For example, in 1997, interest expense accounted for 23% of manufacturing profits; in 2001 for almost 100%.
Q But this borrowed money went into productive assets that improved profits, didn’t it?
A Very little went to net new investment. It’s great bulk went into mergers, acquisitions and stock repurchases, adding nothing to the economy’s productive capacity. Huge amounts were dissipated in worthless goodwill, reflecting absurdly high payments for acquisitions.
Q None of this borrowing helped profits?
A No. As profits went down, corporations effectively devastated their balance sheets and credit ratings. The deterioration in credit quality has been unbelievable.
The unintended consequences of a rush toward globalization?
Unfortunately for many, this truth is unstoppable. It is going to come knocking at your door.
Richard W.
The Euro? No, the euros such as Germany are going down. The Yen? No, the Japanese will go broke if the US goes downhill.
Gold? No, its good in time of war, etc. but not during recessions.
So what currency is going to stay high? The Pound? Swiss Francs?
Do a reread and then you tell me if it means anything.
Richard W.
When you find a dead bang answer to that, let me know cause that is where I want to put all those dollars before they become wallpaper.
Richard W.
Yes, runaway money and credit growth and the typical symptoms associated with overheating economies – inflation, speculation and financial excess.
... economies run and built on this scenario may be in the past.
It's a time for consolidation and wealth protection and living the good life. Having a new car, computer, clothes, girl or boy friend (for the girls here), etc. every 6 months to a year only get's you into debt which makes you a slave to the employers and financiers.
Actually, I believe that it's the American people who are responsible. Clinton was just another gangster that the American people decided collectively to place on the throne.
Did you ever see the movie "The Hunchback of Notre Dame", where the crowd crowned Quasimodo the "Prince of Fools" as they partied in the streets? That's what the American people, in their cocaine-induced delirium, did when they elected Clinton in '92.
Remember the mantra..."Character doesn't count"? A mantra that the American people certified as they elected Bill Clinton. The nation was doomed from that instant, for you see, character is in fact the only thing that does count!
Like it or not, globalizion is part of the agenda of both political parties -- I say both parties in the context that in reality they are only different sides of the same ruling class elite coin. The pad their pockets while we get it in the neck.
Richard W.
This paragraph sums it up.
How can the economy grow when everybody is cutting spending or going bankrupt?
For example:
The telecom banruptcies have almost killed Lucent and Northern Telecom. They in turn have slashed close to a hundred thousand jobs, that paid pretty damn well. These hundred thousand have not been able to find employment that matched their previous salary and have to downsize themselves. Now they aren't buying new toys and geegaws and the toy and geegaw manufacturers start feeling the pinch. Etc.
The trickle down effect is real.
I want to put all those dollars before they become wallpaper.
It will be equal to wallpaper. More useful for fire than to buy wood to make a fire. See the Wiemar economy.
Once again it was a quick fix to profits. But, it wasn't as quick or quick enough to not effect the balance of payments. Both entrys get made on the balance sheet at the same time.
Corporate mangers ... with the recklessness of desperadoes who have everything to gain in the short run and nothing to lose in the long run.
Globalization = take the money and run.
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