Posted on 06/29/2010 10:35:19 AM PDT by BenLurkin
Myth 1: Unemployment is below 10%
Myth 2: The markets are panicking about the deficit
Myth 3: The U.S. is sliding into "socialism"
For a system allegedly being strangled in its bed, U.S. capitalism seems to be in astonishingly robust shape.
Numbers published by the Federal Reserve a few weeks ago show that corporate profit margins have just hit record levels. Indeed. Andrew Smithers, the well-regarded financial consultant and author of "Wall Street Revalued," calculates from the Fed's latest Flow of Funds report that corporate profit margins rocketed to 36% in the first quarter. Since records began in 1947 they have never been this high. The highest they got under Ronald Reagan was 30%.
The picture is also similar when you exclude financials.
The Dow Jones Industrial Average (^DJI - News) is above 10,000. Small company stocks have rallied astonishingly since early last year: The Russell 2000 index is back to levels seen not long before Lehman imploded. Meanwhile Cap Gemini's latest Wealth Report notes that the North American rich saw an 18% jump in their wealth last year.
Meanwhile, federal spending, about 25% of the economy this year, is expected to fall to about 23% by 2013. In 1983, under Ronald Reagan, it hit 23.5%. In the early 1990s it was around 22%. Some socialism.
These days, three-fifths of the entire budget goes on just three things: Insurance for our old age (through Social Security and Medicare), defense, and debt interest.
Conservatives don't want to cut the $700 billion-plus we spend on defense. We can't cut debt interest payments. And while Social Security and Medicare certainly need reform, the main "problems" are simply rising life expectancy and health care demands. If we didn't provide for the insurance through our taxes we'd have to do it individually.
(Excerpt) Read more at finance.yahoo.com ...
I’m sure that Wall Street is doing OK. As a group, they have the muscle and the capital & know-how to survive. But you’re going to have to work harder than that to show me that Main Street capitalists aren’t suffering dearly.
This author needs to look at the official definition of the word “socialism” and not put up some false straw man definition.
Simple answer; the double dip is here and it’s all about Deflation.
I figured out recently that my parent’s house, with 60 acres, cost 110% of Dad’s annual salary. My house, with .25 acre, in a VERY modest neighborhood, cost 180% of my annual income and I make twice what my father earned. I’d say things are getting worse, not better.
Also, I have double my salary in the past five years and still have only a couple hundred dollars at the end of each month- rather than thousands. Food prices are up, energy prices up, income stagnant, companies closing.. etc. etc.
He, intentionally or otherwise, missed the distinction between the Federal government spending money on defense (which it should) and government spending money on hand-outs (which it should not.)
He's just a smartass with glib figures. Why bother being serious with a "financial writer" who advocates walking away from your mortgage as if it would never catch up with you down the road.
If you could report a profit this year and pay half the tax on your profit that you would pay after January 1, 2011 would you declare your profit this year?
One more douche bag who hasn’t got the faintest idea about the real world.
That’s correct. Just because there are private companies does not mean that there is not rampant socialism running right alongside. Actually, of course, the situation is quite tenable for fascism, which requires a private sector to vampirically drain.
Just because nobody’s being herded into concentration camps does not mean we are not suffering under fascism, which is socialism-lite.
“Numbers published by the Federal Reserve a few weeks ago show that corporate profit margins have just hit record levels. Indeed. Andrew Smithers, the well-regarded financial consultant and author of “Wall Street Revalued,” calculates from the Fed’s latest Flow of Funds report that corporate profit margins rocketed to 36% in the first quarter.”
Individuals and corporations are taking profits this year in anticipation of higher taxes next year. Businesses are shedding workers to realize greater profits and because of uncertainty with health care, carbon taxes and genuine concern over a double dip recession.
Hehehe.. Now that’s funny! This guy Brett Arends is a flaming liberal, and not a particularily savvy economist. I know, he’s not an economist, but his article history suggests he thinks he is. On the contrary, this article above, which, as it happens, is a perfect textbook example of propaganda, and the appeal to authority fallacy, is inconsistent with his opinion on economic matters just this month alone.
So Brett, you can’t have ti both ways. Is the economy good, or is it gooder? :)
Tim-
Not a deep thinker.
He’s right about unemployment, its worse than anyone knows or admits. Probably half of the people of working age are not working, which makes it pretty hard to say who’s unemployed and who is simply not working. If you haven’t worked for over a year you’re no longer unemployed. If you don’t apply for unemployment checks you aren’t unemployed, statistically speaking.
But the markets aren’t worried about inflation? Really? Right now we are being whipsawed between a collapsing economy and a collapsing dollar. The collapsing dollar is inflating but fewer people have fewer of them which forces prices downward. The dollar holds strong against the euro which is also in free fall, so who can tell. If deflation and inflation are occurring together at the same time, it may look like everything is perfectly balanced until you hit the wall.
And socialism? He has no clue. How could it be socialism if we’re all making money? He says, forgetting he just told us unemployment is twice at least what we’ve been told. And forgetting that the bank he works for is getting its orders from DC now days. And getting its accounts backed up by DC.
“If you could report a profit this year and pay half the tax on your profit that you would pay after January 1, 2011 would you declare your profit this year?”
This was my thought when reading this article, too. Businesses are well aware crushing taxes are coming...Gov’t, as usual, is clueless.
No, but conservatives DO want to cut $750 bllion-plus we spend on Wall Street Money-is-God Goldman Sachs-AIG. Does Mr. Arends worship Wall Street too?
This article is so full of BS there is not enough time in the day to address it.
But it is an irrefutable law that a Leftist will rationalize what he wants to see.
Chinese capitalism is in great shave too you dink.
This guy would be better served by buying magic beans and watchin’ ‘em grow...
We know there is profit taking in 2010 because of what is to come in 2011. The stack market today is NOT where our focus should be. Jobs, business investment (other than green jobs), energy, inventories etc, are better indicators of what is and what is to come.
Have at it? Just consider the source and forget it......Could be worse tho, GOOGLE!
The thing about people who have written these articles is that they have never run a business.
The reason profits are up is that expenses are way, way down. The most expensive part of an operation is the people. Cut ten percent of your staff and you cut a multiple of your expense costs in salaries, benefits, taxes, and 401k contributions, etc.
Pay down your debt and your profit will increase.
If your sales are down less than an equal percent, your bottom line will look good.
But, it certainly does not mean you are growing. In fact, you are simply doing what you must do to stay alive. When the market turns, you might be caught flat footed and scrambling for resources that are scarce. That turns into inflation.
There is no recession. I went to Panama on vacation this summer.
You little people are just too stupid to understand.
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