Posted on 06/30/2002 2:11:16 AM PDT by sarcasm
Edited on 05/26/2004 5:07:04 PM PDT by Jim Robinson. [history]
June 30, 2002 -- Stock markets just finished their worst first half in three decades.
Meanwhile, the one bright spot in the gloom - expectations of a return to corporate profitability - could be snuffed out as the earnings season gets under way in July.
(Excerpt) Read more at nypost.com ...
These companies are not victims; they are targets for the productive-impaired.
The bottom line for each of us, for our communities, for our states, and for our nation, is that we are as well off as we can produce our way out of the hole.
We are in a hole.
There is no more money.
Our, aforementioned (in the legends of their own "like-minded" minds) "experts" with "expertise" have arranged for the international transfer of our productive capacity and our productive capital to "over there" (you name it).
We are losing and giving up and giving away what we need to produce for our own well-being.
Let me repeat, there is no more money.
There isn't going to be any money unless we can produce goods for sale.
We are not, in general, doing that.
Oh there are certainly towns here and there across America where they still produce goods, but such instances are because those towns know they had better not do to such businesses what the aforementioned "experts" with "expertise" have been doing at the national level.
There could be more productivity, here, if only companies did not have to answer for every look in employees' eyes as they all pass each other in the hallway ... the companies having to fill out forms upon forms of federal questionaires, of a sort, and then forward them to the minions of the federal government that to this very moment consist of the Bush [still running 75% of the Clinton] Administration.
This process of external administration and its costs, still being sanctioned by President Bush because he thinks he gets political capital out of it which he can pay to the vast left-wing conspiracy of political momenti who are ru[i]nning the national capitol and destroying the American Dream.
The dream is/was that we accept the diversity of the situations of our lives and the diversity of opportunities ... because we are self-determined enough to believe that we can educate ourselves and produce our way into better situations.
Now "gay" means sick; "diversity" means left-wing extremist segregation, "progress" means tax, and "move forward" means to not think about what path you are upon.
That leftist and fascist non-sense litters the workplace and corrodes what otherwise needs liberation, in order to be workable, to make things happen.
Hard to understand, among liberals "who have never had to meet a paycheck."
You may observe that the interest rate "gas peddle" is not. Indeed, the fluctuations of the energy supply and prices over the last three years, has had a greater effect, much to the embarrassment of the theorists; "funny" how the moment Clinton is out of office, the gas peddle does not work; might that be because it never did, and what was working was the fudging of numbers to make things appear to be "just great!"?
What was just great!?
Did anybody listen to the C.P.I. and P.P.I. reports which stated, "excluding the price of food and energy"?
Well, the price of food and energy have a lot to do with the costs in the lives of people who work for a living, and in the livelihood of businesses that produce for a living.
Comes as a shock to the theorists who party at the Kennedy's on Martha's Vineyard and conceive of money grown on trees with which to fund their wild ideas.
We are repeatedly told that "the people want government services."
Really? Do the majority of people want government services?
News flash: Most people's contact with the federal government is at the U.S. Post Office and otherwise via tax forms --- except at work, where the volumes of administrative burdens are wearing out our machinery and spirit of production.
To the point where businesses tell themselves they must seek lower operating costs "over there," outside the community, the state, and the nation.
That is what we are getting from government services; our productive capacity is being swept out of the country.
F_S: I'll respond in greater detail later. Right now I have to go do a remodeling job for a neighbor. As you know, I pretty much work 7 days a week to make ends meet. There are no engineering and few manufacturing jobs in the entire Western half of North Carolina. Want proof? Go to monster.com and punch in "Asheville/WNC and -all jobs-. See what's available. If you are really a glutton for punishment, punch in the entire united states and see how many engineering jobs in power plants are available. Less than five, last time I checked.
Sure, I could drive 2 hours to Greenville/Spartanburg and make $1 per hour more as an "engineer" [translation: paper shuffler] than I do as an electrician. But over the last three years I have crossed the River Styx and accepted the fact that never again will I work in a factory or power plant. The "service" economy will have to get me through.
Once I built a railroad, made it run...
Yet the lawyers continued unscathed; as usual.
Where is the accountability, there?
I just drove through that area last week. Big boom in the building of mountain homes. Rand McNally rated Brevard as the number one retirement area in the USA. Somebody is spending lots of money there.
Exactly. Are we about ready for our Caesar?
Homebuilder charged with Endangered Species Act violations, an AP wire story at station KCAL, June 30, 2002 (posted by chance33_98).
Then we had Y2K which forced companies large and small to spend unbelievable amounts on upgrading their networks and their computers, etc.
It is no surprise that immediately after that spending spree - things started nosediving. The Dot Com implosion came at the same time of course, putting double whammy on all telecommunications related companies....and other tech companies.
Then 9-11.
What is needed, IMHO, is an economic summit headed by the very vest, most ethical, of all in business - including small business representatives - to hash out what needs to be done and how to implement it.
The alternative of having Big Brother dictate to businesses what they are to do to "fix" things will, IMHO, only make matters worse.
You hit it right,... retirement homes, not homes for those working and building new homes. These homes are being built with the largesse of years-gone-by work not work presently in progress.
In the meantime, the well paying manufacturing jobs are disappearing from this area by the hundreds - the ones that are left - never to return. Plants are either closing their doors permanently or moving their work overseas. It seems little is staying in America. "Working people" here are getting by selling people somebody else's stuff or working in low paying service jobs, with the exception of home construction. The manufacturing middle is being gutted. When the construction stops i.e. the retirement money runs out, the area will be just another lovely-looking depressed area with people either working as CNAs in nursing homes or on welfare.
One of the many problems with the stock market is that these expectations are not based on real earnings determined under generally accepted accounting principals. Many, perhaps most, of these published earnings reports come to an operating income before extraordinary items number--many charges that relate to the creation of the operating income stream and which should be charged as expenses above the line are below the line instead, inflating the operating number which is used for comparative and media reporting purposes.
Based on the media numbers, stocks are significantly overpriced based on price earnings ratios and dividends and they could be expected to drop much further to real values. No one has yet done a restatement of the S & P earnings to reasonable GAAP reality--I suspect that such a restatement would demonstrate that the S & P is selling somewhere around 60 times which is of course an astronomical high in terms of value at this point in the cycle and would lead one to the expectation that prices will drop much further for a long time.
Whose fault? The kinds of unraveling we now see are the result of artificial inflation of liquidity at artifically depressed prices (interest rates) by the Federal Reserve. The Fed has engaged in these policies in response to political pressures from incumbent politicians who do not wish to be seen as in charge in periods of economic contraction. This particular bubble actually started in early 1992--a mild contraction began which would have seen the excesses of the later 1990's commence from a much lower base.
The contraction was aborted however Clinton was elected to expand the economy. The 1993 tax cut was designed (explicitly or implicitly) to furnish the Fed with fiscal protectection for a significant monetary expansion and reduction of interest rates which in turn fueled an increase in stock prices, real estate prices, and general consumption spending.
These events are much like the similiar bubble in the 1920's and can be expected to result in a similiar period of unwinding to an ultimate lower level of prices generally--for residential real estate, common stock, and consumer assets. The contracton that began in 1929 did not see the expansion begin until 1949.
Update your information: Standard and Poor has come out with a "new" measure called Core Earnings that ignores Pro-Forma and other false earnings accounting methods. This "new" measure is the same at the measure used before (prior to) the liberal accepted accounting practices of the '90s.
Yup. I'm wiring lots of $2 million vacation homes up in the Highlands/Cashiers area. Brevard is not so upscale.
But these homes take two years to build, so there is a long lag time. It is my sense that not as many are being started this year.
Guess again, the "core earnings" concept is designed to respond to the analysis we have set out--they are not GAAP at all. The whole point is that if you are going to try to determine where you are in terms of real values, stated as earned returns on capital, by comparing current returns stated as a P/E ratio with historical P/E ratios, you need to make the earnings determination the same way you made the historical determinations.
In my view, the option element in the employee stock option is compensatory, so it ought to be treated as an expense and deducted from earnings. However in the current market condition, mandating that you do that does not mean much because there is not much about common stock appreciation that is compensatory in this enviornment.
What you have to do is mandate that the published financial statements actually present earnings and expenses of the enterprise on a fair reasonable comparative basis--the function of the independent account is to look at the statements and the books and confirm that has been done. "Core earnings" makes some obvious adjustments in the current numbers practices but does not resolve the problem.
Just a little to add (but not improve on), stock market-wise....
One of the main problems with the U.S. economy and the U.S. stock market is that, in order to claim economic robustness (especially, but not only, during the Clinton administration….) the figures had to be either cooked, or manipulated. After all, before Bill’s election, the media had (very successfully) inculcated into the average American voter’s (sponge-like) brain the notion that the state of the American economy was the yardstick by which the citizen was to measure his sense of security and well being. Technological/defense/military treasures been sold or given to our ideological enemies? All manner of personal attack/destruction (sometimes even death) being visited upon those who would cast aspersions on the President or his administration? Despicable, globalism-agenda-based, sovereignty-ignoring militaristic brutalities being committed all over the world? Sexually (and otherwise) immoral behaviors being committed/condoned within the walls of the White House? All manner of unconstitutional, liberty-destroying orders being issued, and carried out? Much of America’s land and liberty being sold to the highest foreign bidder?....All of that was declared (by the media, and the statist experts) to be pretty much irrelevant. After all, the Dow was flying. There were two/three cars in most garages. It was the economy that mattered. (stupid)
So…the economy had to come through. Otherwise, all of the rest of the stench might well have become noticeable (even palpable) – and even to those who consciously decided to abandon their sense of smell
The irrational (understatement of the century) exuberance of the Clinton years has resulted in a stock market which, despite recent give-backs, has no business enjoying the levels even of today. P/E ratios are outlandish. Companies which exhibit P/E ratios that one were considered highly speculative are being gobbled up by (supposedly) conservative investors. The casino mentality has overshadowed sound investing.
Whenever the government imposes restrictions on the economy (even in the seemingly innocent form of a mandatory minimum wage, or artificially-imposed interest rate parameters), the wealth of the individual citizen (and therefore the nation as a whole) invariably suffers.
The Fed is largely to blame for the current irrationality and ‘unnaturalness’ in the market. Its artificial manipulation of the economy, in order to defer an economic contraction (and thereby achieve momentary political gain) may prove to be even more disastrous than many of us believe. Much of the current market decline (with much more down yet to be seen), and collapsing dollar, can be laid at Mr. Greenspan’s feet. As a wall street pundit (can’t remember which….Rukeyser maybe?) recently said (not verbatim, but pretty close I think), ‘If he cuts interest rates (already at 1.75% -- the lowest in forty years) yet again, the dollar will plunge yet further – and if he raises rates to save the dollar, the market will plunge.’
The danger in Greespan is two-fold. No unelected (but politically appointed) official should wield the economic power that this man is capable of wielding. And, given his omnipotence over the economy, the fact that such an extraordinarily economically unqualified man (never was worth a damn as an economist – just a glib talker) holds the reigns is beyond ludicrous.
We may soon experience our sixth straight quarter of earnings declines, and three consecutive years of negative market returns (the worst such conditions since World War II). Add to that the fact that the average American citizen can’t see beyond his nose, and, once the full impact of recent (and no doubt yet-to-come) corporate scandals are made public (and the appropriate heads begin to roll), the market implodes even further, 401K statements start looking even more dismal than they already do….and Mr. Bush’s current popularity will be short-lived. The fact that the roots of the impending economic debacle were planted long before he set foot in Washington will not be evident to the impaired vision American. And the media and the leftists will play the catastrophe for all its political worth. (Don’t get me wrong. Mr. Bush has done little to stave off the coming disaster. But neither does he deserve to have it pinned to his back.)
Consumer spending has been keeping the economy's head above water so far, economists add, but it's uncertain how long that can go on without corporate spending pitching in to help.
I never cease to be amazed at how economic optimists invariably point to consumer spending as a sign of economic health (while conveniently ignoring record-setting bankruptcy filings and credit card indebtedness). So irrational, irresponsible spending on the part of the average American consumer is supposed to be perceived as a life preserver while the nation’s economy is imploding. Thanks, but no thanks.
In times such as these, personal economic vigilanc is the only life preserver worth hanging on to. The pundits be damned.
Most importantly, America is facing the most serious threat to her sovereignty and security in her history. The fact that we are experiencing a staggering economic downturn is not to be ignored. But, we have worse problems standing just outside the door. To focus our attention (once again) solely on the economy (stupid) could not only (this time) prove foolish. It could prove fatal. We cannot allow the propaganda powers that be to (once again) indoctrinate us into believing that our safety and security depend on dollars. They depend, even more, on keeping those bent on our very destruction away from our door. It’s a matter of keeping things in perspective, and not allowing those with an agenda to tell us where the greatest threat to our security lies. When you are being attacked on more than one flank, you must place most of your reinforcements at the flank that is the most long-run strategically vulnerable. Liberty, in the long run, is more valuable than dollars.
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