The Wall Street Rally: Watch Your Wallets
Been Down So Long It Seems Like Up To Me, the precocious 1966 novel by the late Richard Farina, defined the late 1960s counterculture. The stock market rally that's pushed the Dow Jones Industrial Average back above 9000 for the first time since early January could be given the same title, and it might well come to define the much-wished-for financial recovery.
What's pushing the stock market upward? Mainly, unexpectedly positive second-quarter corporate profits. But those profits aren't being powered by consumers who have suddenly found themselves with a lot more money in their pockets. The profits are coming from dramatic cost-cutting -- including, most notably, payroll cuts. If a firm cuts its costs enough, it can show a profit even if its sales are still in the basement.
The problem here is twofold. First, such profits can't be maintained. There's a limit to how much can be cut without a business eventually disappearing -- becoming, in effect, a balance sheet in space. Secondly, when businesses slash payrolls to show profits, consumers end up with even less money in their pockets to buy the things businesses produce. Even if they hold on to their jobs, they're likely to fear that they won't have the jobs for long, which causes them to retreat even further from the malls.
Most companies that have reported earnings so far have surpassed analyst's estimates, but that only means that earnings have been less bad than analysts had feared. According to the chief investment officer at BNY Mellon Wealth Management, if the companies that haven't yet reported earnings show the same pattern a the companies that have reported so far, overall corporate earnings will have dropped 25 percent over the past year. That may not be as much of a drop as analysts had expected, but it's still awful. Operating income for companies in the S&P 500 that have reported so far has been almost 29 percent lower than last year, more than 80 percent lower than 2007, according to Standard and Poors. Ouch.
"Better-than-expected" is Wall Street's euphemism these days for "we're happier than we thought we'd be." But Wall Street is in the business of cheer leading, even when there's really nothing to cheer about. It wants investors to think positively, on the assumption that positive thinking can be a self-fulfilling prophesy: If investors begin putting more money into the market, then the market will automatically rise, leading more investors to put in more money -- until, that is, the rally ends because nothing has fundamentally changed in the real economy.
Keep your eye on the real economy, where unemployment and underemployment keep rising. It's not as much fun as cheering and investing right now, but it's far safer.
It appears to be a recovery that will be on paper only.
Unless people are put back to work the economy will continue its negative growth and more people will lose their jobs and the cost of goods/services will continue to rise which means more people will be further in debt/filing for bankruptcy/losing their homes which will lead to even less consumer spending, etc, etc, etc.
The American workers need to have jobs with good pay (so burger flipping at McDonalds and being a 'greeter' at Wal-Mart don't count as such) with good benefits to be able to sustain our economy. What I predicted almost 20 years ago when NAFTA was passed and signed into law has come to pass...and once the American workers got screwed we were all screwed. Buying power isn't the ability to take out loans against criminally inflated home prices.
As Simon Johnson observes here a not insignificant part of our oligarchy has to lose their wealth, and which I feel needs to be redistributed downward, for us to finally start pulling out of this economic death spiral. I suggest that the best place to start on that process is with our 'for profit' health care system.
July 23, 2009 10:49 PM | Reply | Permalink
Now I understand why Rahm says the government rescued the economy while Obama says he's now praying all the time because he really needs guidance.
July 23, 2009 11:07 PM | Reply | Permalink
the dow is a mood ring for the top 5 percent.
July 23, 2009 11:10 PM | Reply | Permalink
Best statement of the day!
July 23, 2009 11:19 PM | Reply | Permalink
cosign!
July 24, 2009 2:29 AM | Reply | Permalink
Redoubled!
July 26, 2009 12:35 PM | Reply | Permalink
Remember October 2002 and March 2003 and 1% interest rates?
How 'bout November 2008 and March 2009 and 0% interest rates?
To the moon, Alice; to the moon!
July 24, 2009 12:58 AM | Reply | Permalink
I love it when a career politician like Reich claims that there's a group of people somewhere on Earth that spins the truth more than government. The hypocrisy is astonishing. For example:
1. Reich says that corporate profits achieved through cost-cutting can't be sustained in the long-term. Neither can economic growth be sustained through government stimulus! Eventually an economy must have demand growth to expand, just like a corporation must eventually have sales growth to increase profits. So where is Reich when we need a reminder that economic growth created by govenrment stimulus is, like profit growth through cost-cutting, an example of living on borrowed time rather than an example of good decision-making?
2. Reich says Wall Street is in the business of cheerleading, even when there's really nothing to cheer about. Really, Reich? Cheerleading is Wall Street's business, not Washington's? No one on Wall Street, or anywhere else, even comes close to the cheerleading prowess of the federal government. Take a look at this piece by factcheck.org:
http://www.factcheck.org/politics/100_days_of_spin.html
And that's just the spin during the early days of the Obama administration, which pales in comparison to the spin that goes on during a Presidential campaign. Cheerleading from both Democrats and Republicans is legendary, and puts Wall Street spin to shame. Reich is well aware of this, being a former cabinet member. The ONLY thing a cabinet member really does is spin his/her boss's message.
Reich's entire career is based on cheerleading. Pot, meet kettle.
July 24, 2009 5:23 AM | Reply | Permalink
I wouldn't blame Reich, he has been a Beltway outsider for a while now since his fallout with Clinton. He has hardly cheered on TARP or any of the actions from Treasury and the Fed. It's mostly the same old clique - the Oligarchy and their BOUGHT government officials from BOTH parties - that has been playing the sleight of hand.
And no, this isn't market recovery. This is another market bubble, the next Ponzi to lure unsuspecting investors in to be sucked dry.
July 24, 2009 8:29 AM | Reply | Permalink
Reich may be a Beltway outsider right now, but he is an advocate of giving more power to the bought government officials you described and if the Obama administration gave him a chance, he would be happy to go back to his job of working with those bought government officials to spin the President’s message.
July 24, 2009 2:27 PM | Reply | Permalink
The question is, "Is he right?".
The answer is, of course he is.
I would add the tremendous amount of debt these companies hold will also short circuit them.
Being critical of someone doesn't mean their message is wrong.
July 26, 2009 10:41 AM | Reply | Permalink
Exactly. There's a nice article on this type of mistake in reasoning in the Scientific American: http://www.scientificamerican.com/article.cfm?id=the-truth-about-hypocrisy
The commentor here just just committing a kind of tu quoque fallacy, but even if they made it into a clean accusation of hypocrisy, it STILL doesn't answer the question.
July 26, 2009 12:33 PM | Reply | Permalink
I didn't say Reich was wrong. I said he's a hypocrite. I will also say that the cheerleading coming from Washington (of which Reich used to be a part) is more dangerous than the cheerleading coming from Wall Street, because you can choose not to do business with Wall Street.
In your reply, you mentioned that corporations will be hurt by their large debts, and I agree. The federal government has a debt problem too. But again, you can choose not to do business with corporations that have taken on too much debt or are otherwise in danger of failing. Try telling the IRS that you're choosing not to give them money because you don't think they will use it responsibly.
July 26, 2009 3:11 PM | Reply | Permalink
1. Nobody ever suggested that economic growth can be sustained through government stimulus. At best, rational people agree that the stimulus is intended to spark growth, or at least minimize an economic downturn, not to sustain growth. However, the corporate profits achieved by cost-cutting are so transient that the effects will be negligible as soon as the next quarter. You also don't address where those costs are being cut - does the word 'unemployment' mean anything to you? Once again, the richest 1% balance their income on the rest of us - including you.
2) Theoretically, our society has a free press and free flow of information that, y'know, fact checks statements made by government officials when there are no missing white women to distract them. When's the last time you saw a critical inquiry of corporate news? Where's the Wharton School of Business Fact Check on Wall Street? When corporate-owned media reports on the PR and legal department-approved shiny happy news, the so-called business reporters, who are panting after stock tips and penthouse cocktails pass it on uncritically. That's cheerleading, and Wall Street will always beat Washington.
July 26, 2009 1:57 PM | Reply | Permalink
1. The analogy is between economic growth through stimulus, which Reich endorses, and profit growth through cost cutting, which Reich dismisses. Profits achieved by cost cutting are not transient; profit GROWTH through cost cutting is transient. If you think employers are obligated to maximize the number of people they employ rather than maximizing their profits, please make an argument to support that idea. I’d like to hear it.
2. I agree with your view of the media coverage of business news, but not your conclusion that there’s more cheerleading or spin on Wall Street than there is in Washington. Here’s a story about Geithner’s view of the economy:
http://www.marketwatch.com/story/geithner-economy-mending-faster-than-expected
So is Reich wrong, or is Geithner a cheerleader?
A while back I read a book called “It's Not News, It's Fark: How Mass Media Tries to Pass Off Crap as News.” The book was more humor than genuine research, but it includes a lot of media criticism that I thought was legitimate, and will probably resonate with you.
July 26, 2009 3:42 PM | Reply | Permalink
Re: Employers obligated to employ as many people as they can.
The case to be made comes directly from industry itself: Henry Ford. He held that the role of the industrialist is to make the best product possible for the lowest cost possible, while paying the highest wage possible.
The rationale is this: Niche products are inherently less stable over time. In order to stimulate as much demand as possible for your product, you need to either a)be selling something people must have to survive, like air, or b)price your product at a point where the purchase represents less time than the product itself saves.
What I mean by this is: money itself is an abstraction of time spent in labor. If you make $20/hr, then spending $200 represents spending 10 hours. Thus, if the product will save the equivalent of 10 hours of time/labor, it is worth that $200.
Now, the larger and/or more complex/more difficult to produce an item is, the more expensive it will be. Costs involved in production of the product can only be ameliorated so well and reduced so far. This means that the more expensive your product is, the more you want the average consumer to have in his pocket, in order to be able to afford your product.
There is no company that can afford to assume they will sell all of their finished product to their own employees. That'd just be silly. But companies can safely assume that all of their sales will be to someone's employees. Thus, the way to ensure that the maximum customer base for your product exists is to attempt to pay as many employees as you can as much as you can in order to ensure that they continue to support other companies, who in turn pay as many employees as they can as much as they can, and who will then view your product as more desireable.
It's actually very basic social engineering. You do your best to help the other guy because that way he helps you. It's the underpinnings of very interaction we have, right down to 'I won't kill you if you won't kill me.'
July 26, 2009 6:42 PM | Reply | Permalink
There are several problems with your example. The first is that Ford wasn’t just a manager deciding how much to pay the people working for him; he was also the primary shareholder of Ford Motor Co. To the extent he decided to pay higher wages to his employees, Ford took the money out of his own pocket, as was his right given that the business belonged to him. In a more typical arrangement where management and shareholders are different groups of people, shareholders aren’t providing capital for the sake of maximizing wages with an arbitrary level of “acceptable” profit. They simply want to maximize profit. Maximizing profit is perfectly moral behavior, especially when you consider that most of the capital provided to corporations comes from institutional investors like pension funds, charitable foundations and university endowments. The more corporations are able to create profits, the more these institutions are able to fulfill their missions.
The second is the idea that a company creates a bigger market for its own products by paying its employees higher wages. Ford may have been a manufacturing genius, but that didn’t make him much of an economist. Simply paying people more “because you can” is not a recipe for economic growth. It’s a recipe for inflation, because the additional money put in the hands of workers/consumers chases after the same amount of available goods.
Third, your “money is an abstraction of time spent in labor” is a misinterpretation of the Labor Theory of Value. According to the theory, the value of a car is ultimately based on the amount of labor required to produce it. That’s the AMOUNT of labor, not the PRICE of the labor. Arbitrarily increasing the price of the labor doesn’t make the car more valuable; it just makes the car overpriced.
Finally, your description of “basic social engineering” doesn’t support your argument for maximizing wages. You can “do your best to help the other guy” by maximizing your shareholders’ investment returns, since they are representing the beneficiaries of our pension funds (workers), charitable foundations (poor), and university endowments (students).
July 27, 2009 2:33 AM | Reply | Permalink
And I'd argue that you actually do a better job of maximizing investor returns by doing your level best to expand the consumer base and sales figures than by cutting costs and reducing your consumer base.
The unemployed don't just not spend, they don't invest, either.
And yes, the value of a car - as a good to be sold - is determined by the amount of labor needed to make it. But the value of the car as a good to be purchased is determined by whether the purchaser receives more benefit from owning the car than they would otherwise receive from the time it takes them to earn that amount.
July 30, 2009 1:22 PM | Reply | Permalink
No-one is denying that for any kind of sustainable economic recovery, we need to stimulate demand. That's what much of the government-led spending is intended to do: to find ways to put money back into circulation through projects that will require materials and services, thus sparking demand.
Nor is anyone trying to claim that government can maintain a wide-open choke forever. But right now, given that nobody else has money to spend in order to stimulate demand, that spending has to come from the government. Once the wheels are oiled and things start to un-seize, then it's a good idea to turn back - not to the Clinton-era tax brackets. After all, we all know that championing a Democratic President's tax policy is tantamount to socialism. No, instead we should look to a Republican President's tax policy: Dwight Eisenhower.
He had the top tax bracket at 50%, not 39 like Clinton. ;)
July 26, 2009 6:30 PM | Reply | Permalink
Why stop at 50? The government does such a great job with our money, we should just make it an even 100. After all, the government knows exactly how much stimulus is needed and exactly when "the wheels are oiled and it's time to turn back," right?
According to your theory that "money is an abstraction of time spent in labor," we should just give the government all of our money because that will save us the time and labor of having to think for ourselves.
Don't worry though, they'll make up for the 100% tax by giving you a big raise. ;)
July 27, 2009 2:47 AM | Reply | Permalink
Ah, the reductio ad absurdum argument. Truly the last refuge of the ignorant and incompetent.
July 27, 2009 10:10 AM | Reply | Permalink
My reply made as much sense as Bill's rationale for raising taxes. At least Bill made an effort in a separate comment to make an argument for maximizing employment/wages rather than profits. Are you going to make an argument, or just throw around random snippets from your high school Latin class?
July 27, 2009 3:08 PM | Reply | Permalink
Except that's not a theory. That's what money is. Money is an abstraction of the value society places on our labor. Money has no actual value in and of itself. If you've got a better definition for money, lay it on me, man.
And the rationale for raising taxes wasn't at all included in my tongue-in-cheek comment about how evil Clinton's (relatively low) top-end tax rate was. The rationale's pretty simple:
Government exists to enforce the Social Contract - the unspoken agreement that if you don't kill me, I won't kill you, and we'll both work to improve conditions for one another. In doing so, we improve conditions for ourselves and for our children. But the part that makes it all work is actually improving the lot of others, because if we don't, then they have no motivation to not kill us and take our stuff.
Thus, those who have the most are benefitting more from the security, stability, and services government provides: their lot has been improved by the efforts of all. Yes, they have contributed to their own advancement, but I defy you to show me a single multi-millionaire who could have made any money without other people: workers, investors, consumers. So, they pay more in order to achieve what they individually cannot: assist in a similar proportion to raise the lot of others. If you'd prefer, we could instead institute community service commensurate with income, but the truly super-rich might well find themselves owing more time than there is in a day.
Those who have less are not receiving the same benefits from having a government. Thus, they pay less, down to the point where we feel government has failed completely in providing an environment where the community can work together to raise one another out of poverty - those aren't taxed at all, because they're not benefitting sufficiently for society to have a valid claim on them.
July 30, 2009 1:16 PM | Reply | Permalink
The buzz about high frequency trading, or speculating, has reached the NY Times:
That sort of exploitation of the unwary could well be a bear rally.
Here's a video in which a Canadian analysts sees another Depression:
http://watch.bnn.ca/the-close/july-2009/the-close-july-23-2009/#clip196526
July 24, 2009 11:08 AM | Reply | Permalink
"Bear rally"? March 2003 to October 2007 was a rally in a long-term secular bear market.
Investors can't afford to miss out on rallies -- bull or bear.
July 24, 2009 12:31 PM | Reply | Permalink
Even if the supercomputer traders are the only ones making money?
July 24, 2009 12:40 PM | Reply | Permalink
It's amazing how a few billion dollars can make a dead cat bounce.
July 24, 2009 12:40 PM | Reply | Permalink
Make that a few Trillion.
July 26, 2009 10:41 PM | Reply | Permalink
goldman has software that puts in high- speed and high-volume trades on various stock and commodities markets just a few seconds prior to the economic news is announced. after other traders get in, they get out.
this computer software was stolen and they are worried.
“Someone stealing that code is basically stealing the way that Goldman Sachs makes money in the equity marketplace,” said Larry Tabb, founder of TABB Group, a financial-market research and advisory firm. “The more sophisticated market makers -- and Goldman is one of them -- spend significant amounts of money developing software that’s extremely fast and can analyze different execution strategies so they can be the first one to make a decision.”
Bloomberg: Goldman Trading-Code Investment Put at Risk by Theft
July 24, 2009 6:44 PM | Reply | Permalink
I trade currencies and have noticed for the last year or so that something is going on....the market always moves prior to the announcement of a big piece of financial data. I just thought insiders were getting leaks.
July 26, 2009 6:38 PM | Reply | Permalink
I agree 100% with Robert Reich.
That's why I'm not investing into this rally.
By many measures, stocks are more overvalued than one would expect at the start of a true long-term bull market.
I haven't yet seen enough evidence that the larger economy (you know, the one where folks actually buy things in stores) has improved significantly.
I could be wrong. But if this rally is the start of a long-term bull market, it won't matter if I get in a year late or so.
July 25, 2009 12:53 PM | Reply | Permalink
"I could be wrong. But if this rally is the start of a long-term bull market, it won't matter if I get in a year late or so. "
I don't think you'll ever have that certainty. A big pullback could happen one or two years from now, or in five. The moment you think it is "safe", might just be the moment it tanks really bad. This market has a way of confounding everyone who tries to make a guess.
July 26, 2009 1:04 PM | Reply | Permalink
Hey freedomhasvalue: You don't think the Wall St. crowd is bought and paid for? The ratings firms with their incestuous ties to the banking houses (talk about cheerleaders!)?
July 26, 2009 10:35 AM | Reply | Permalink
I agree with you, though I would say the incestuous ties are between the ratings agencies and the rated companies that hire the ratings agencies to do consulting work, as well as investment banks’ research analysts who issue “buy” ratings on the stocks of companies that give investment banking business to the analysts’ employers.
There is a LOT of cheerleading on Wall Street, yet there is a great deal more cheerleading in Washington. Cabinet members in particular (as Reich used to be) do nothing but cheerlead for their bosses. For example, Geithner is looking at the same economic data as Reich, but somehow he’s coming up with a more positive way of looking at it:
http://www.marketwatch.com/story/geithner-economy-mending-faster-than-expected
Isn’t it convenient that Geithner finds the silver linings in all of Reich’s economic clouds? Geithner’s view of the economy is more consistent with Wall Street’s than it is with Reich’s, so either Reich is wrong or Geithner is doing some cheerleading too.
July 26, 2009 2:34 PM | Reply | Permalink
A passing thought: We are living not in a Republic nor in a Democracy, but in a Kleptocracy. Wall Street, the insurance companies, hedge funds, military industrialists, etc., run the economy and the government. The rest of us are fleeced, at best. The man for whom the word kleptocrat was coined, Mobutu, stole only a few billions in Zaire. These kleptocrats are stealing by the trillions. Obama is not the answer, nor are the congressional Democrats. Investors are merely another set of victims for these grifters.
July 26, 2009 10:58 AM | Reply | Permalink
Word.
July 26, 2009 10:43 PM | Reply | Permalink
Reich makes a good point.
BUT
You can't see the future. Don't ever try to predict or time the market, or you will be burned.
I think Reich's article is flawed because it seems to imply trying to time, which is all but impossible.
The moment "experts" declare we are in for a pull back, it shoots up. When there's doom and gloom, we get a remarkable rally. When everyone is feeling confident, it crashes.
You simply can never predict the "random walk".
"Keep your eye on the real economy, where unemployment and underemployment keep rising."
These are, however, lagging indicators. The market is frequently (though not always) forward looking. If the rally holds, it will mean that the real economy will likely improve 6-9 months later.
July 26, 2009 12:58 PM | Reply | Permalink
Reich does make good points. However, he doesn't allow for the possibility of an export-driven recovery. Those newly lean-and-mean companies, aided by a dollar that isn't yet back to full strength, may succeed in selling much -- if not all -- the product in developing countries that they used to sell to the credit-maxed American consumer.
July 26, 2009 3:09 PM | Reply | Permalink
American business is like a farmer who has gotten so enamored of creating exotic cheese that he forgot to buy feed for the cows.
Things look a little better now, because the farmer found out he can sell some of the cows for hamburger; but soon it won't be a dairy anymore.
July 26, 2009 4:54 PM | Reply | Permalink
Two US economies--Wall Street and its bonus millionaires and the rest of us 300 million people.
Reich was part of the Clinton tilt/grab toward Wall Street. A snake in the grass. Greider (current Nation) and Kevin Phillips "Bad Money" are more to the point.
i.e. What's good for Goldman-Sachs is not good for the country.
July 26, 2009 5:32 PM | Reply | Permalink
Mr Reich you seem to want it both ways. In a previous piece you said that the workers that make stuff, build stuff and fix stuff and are not of any particularly unique, individually sought after, or symbolic value are pretty much a thing of the past. You cited a factory (I think you said you visited it)that produces products for the mass market that has a grand total of zero of these workers. Profits will remain and grow, but opportunities for proletariat workers will wane to near zero, right?
Now you tell us that the efficiencies and profits gained by shit canning regular working stiffs must be viewed as untrustworthy signs of positive economic progress.
Which is it? Won't the sucessful companies of the future eventually not need but a small fraction of whatever number of old fashioned working stiffs they currently are keeping on the payroll?
Does your vision of the "way fewer traditional working stiffs" future include some ideal of an unbreakable, unwritten code of understanding among benevolent minded business leaders about keeping sales as high as possible and charitably keeping workers of another era on the payroll, putting them out to pasture only when (and in numbers that)the macroeconomic conditions can absorb the costs of their collective temporary or permanent idleness?
I don't mean to be a wise ass, I think you are a earnest voice for overall good policy, but I do think your previous piece was putting the cart before the horse by a country mile in it's elevation of the non-worker worker.
Reread your present piece when you say that the remaining workers:
"Even if they hold on to their jobs, they're likely to fear that they won't have the jobs for long, which causes them to retreat even further from the malls."
I have been in full retreat from "the malls" since my healthcare and pending children's (3) college tuition costs threw my household balance sheet into the red, around the turn of the century. (Cal Berkeley for my daughter goes for $28K/yr, your welcome) What really is bad for me is not fear of losing my 16 ton hauling job, it's the greed, inefficiency and incompetence among non-production workers in my company that continue to drive up the market prices of the fruit of my labor while at the same time tamping down demand for my skills.
July 26, 2009 5:43 PM | Reply | Permalink
Don't forget the repeated attempts under the Bush administration to let Mexican trucking compete all over the country. If business can't export your job to China, they'll import cheap labor to replace you. They are even exporting defense jobs that were "U.S. citizenship required", like the air tanker contract to airbus.
I don't know who is coordinating it, but there does seem to be a conspiracy to never employ native-born talent.
July 26, 2009 6:34 PM | Reply | Permalink
There's not going back, unless it's to 1979. The last 30 years were a mirage created by false demand which was created by cheap Chinese credit, which is now gone forever. And all it cost was our manufacturing base! The American people aren't smart enough to realize this and they won't react well to the new reality.
July 26, 2009 6:35 PM | Reply | Permalink
"There's no going back, unless it's to 1979"
Can't we make it 1969? I missed Woodstock and I just loved riding in the back of those big old station wagons with nary a seat belt in sight. And my mom's sunglasses were the coolest.
July 26, 2009 6:44 PM | Reply | Permalink
There's some plausibility that you are right, that the economic growth since the 1990s has all been a bubble, and not based on real economy.
However, these things are never that simple. Japan's markets are now WAY below where they were in 1987, like 3/4 down. And yet, Japan's real economy has grown quite a bit over that time, perhaps tripling. And they were making real things, like cars and electronics.
Countries can make real things and yet never make money.
July 26, 2009 8:54 PM | Reply | Permalink
"Lenin wrote that imperialism was the highest stage of capitalism. An Indian writer identified the difference between colonialism and imperialism. A colony is where you get cheap raw materials and sell goods to, whereas imperialism is a matter of making a cultural impress. Britain's colonialism bled India white. Her imperialism gave India the notions of a free press, democracy, elections, parliament, habeas corpus... Bled, then, but whitened too, so to speak? As for America, in 1857 she produced much of what she consumed. Today's America is a classic colony, home to raw materials, consumer of everything from abroad."
http://www.countercurrents.org/niranjan120507.htm
"In 2007, the American Government is giving over not only parts of Iraq but even parts of the United States (New Orleans, if Greg Palast is to be believed) to an East India Company of our own times -- Blackwater (a curious coincidence: Kala Pani, or black water, was the name given to the oceans in medieval India, to discourage people from traveling abroad)."
Is Goldman Sacs the New and improved East India Company?
How cozy were Blair and Bush? How much did they both support the New East India Company, called Blackwater.
How much trade do we have with British controlled entities?
What’s next; give the population Bhang, to quiet the rebellion?
July 26, 2009 9:01 PM | Reply | Permalink
Bhang comes in many forms and is already being given to the majority of the population. The East India Company was the heart of the British Empire and has only morphed into new forms over the centuries, not disappeared. It was this empire that was rocked to its foundations last July. It is this empire that is dead on its feet and will soon collapse. What will replace it? I'm afraid something worse, as humanity today seems morally unfit to survive.
July 26, 2009 10:58 PM | Reply | Permalink
Dang it. I hate it when you're right.
July 26, 2009 11:54 PM | Reply | Permalink
On WSJ, Maria Bartiromo posed the same question, but not quite as directly.
She questioned her guest by pointing out that the Q2 earnings were due to cost cuts and that real revenues (before expenses) were either stagnant or lower. She then asked when did the guest expect increases in real revenues, not simply net profits.
Analysts have also been somewhat cautious when it comes to valuing stocks, particularly bank stocks. Because of the new accounting rules, analysts are taking a closer look at bank financial statements to either restate them in comparable terms or to subtract what they consider to be bad loans, etc. Wells Fargo is a good example of this. WFC had unexpectedly high profits in Q2, but the stock actually took a dive after analysts provided further information for investors to consider (and continues to slowly dive daily).
July 27, 2009 2:20 PM | Reply | Permalink