"You know, if there was [sic] no such thing as the written word, I'd be telling stories on street corners."
---------Harold Robbins

Tuesday, September 13, 2011


The reports of 2nd quarter profits of American corporations were nothing short of amazing. In the decades following World War II any corporation that realized an increase in profits of 3-5% was consider a sure fire winner. Investors lined up and the stock price climbed. Then by the ‘80s and Ronald Reagan, such returns were no longer acceptable and 5-10% growth became the new baseline. Now in our Brave New Globalized World profits must grow by geometric proportions to be acceptable. Three fourth of companies reporting 2nd-quarter results show unprecedented jumps in profit:

>>GE Capital profit jumps 123%
>>MasterCard profit up 33%
>>Mattel net income jumps 56 %
>>Citigroup up 24% [$3.3 billion]
>> Caterpillar up 44% [$1 Billion]
>> Dow Chemical Profit up 74%
>>Visa up 40%
>>Exxon Earning up 41%
>>Starbuck's profit up 33%
>>Chevron profit jumps 43%
>>GM profits jump 89%
>>Dell Posts Flat Sales --Profits rise 63%

The figures for Dell computer are typical. Corporations with no gain in sales and in many cases with even lower sales figures are reporting vastly increased profits. The oblivious question is: What is the source of these sudden corporate gains?

The AP wire carried a brief story in a recent late Friday release [see my previous post for more on the "Friday Follies."] that revealed the extent of the share of the pie that corporations are taking. It summarised finding of the Center for Labour Market Studies at Northeastrn University, according to the director Andrew Sum:

                         Boom in Corporate Profits, A Bust in Jobs, Wages
Paul Wiseman, AP Economics Writer, On Friday July 22, 2011, 6:36 pm EDT http://finance.yahoo.com/news/A-boom-in-corporate-profits-a-apf-3135711604.html?x=0
[note: Yahoo news links tend to go dead after 1-3 days]

"I've never seen labor markets this weak in 35 years of research," says Andrew Sum....Wages and salaries accounted for just 1 percent of economic growth in the first 18 months after economists declared that the recession had ended in June 2009...Corporate profits, by contrast, accounted for an unprecedented 88 percent of economic growth during [the same time period]...
Director Sum cited several factors at work in this unprecedented disparity. The two most important being the expansion of American corporations to over seas market; and second, the surplus work force created by the army of unemployed Americans. As Sum noted: "...companies are squeezing more productivity out of staffs thinned by layoffs during the Great Recession. They don't need to hire. And they don't need to be generous with pay raises; they know their employees have nowhere else to go."

How extensive is this problem? Steve Davidoff in his "Deal Professor" column in the New York Times Dealbook on August 16,2011,section gives some amazing answers.

 [The link is to Dealbook, which is not behind the NYT paywall.]
A recent Standard & Poor’s study found that 50 percent of sales by companies in the S.&P. 500-stock index are outside the United States. [Emphais added] Interestingly, the report also found that these companies paid more in foreign taxes than to the United States government....
In 2004, Congress enacted the American Jobs Creation Act, a tax holiday for companies to repatriate cash. The dividend tax was reduced to 5.25 percent from 35 percent. In exchange for this reduction, Congress required that any cash repatriated be invested in the United States. The cash could not be used for dividends or stock repurchases.
Alas, cash is fungible...[A study:]The Unintended Consequences of the Homeland Investment Act," found that in the year following the act, repatriations increased by $230 billion from the previous year, to $299 But the repatriation did not result in increased investment. Instead, companies largely repatriated the money and used their current United States holdings to pay out dividends or engage in share repurchases. This was contrary to what Congress had intended.
For those who can’t understand the nature of the war being waged on the majority of American citizens, it is only necessary to look to the professional financial advisory services. On October 8, 2009 the market advisor Rakesh Saxena writing on the site "Quote Platform" spelled out the facts of the Globalized economy.

Noting that India with a population of over one billion persons had hundreds of millions living on the edge of starvation, he said that those numbers do not matter. All that is important is the realization that India has over 350 million people with upper middle class incomes, who are in the market for new cars and flat-screen TVs,  and that that is a group larger than many other nations.  In other words, only those with money count. Those who have fallen off the apple cart can be safely forgotten. He concludes his market analysis:
At the same time, equity prices should face no risks from negative unemployment data. The thousands of desperate, unemployed workers who lined up in downtown Detroit [in Oct 2009]for housing assistance bitterly complained about the Obama Administration’s inability to generate jobs despite the promises made during, and immediately after, the last presidential elections. But, as a Wall Street hedge fund manager asked, "Who cares?"

Wednesday, August 17, 2011


The Federal Government as well as most major corporations long ago discovered a wonderfully easy way to bury unpleasant news that they hope never comes to the attention of most people: the Friday evening press conference.

By three P.M. on Friday almost everyone is packing up to get out of the office and onto the pleasures of the week end. Rather than conceal the really bad news, the "Powers that Be" choose to send an underling to announce the bad news. After all, with the name reporters from both the print and electronic media gone, the briefing by the Fourth Under Secretary of The Treasury will only be attended by cub reporters and interns.  The story is then buried under all the human interest stories and puff pieces that were prepared earlier in the week to fill in for the lack of hard news. By the following week the story is old news and will be forgotten in the hurly-burly of the ongoing circus.

If someone manages to dig out the story later and attempts to bring it into the spotlight, it will be dismissed as old news and not worthy of attention. It is truly amazing how many really important stories managed to get buried in the weekend follies.

Wednesday, August 3, 2011


Get beyond the idea of the media. Do something they can't ignore.

In the Miami/Ft lauderdale market there have been MoveOn and other protests where hundreds of people showed up and no media coverage. At one large protest a local station [The locals are Network owned] sent a team that did over an hour's worth of taping with inteviews. It ended up as a 20 second piece just before the commercal break leading into the sports roundup on the 11 PM News.

As Boss Tweed said: "In politices the first thing is money; I forget what the second is."

I have been campaigning for a "NO SHOPPING DAY" on the 1st Saturday of each month. This will work. On Tuesday Aug 2nd the Consumer Spending report showed a decline of 00.2%. The Dow fell over 265 points! YEAH! It does get attention.

If even 20% of the public quit spending money -- in malls, on line, and paying bills --on the 1st Saturday of each month, things would begin to change. The reasons for the 1st Saturday are twofold: [1] It is easy to remember, and [2] there are more complex economic reasons that would give this act maximum impact, but would be beyond the scope of this post.


The secret of getting things done is to act!
Dante Alighieri

Sunday, July 17, 2011

 It’s ironic that Tea Party Icon Congressman Allen West (Rep) Fl 22 District [Boca Raton and northern Broward County / Ft Lauderdale] who was on the CBS Evening News on this past Friday July 15th proudly proclaiming that he would never agree to raise the US debt ceiling –ever–not even a penny, is trying to gives away Florida taxpayers’ dollars to private enterprise.

For a print version of his comments on the debt ceiling:
Rep. Allen West on McConnell debt plan: It's dead on arrival

But there was no mention that only a couple of weeks ago he approached the Mayor of Broward County, Sue Gunzburger, with a request to pony up $14 million for new Super Sky Boxes at the Bank Atlantic Center [home to the NHL Florida Panthers and concerts by Lady Gaga, the Rolling Stones, and others]. Apparently he thinks that the county has money to burn.

In fact, the county budget has a shortfall of $20 million dollars and the school board has given pink slips to 700 teachers. Municipalities in the county seeking grants to make up budget short falls have been turned down. One example: the city of Hollywood planned to pink-slip a number of police officers to make ends meet, and the officers agreed to take a 12% pay cut so that no one would loose his or her job.

West’s excuse for the $14 million dollar give away is that: "It would create jobs." Never mind that of the original construction cost of $212 million, the county put up $184.7 million and was promised a share of the profits. Since the opening of the arena thirteen years ago in 1998 the county has received one check for $200,000. The county is not allowed to see the books! Even more damning financial details are on the arena website:   http://hockey.ballparks.com/NHL/FloridaPanthers/newindex.htm

 None of this bothers the last of the Red Hot Spenders, as long as a few people in the Holy Private Sector (genuflect, please) are able to pocket the money.

©Roger G McCorkle