This page has been archived and commenting is disabled.

Corporate Profits & Income Inequality

Tyler Durden's picture




 

Submitted by Lance Roberts of STA Wealth Management,

 

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Wed, 01/22/2014 - 13:37 | 4355824 WarriorClass
WarriorClass's picture

Wall Street advisor: Actual unemployment is 37.2%, ‘misery index’ worst in 40 years

http://americandictators.blogspot.com/2014/01/wall-street-advisor-actual...

Wed, 01/22/2014 - 13:44 | 4355845 RebelDevil
RebelDevil's picture

and it's about to get even worse with this upcoming meltdown in china.

Wed, 01/22/2014 - 13:49 | 4355863 LawsofPhysics
LawsofPhysics's picture

Could you be more specific?  Been hearing about this "meltdown" for quite some time now...

Wed, 01/22/2014 - 14:01 | 4355903 RebelDevil
RebelDevil's picture

http://www.zerohedge.com/news/2014-01-19/bank-america-actively-preparing...

More likely than not, this will be the trigger that pops the greatest bubble in the world - The Chinese credit bubble.

Wed, 01/22/2014 - 14:20 | 4355963 LawsofPhysics
LawsofPhysics's picture

So, your "source" is Bank of America?  Good luck with that.  The Chinese are a culture of hardworking, singlularly focused people, with a single-party system with everyone focused on making China, the world superpower.  Their "elite" party members have sacrificed the peasant population for the greater good of China before and will certainly do it again.  Don't hate the players, hate the game.  What sort of "sacrifices" wood the average American make for the greater good in America?  That's all that matters, many I know are brushing up on their Mandarin.

Hedge accordingly.

Wed, 01/22/2014 - 14:36 | 4356030 RebelDevil
RebelDevil's picture

No, my source is ZH.

The most important aspect of this site I believe is how the Tylers connect the dots for you with those litttle blue hyperlinks to past articles.

Wed, 01/22/2014 - 14:43 | 4356053 redd_green
redd_green's picture

Re "Chinese are a culture of hardworking, singlularly focused people, with a single-party system with everyone focused on making China,"   AAHHHAAAAA HAHAHHAHAHAAAAAAA HAAA Thanks I needed the laugh.   You obviously never visited China, and don't know any Chinese.

Wed, 01/22/2014 - 14:54 | 4356089 LawsofPhysics
LawsofPhysics's picture

Well, the two that I have working for me certainly are and they certainly lit a fire under the asses of a few "locals" on my team.  But sure , perspective is indeed important.   Now get back to work.

Wed, 01/22/2014 - 16:04 | 4356370 zanez
zanez's picture

Running-dog crypto-fascists!

Wed, 01/22/2014 - 14:18 | 4355989 El Vaquero
El Vaquero's picture

I'll believe that is the trigger when I see it.  Our economy should have imploded in 2008-2009, and it has instead been put on life support.  It should have imploded at any given time after that as well.  There are so many potential triggers and the assholes at the Fed and other central banks have done better than most could have dreamed of at stopping the disasters from getting really bad.  Of course, they make the distortions that will eventually be corrected that much worse every time they avert a disaster, but you never know what they're going to pull out of their collective asses.  So, maybe this will be the pinprick that pops the bubble, maybe it won't.  I'm not playing in the markets and I'm not holding my breath. 

Wed, 01/22/2014 - 14:23 | 4356003 LawsofPhysics
LawsofPhysics's picture

"Our economy should have imploded in 2008-2009, and it has instead been put on life support by force."  -FIXED, we must never forget Hank "tanks in the streets" Paulson holding a gun to CONgress and bailing out the financial sector and banks...

Wed, 01/22/2014 - 14:29 | 4356012 El Vaquero
El Vaquero's picture

You'll get no arguments from me when it comes to Paulson being a cocksucker and a bully. 

Wed, 01/22/2014 - 14:35 | 4356027 Dr. Engali
Dr. Engali's picture

That's already common knowledge and priced in. That's one of the scare stories to introduce some fear. Rest assured that when this bubble pops, the trigger will have come from some place that we don't see and only a select few will know of it in advance.

Wed, 01/22/2014 - 14:41 | 4356042 RebelDevil
RebelDevil's picture

It is possible that this default could pass over easily, but defaults in the (near)future may not.
"The potential first default, even if it’s not CEQ1 on 1/31, would be important based on the experience of what happened to the US and Europe; the market has tended to underestimate the initial event."

Wed, 01/22/2014 - 16:03 | 4356343 SDShack
SDShack's picture

Yep, the BoA note is just to lure in some shorts, then when nothing happens and the crisis is "averted", rally on and fleece the shorts. Rince and repeat ad nauseum. The real trigger is either a real event that comes out of nowhere (probably from something that spirals out of control), or it is an engineered event known only to a select few and unreported until it is sprung. Either way, it's going to be unreported until it happens.

Wed, 01/22/2014 - 14:01 | 4355902 OldE_Ant
OldE_Ant's picture

Wasn't the meltdown in Japan?

Or was that two meltdowns (NIKKEI, FUKISHIMA) and one melt up(NIKKEI) my glowing brain can't seem to process that well anymore.

Even so.  Expect similiar meltdowns and more coming to your country soon.

At some point we'll all be eating shit (almost there), and glowing (working on it) about it.

OldE

Wed, 01/22/2014 - 14:10 | 4355951 max2205
max2205's picture

The poor= just another guy waiting to take your job 

Wed, 01/22/2014 - 14:52 | 4356080 midtowng
midtowng's picture

This article is bullsh*t.

if there's anything to be done about income inequality, we should focus on how to give people greater capacity to serve their fellow man, namely raise their productivity."

 The fact is the productivity of the working class is America is going up every single year. If the writer of this article gave even a modicum of effort he would know this. Productivity is NOT going to the worker. His simplisitic notions are from some economic model, not from reality.

Wed, 01/22/2014 - 15:34 | 4356236 disabledvet
disabledvet's picture

i understand the sentiment...and by no means is this meant as an excuse for MBS's, CMBS's, CDO's, CDO's (squared), Insurance Companies "on the other side of that risk trade", ummm..."liar loans", off balance sheet vehicles, "slapping triple AAA on that thing", Ponzi schemes, etc...etc...etc...etc...etc...etc. HAVING SAID THAT...these are TAXPAYERS. And this matters to me because my friend is coming home. I hope all his friends are coming home too.

What happens after that is of little to no consequence to me. And I mean ABSOLUTE FRIGGIN' ZERO.

Wed, 01/22/2014 - 13:45 | 4355848 Gankfest
Gankfest's picture

:D

Wed, 01/22/2014 - 15:57 | 4356335 OldBoy
OldBoy's picture

John Stossel on the O'reilly factor tried to make the case that even though the rick get more pie than everyone they cause more pies to be made so everyone gets more. Not sure I by it though. I fear that human greed is getting in the way and the rich just keep gettin richer. Reduce the greed and increase the generousity.

Wed, 01/22/2014 - 17:12 | 4356664 barroter
barroter's picture

The "rich," already own 9 slices of a 10 slice pie.   And they want that last piece too...

 

Wed, 01/22/2014 - 13:53 | 4355844 LawsofPhysics
LawsofPhysics's picture

The two new CEO mantras to their employees;

1) "We performed great, so my friends and I will take the profits while you shoulder the burden of the company's debt". 

2) "Should my leadership result in the failure of this company, you with lose your job and the taxpayer will pay back any creditors while my wealth remains intact".

 

Show of hands, how's this working out for everybody?  Good, now back to your regularly scheduled propaganda...

Wed, 01/22/2014 - 14:15 | 4355973 YC2
YC2's picture

Except in many instances when government rigs the game with crony capitalism, income is mostly a result of one's productivity and the value that people place on that productivity. 

==================

There is a lot wrong with this sentence and what is implied in it, starting with the fact that the wrong half was bolded.

 

Wed, 01/22/2014 - 14:19 | 4355986 LawsofPhysics
LawsofPhysics's picture

First of all, "value" implies that there is a mechanism for true price discovery, definitely not the case today.

Wed, 01/22/2014 - 15:18 | 4356166 taeonu
taeonu's picture

This also ignores the fact that productivity is at an all time high while middle class wages haven't risen since the 60's. Income is a result of how much of the profits of productivity one can keep. A look at the incomes of the holders of capital over the same period shows where all the income gains have gone. 

 

They have learned that you don't have to pay someone $15 an hour when you can pay them $7.50 and loan them the other $7.50.   The worker is also less likely to quit or go on strike when they have debt payments to make. 

 

 

Wed, 01/22/2014 - 13:47 | 4355855 Bill of Rights
Bill of Rights's picture

. Corporate profits, both as a percentage of GDP and relative to labor income, are at or near record levels.

http://www.cnsnews.com/news/article/ali-meyer/record-20-households-food-...

Winning one SNAP recipient at a time

http://www.cnsnews.com/sites/default/files/images/Food%20Stamp%20Househo...

Wed, 01/22/2014 - 13:52 | 4355868 AccreditedEYE
AccreditedEYE's picture

While I'll agree to this conclusion I'll also state that capital/management/ "The Rich" bear some responsibility here as well. They keep moving "ways to be productive" off shore without coming up with "new ways to become productive". This gets compounded by a government who doesn't act for the benefit of the economy due to the cover provided by the Federal Reserve. (which, incidently, also helps capital/management/ "The Rich"). Labor provides work/service, not ideas. They aren't paid to provide ideas and shouldn't have to. Labor should be self-sufficient but that is all because they aren't paid to take any more risk than that.

Wed, 01/22/2014 - 13:57 | 4355892 LawsofPhysics
LawsofPhysics's picture

"Labor provides work/service, not ideas" - I don't think you understand how the manufacturing of goods and services of real value works.  90% of the time solutions to problems and new innovation comes right from the person doing the real work, not some stuffed shirt ivy league fuck in the office.  Now if you are implying that the white collar workers have become completely disconnected from the people they are supposed to be managing (often because they have never really worked day in their life and often don't even understand what the company really does), then yes, I am inclined to agree.

Wed, 01/22/2014 - 14:09 | 4355946 AccreditedEYE
AccreditedEYE's picture

I thought that statement spoke for itself in that, yes, Management/capital HAS become disconnected from the worker. Off-shoring shows you just how disconnected they have become; treating all labor equally like a commodity. (Who cares about quality) On top of this, they expect labor to fend for themselves in this horrible employment environment, as if everyone without a job wants to be a risk-taker/entrepreneur. They never remember that this entails giving up benefits and having a large chance of failure. Not really good options for a family of 4 and entails an entirely different skill set.

Wed, 01/22/2014 - 14:16 | 4355976 LawsofPhysics
LawsofPhysics's picture

In short, moral hazard.  Of course corporate leadship does not understand "risk" anymore, not since Hank "tanks in the streets" Paulson held a gun to the taxpayer's head and said "you will bailout the financial sector."

 

Wed, 01/22/2014 - 17:16 | 4356674 barroter
barroter's picture

"Ideas."  Whatever happened to that phrase "vision" CEO's use to bandy about?  Vision my ass...BULLSHIT is what they're good for.

Wed, 01/22/2014 - 13:53 | 4355871 arkady
arkady's picture

Can corporate profits be also a function of corporations no longer willing to invest into expansion?   

For example in today's economy where banks are unwilling to lend due to scary economic forecasts, corporations too would hang on to cash and "ride out the storm".  They would also be more willing to lay off the workforce as labor is the #1 expense for all businesses.

Thus we might be able to easily explain that rising profits is as much of a function of today's economy and entrepenuers afraid of investment rather than "squeezing" the worker.  

Wed, 01/22/2014 - 14:06 | 4355928 Ghordius
Ghordius's picture

excellent alternative point of view. I'd add another aspect of it: the biggest job creators (I know, trademarked) in aggregate have never been big stock-listed companies. big biz has always been good at buying up and then streamlining. meanwhile small and medium businesses face even more the need to "ride out the storm"

Wed, 01/22/2014 - 14:28 | 4356010 arkady
arkady's picture

Indeed, I believe you are spot on there.  I think small business (not sure how that is defined currently) represents over 70% of job creation.  Thus large corporations themselves are indeed the engines of streamlining rather than job creation per se.

Of course you have your WALMARTS that employ an ungodly amount of people too, but that is probably one of the most hated companies in America for the very reason of streamlining.  Still, I personally hold no grudge against Walmart that pays ever so slightly less than the general retail sector.   Walmart's benefit to society, IMHO, is the ability to deliver cheaper goods to people - and that is always a good long term benefit for America where wealth and capital formation is difficult to come by.  Yes that is gained via cold streamlining, but the overall benefits outweigh the negatives.

Wed, 01/22/2014 - 13:55 | 4355874 One And Only
One And Only's picture

There is no human way of solving the income inequality problem. The same reason you can't make stupid people geniuses. There simply is no excersize to solve it.

The harder you try the greater polarity you get and the more problems you create.

Free markets resolve these issues. Too bad we haven't had one in at least 100 years.

Wed, 01/22/2014 - 14:04 | 4355922 Bill of Rights
Bill of Rights's picture

Sort of like the $10,000 dollar bet to turn the Three Stooges into Gentlemen.

Wed, 01/22/2014 - 14:19 | 4355992 Headbanger
Headbanger's picture

Nyuk, nyuk, nyuk, nyuk!

Wed, 01/22/2014 - 14:13 | 4355934 RebelDevil
RebelDevil's picture

Try Harder - ... to see that QE is the great divider.
http://www.zerohedge.com/news/2014-01-19/what-1592-days-central-planning...

(WTF is with people!? The Tylers are WAY ahead of all of you .... because you're not paying attention?)

Wed, 01/22/2014 - 13:56 | 4355877 Flakmeister
Flakmeister's picture

I guess trickle down didn't work as advertised, at least how it was advertised to Joe Sixpack....

For many SNAP and Earned Income Tax Credit are in reality nothing more than corporate subsidies. Any corporation with more than 1000 employees (including all subsiduaries and franchises) should have a min. wage of $15.00 (basically what it was in 1965)...

Wed, 01/22/2014 - 13:55 | 4355882 enloe creek
enloe creek's picture

100% inheritance tax
problem solved

Wed, 01/22/2014 - 14:00 | 4355897 Flakmeister
Flakmeister's picture

Run a simple spread sheet model...

Progressive wealth tax starting at $10,000,000 with rates of ~5% for anything over $100,000,000...

The rentier class will need to make real investments and not merely clip coupons to get richer....

Wed, 01/22/2014 - 14:02 | 4355901 Dr. Engali
Dr. Engali's picture

Income inequalities is one of the more ridiculous notions I've encountered. There always has been and always will be differing levels of income, and that's a good thing. Otherwise why would I want to go through all that schooling to become  a doctor if I can serve burgers for the same salary?  What I don't expect is for my income stream to be syphoned off through inflation and taxation to feed both sides of the income extremes.

Wed, 01/22/2014 - 14:03 | 4355916 RebelDevil
RebelDevil's picture

"What I don't expect is for my income stream to be syphoned off through inflation and taxation to feed both sides of the income extremes."

Well isn't that the norm?

Wed, 01/22/2014 - 14:13 | 4355954 Dr. Engali
Dr. Engali's picture

Edit...Pardon my error in grammar. Even though I used a doctor as an example, I am not a real doctor.  I have however, flipped a few burgers in my life. 

Wed, 01/22/2014 - 14:37 | 4356035 redd_green
redd_green's picture

If you think its feeding both sides, take another look.  

Wed, 01/22/2014 - 14:56 | 4356091 El Vaquero
El Vaquero's picture

EBT goes to the poor and QE/ZIRP goes to the rich.  Yes, it is feeding both sides, just not equally. 

Wed, 01/22/2014 - 15:16 | 4356157 cro_maat
cro_maat's picture

Sorry but MOST taxation goes to pay the interest on national debt which goes to the bankers along with QE.

Wed, 01/22/2014 - 15:25 | 4356206 El Vaquero
El Vaquero's picture

False.  The current interest paid on the national debt is artifically low due to Fed and other banker manipulation of treasury yields, and at the current time, is not the lionshare of where your taxdollars go.  DOD and HHS are the two behemoths of the on the books stuff, and then there are the unfunded liabilities. 

Wed, 01/22/2014 - 16:03 | 4356367 Colonel Klink
Colonel Klink's picture

No it doesn't.  You should check your facts first.  In 2012 only about 6% went to pay interest on the national debt.  Even if you say that we're spending over the incoming tax revenue by 50%, the cost in terms of tax revenue is still under 10%.  Which is also a big lie when they say we'll default on the debt.  What we'll ultimately default on is the entitlements they've "promised"!

http://www.cbpp.org/cms/?fa=view&id=1258

Yes I down voted you for passing bad information.

Wed, 01/22/2014 - 17:18 | 4356685 barroter
barroter's picture

Government sponsored stale bread for the poor and gov't sponsored fillet mignon for the rich. 

Wed, 01/22/2014 - 14:01 | 4355905 toros
toros's picture

Capital share can grow for quite along time. Ever here of the Egyptian Pharaohs? Debt slaves will be the envy.

Wed, 01/22/2014 - 14:04 | 4355920 Pickle Jar Bob
Pickle Jar Bob's picture

 

"Fifty years and $20 trillion later, LBJ's goal to help the poor become self-supporting has failed."

 

Was that really his goal though?

 

http://www.goodreads.com/quotes/770072-i-ll-have-those-niggers-voting-de...

Wed, 01/22/2014 - 14:05 | 4355926 Inthemix96
Inthemix96's picture

Somethings afoot my American friends, was forwarded an article today about one of gestapo police commisars having a word with the home secretaries office about the legal use of 'Water Cannons' on us plebs, all for the coming peceable demonstrations of this appalling government 'Robbery'.

Somethings brewing under the surface my friends, the gestapo must be shitiing themselves.

Its going to be a long interesting year this one.

:-)     And on another 'You Couldnt Make It Up' story from the 'Telegraph', smoking makes you more likley to have a gay child.  The fuckers have gone total retard here.

Wed, 01/22/2014 - 14:06 | 4355932 praps
praps's picture

You can raise the productivity of slaves all you like but they will stil be paid a subsistence wage.

Wed, 01/22/2014 - 14:12 | 4355959 Dingleberry
Dingleberry's picture

The war on poverty worked exactly as predicted. Pay people to feed and breed while single only.

Punishment (i.e. no welfare) for getting married.

Cui bono?

There is your answer.....

 

Wed, 01/22/2014 - 14:35 | 4356028 redd_green
redd_green's picture

Zero starts to this junky article.     The de-industrialization of the United States, closing down profitable factories, firing highly paid workers, dozing the buildings, has nothing to do with taxation or welfare.   The Germans didn't destroy their industrial base just because the Chinese built garbge made with slave labor.   Ask yourself why the crooks who ran US industry into the ground did just that.

Wed, 01/22/2014 - 14:47 | 4356067 Dingleberry
Dingleberry's picture

The germans don't have 3 generations on perpetual welfare like we do in EVERY SINGLE MAJOR CITY.

Ask yourself who were the crooks who did that.

Wed, 01/22/2014 - 14:59 | 4356103 LawsofPhysics
LawsofPhysics's picture

No welfare recipients in Germany?  That is not the impression I get from my relatives there.

Wed, 01/22/2014 - 14:56 | 4356068 LMAOLORI
LMAOLORI's picture

 


QE is based on Marxist Theory and shouldn't be mistaken for real Capitalism. It is pretty funny the trickle down isn't TRICKLING DOWN to Main Street - color me shocked. Marx is the father of both socialism and communism. Those at the top are once again sharing the gains - those at the bottom are being bought or placated with food stamps - and those in the middle are systematically being wiped out.  All part of the plan for control of the global economy and YOU.


 

"QE (quantitative easing) is essentially the printing of money and the addition of liquidity into the markets so that stock (and other asset) prices are given an artificial boost. Federal Reserve Chief Ben Bernanke believes that by pulling up stocks, the masses will feel richer and spend more on consumer goods, thus lifting up the economy. This is based on Karl Marx's reflexivity theory (George Soros essentially paraphrased Marx) that states by turning the small wheel (stocks), you can turn the big wheel (economy), which in turn will come back and turn up the small wheel (stocks). Bernanke subscribes to such a theory, and he wants QE to lift up the small wheel (stocks), which he hopes will lift up the big wheel (the economy)."

Wed, 01/22/2014 - 14:57 | 4356092 LawsofPhysics
LawsofPhysics's picture

ah yes, the perpetual motion machine, good luck with that.

Wed, 01/22/2014 - 17:25 | 4356703 RMolineaux
RMolineaux's picture

The statement that Marx was the father of both communism and socialism is patently false.  There are many streams of socialist thought and some of them pre-dated Marx.  But the author of this comment is correct in comparing the conditions existing today to those of Marx's early 19th century Britain.  But we have an added mechanism currently that did not exist in his time:  the globalization of the labor market and the servitude of government to transnational corporations.

Wed, 01/22/2014 - 15:04 | 4356119 Toolshed
Toolshed's picture

The pendulum swings on. These current conditions are what facilitated the rise of labor unions. The scum at the top stomping on the sweaty masses at the bottom. Never considering the fact that nothing lasts forever and the sweaty masses eventually realize they are being screwed and rapidly transition from digging ditches to operating guillotines. Same as it ever was.

Wed, 01/22/2014 - 16:24 | 4356455 csmith
csmith's picture

Good Intentions Paving Company, Inc.

Wed, 01/22/2014 - 17:32 | 4356732 RMolineaux
RMolineaux's picture

In evaluating this item, one should keep in mind that the figures for earnings per share are being distorted by the use of stock buybacks by corporate managements looking to inflate their bonuses.

Do NOT follow this link or you will be banned from the site!