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Profits Are Booming. Why Aren’t Jobs?
New York Times ^ | January 8, 2011 | Michael Powell

Posted on 05/31/2011 7:05:20 PM PDT by khnyny

To gaze upon the world of American corporations is to see a sunny place of terrific profits and princely bonuses. American businesses reported that third-quarter profits in 2010 rose at an annual rate of $1.659 trillion, the steepest annual surge since officials began tracking such matters 60 years ago. It was the seventh consecutive quarter in which corporate profits climbed.

Staring at such balance sheets, you might almost forget that much of the nation lives under slate-gray fiscal skies, a place of 9.4 percent unemployment and record levels of foreclosures and indebtedness.

And therein lies the enduring mystery of this Great Recession and Not So Great Recovery: Why have corporate profits (and that market thermometer, the Dow) spiked even as 15 million Americans remain mired in unemployment, a number without precedent since the Great Depression? Employment tends to lag a touch behind profit growth, but history offers few parallels to what is happening today.

“Usually the business cycle is a rising-and-falling, all-boats-together phenomenon,” noted J. Bradford DeLong, an economics professor at the University of California, Berkeley, and a deputy assistant secretary for economic policy in the Clinton Treasury Department. “It’s quite a puzzle when you have this disjunction between profits on the one hand and unemployment.”

A search for answers leads in several directions. The bulls’ explanation, heard with more frequency these days, has the virtue of being straightforward: corporate profits are the economy’s pressure cooker, building and building toward an explosive burst that will lead to much hiring next year.

The December jobs numbers suggest that that moment has yet to arrive, as the nation added just 103,000 jobs, or less than the number needed to keep pace with population growth. The leisure industry and hospitals accounted for 83,000 jobs; large corporations added a tiny fraction.

(Excerpt) Read more at nytimes.com ...


TOPICS: Business/Economy; Front Page News; Government; News/Current Events
KEYWORDS: bhoeconomy; business; depression2point0; economy; freetrade; freetraitors; getreadyhereitcomes; greatestdepression; greatestrecession; greatrecession; incorporation; michaelpowell; obamanomics; preparedness; preppers; profits; survival; survivalping; unemployment
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To: LibLieSlayer

Americans are being played, just like workers in the rest of the world. We think we’re “special”, but we’re not. We are just a commodity to be used by the puppet masters. Sorry to sound so cynical, but even if it’s not “intentional” the results are the same.

Add to the equation the fact that those in charge in this country have no concept of how to run a child’s lemonade stand, let alone our economy and you have a recipe for disaster. For the most part, Wall Street has bought and paid for our political process - to their benefit.


41 posted on 05/31/2011 7:59:19 PM PDT by khnyny
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To: rbg81
The result is that We (the Human race) can now produce enough to survive without everyone taking part in the workforce. In many ways this is good, but someone needs to give people money to buy the things being produced. This costs a lot, especially in the West where people demand high living standards. And we don’t let people starve. So...we try to make up the slack in the public sector, which involves borrowing $$ we don’t have.

Or we just have a nice little world war, that kills off the excess.

42 posted on 05/31/2011 7:59:40 PM PDT by dfwgator
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To: khnyny
Any idiot can slash and burn almost any business into short-term profit growth by torching the fixtures. But the music stops when you throw the jukebox in the fire.

In the contemporary ideology of business it doesn't mater if you burn next years seed because business decisions are based not on strategic thinking but making sure analysts who Lewinskied their way in life say something nice about you on CNBC and compensation schemes that encourages pawning the Royal Doulton.

I spent much of the last decade watching MBA's fire engineers who could neither describe their positions let alone evaluate their performance. They were driven only by the promise of a $50,000 bonus for every $1,000,000 dollars in salaries they cut. Want to guess how that company is doing today?

I mean yeah, we had some great profits from the sheer inertia behind several mature product lines but throwing out the product roadmap and licensing hardware from a Taiwanese ODM and outsourcing porting and further development to India never produced a shippable product. Their only remaining business is patent trolling and leasing empty office buildings (which is nowhere near as lucrative as it once was).

43 posted on 05/31/2011 7:59:56 PM PDT by WalterSobchak2012
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To: hc87

It isn’t American workers, it’s the government that is regulatory. But you transnational corporationists want it that way because it gives you an excuse to use communist controlled slave labor.


44 posted on 05/31/2011 8:01:22 PM PDT by hedgetrimmer
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To: norwaypinesavage

Obama is just perpetuating the GW Bush policies, Robert Zoellick and the “free traders” of the GHW Bush Clintons.


45 posted on 05/31/2011 8:02:56 PM PDT by hedgetrimmer
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To: RightGeek

Because of the falsely named “free trade”. And don’t you for get for a minute that the US taxpayer is subsidizing all this, the few that are left.


46 posted on 05/31/2011 8:04:03 PM PDT by hedgetrimmer
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To: khnyny

Companies have cut back to a more efficient smaller gross which increases the bottom line.

No one except government is stupid enough to hire someone to give them a job!


47 posted on 05/31/2011 8:04:10 PM PDT by dalereed
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To: apoliticalone

In fact they prefer that the US be taken down a peg, as it wins them favors with the communist slave labor providers they seek to curry favor with.


48 posted on 05/31/2011 8:05:21 PM PDT by hedgetrimmer
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To: JDW11235

I have no problem with punitive tariffs for countries that trade unfairly. I think you are correct in that free trade is not necessarily the answer in all cases especially in the case of those nations that trade unfairly,i.e,China. But corporate and business activity is governed by competitive survival.Corporations and business are not the problem. Trade policy, fiscal policy, tax policy and regulatory policy are.
If you do not think that business is about running a profit, why not invest your retirement funds in the domestic widget manufacturer who is “loyal” but cannot compete because their product cannot be competitively priced in the global marketplace. You can write off your investment as a charitable contribution after they go broke.


49 posted on 05/31/2011 8:06:09 PM PDT by chuckee ( gives too much credence to the UK's)
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To: apoliticalone

“Big corporations have no interest in helping the USA economy.”

No one in business large or small has any interest in helping the US or any other economy!!!

The only reason to be in business is profit!


50 posted on 05/31/2011 8:08:04 PM PDT by dalereed
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To: khnyny

A1: 0bamaCare. Punishment for hiring.

A2: 0bamanomics. Punishment for success.


51 posted on 05/31/2011 8:12:24 PM PDT by Uncle Miltie (0bamanomics: Trickle Up Poverty.)
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To: khnyny

This article skirts the entire reason that companies are not adding new employees.

Adding an employee increases the company’s overhead and is a permanent addition. Next month when Holder/Obama come out with their next new regulation slamming businesses, the company which has added staff gets hit with incrementally greater taxes than its competitor which did not add permanent staff.

Companies now are foregoing adding staff in favor of using contractors and/or mechanization. Machines don’t call in sick and contractors can be shed immediately. Full time new employees can be a nightmare when the cost of taxation rises.


52 posted on 05/31/2011 8:13:27 PM PDT by Rembrandt (.. AND the donkey you rode in on.)
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To: chuckee

Actually, although I may have come off as being confrontational, I agree with you. A major reason why a corporation is in business today is profit. However, not all corporations are for profit, and the object of all business is not monetary gain. Still, in the context of for profit corporations, there’s some considerations.

First, in the history of corporations, there were once a specific group of people who had to petition the people (government) at a specific level, with a specific object in mind (usually profit/business), and were given a specific time frame in which to attempt such. Next, it’s important to understand that in the modern day embodiment of corporations, there is zero accountability to the public (who allows the corporation it’s powers), but only to the share holders.

So, you see, the perverted definition of corporation that is now being used is a far cry from what it once was. It’s no longer accountable to the populace in which it operates, and if it was (by it’s charter and approval to operate), corporations would have some loyalty is that wanted to stay incorporated.


53 posted on 05/31/2011 8:13:55 PM PDT by JDW11235 (I think I got it now!)
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To: khnyny
The answer to the question is simple. Corporate Officers are required by law to maximize profits for the shareholders. If they fail in this "fiduciary duty" (look it up), they can be held liable both civilly and criminally.

This was done quite on purpose of course.

54 posted on 05/31/2011 8:14:43 PM PDT by Lurker (The avalanche has begun. The pebbles no longer have a vote.)
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To: Venturer

The founders had very good reasons to protect the economy from the slave labor seekers. Apparently you took US history from Howard Zinn.

The American people provide the incorporation process to these companies. The would not want to incorporate in China for example, as they would have a hard time utterly corrupting the chinese officials who have to answer to the Chinese communist party.

It’s no problem at all to divest any loyalty to the American people, whose citizen soldiers get called to war for the rotten globalist trash companies incorporated in the US.


55 posted on 05/31/2011 8:14:47 PM PDT by hedgetrimmer
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To: apoliticalone

Too, those corporations hold their cash profits overseas, and would be punished by American tax rates and policies by bringing that cash home to hire an American.


56 posted on 05/31/2011 8:15:02 PM PDT by Uncle Miltie (0bamanomics: Trickle Up Poverty.)
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To: khnyny

Oh yeah that’s rich! How many taxes did GE pay last year? How many tax dollars did they take in subsidies?


57 posted on 05/31/2011 8:15:59 PM PDT by hedgetrimmer
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To: Revolting cat!

Got it right! Go ‘cat go!


58 posted on 05/31/2011 8:16:32 PM PDT by hedgetrimmer
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To: JDW11235; chuckee

“some loyalty is that wanted to stay incorporated.”

Should read “If they wanted to stay incorporated.” I’m eating : )


59 posted on 05/31/2011 8:17:03 PM PDT by JDW11235 (I think I got it now!)
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To: chuckee

“I have no problem with punitive tariffs for countries that trade unfairly.”

Just out of curiosity, which one trades fairly? I wanted to find out where not to put my money. 8^)


60 posted on 05/31/2011 8:17:27 PM PDT by LibertarianInExile (When Republicans don't vote conservative, conservatives don't vote Republican.)
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