Copied from a Facebook page. I could easily find the source by Googling but why should I bother? + Why do I think the stock market will plunge this year? Because most companies are boosting their stock prices not by developing new products or selling more goods and services but by slashing their payrolls and buying back their shares of stock. These steroidal tactics are generating temporary boosts in share prices, but they can’t be sustained. There are only so many workers to be sacked and so many stocks to be repurchased. These companies remain as incapable of generating things people want as before. Consider Hewlett-Packard, which yesterday announced plans to cut an additional 11,000 to 16,000 jobs. Wall Street is enthusiastic, pushing the stock up more than 6 percent today. But the tactic won’t work over the longer term because Hewlett-Packards PC sales are dropping and business customers are shifting toward cloud computing, where it’s not a major player. More to the point, as big companies across America continue to shed middle-class jobs in pursuit of lower costs, median household income continues to drop. Which means fewer Americans can afford to buy what these companies have to sell. Which means these companies profits are bound to shrink and their stock prices to drop. Get it? Workers are consumers. As these companies workers do worse, so do their customers, and so, ultimately, do they. + My comment to this: I was told about this years ago by a retired MIT chemist. He said that years ago you got your PhD and went to work for a company. And they said, Do something that will make us money. So you fooled around for a few months until you found something that would make the company money. When you got it going, making the company money might occupy you for several years. Ten or so years ago he told me that companies only worried about the bottom line for the following quarter, so they might fire 250 chemists just to make the stock look good. And he said that because nobody seems to be looking 10 or 30 years down the road, other countries are going to bury us economically. ++ Also. As it says, as a companys workers do worse, in the long run the company does worse. Employers cut back wages to make more profits. Unions are discouraged because they agitate for higher wages. But the more money workers earn, the more theyre going to pump into the local economy. --- Exception being the big box stores that suck the dollars out of state without recirculating them like the old mom and pop stores did. Each state should also have its own state bank which would keep the dollars in circulation in that state. Republicans call state banks a form of Socialism because money that circulates in a state cant be quickly siphoned off into tax-free off shore accounts by multi national banks. Which town do you think would be the best off? One inhabited by 5,000 people, 4998 of whom each earned $20,000 a year and the other two each earned $100,000,000 a year. Or, a town inhabited by 5,000 people, all of whom each earned $50,000 a year? In which town would you see the most money circulating on the street? In which town would you rather own a donut shop? Or a beer store? Or a pottery shop? Or a dock where you rented out boats? If you dont think times are tough, drive through your town and check out the number of junk cars in dooryards. Now only the folks doing very well can afford to keep more than three or four.
Posted on: Tue, 27 May 2014 01:23:18 +0000
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