Friday, July 06, 2018

We Are All Hostages of Corporate Profits

We're in the endgame of financialization and globalization, and it won't be pretty for all the hostages of corporate profits.
Though you won't read about it in the mainstream corporate media, the nation is now hostage to outsized corporate profits.
The economy and society at large are now totally dependent on soaring corporate profits and the speculative bubbles they fuel, and this renders us all hostages: "Make a move to limit corporate profits or speculative bubbles, and your pension fund gets a bullet in the head."
Not just pension funds, of course; tax revenues will also be taken out and shotas most of the state and federal income taxes are paid by high-earners and those skimming capital gains from stock options and stock-based compensation packages.
Political and financial authorities have caved in to the implicit threat, lest their share of the corporate swag be tossed in the ditch. To appease public anger, various bureaucratic thickets have been created, but as you can easily see, corporate profits have not been affected.
The global downturn resulting from China's tightening of credit in 2016 caused a remarkably under-reported panic in central banks, which pulled out all the stops to keep corporate profits high.
Subsidies, tax breaks and exclusions keep the profits flowing not just to corporate managers and owners but politicos, lobbyists and the entire food chain that serves the top of the wealth-power pyramid in America.
Notice the difference between normal and abnormal profits? The enormous speculative boom of the dot-com era doubled corporate profits in a mere decade, but those gains pale compared to the tripling in profits since the 2002 downturn:
After the dot-com bubble burst, we belatedly realized the economy had become dependent on bubbles for its growth. The panicky response of central banks revealed the depth of the dependence, and this response inflated a bubble that far surpassed the dot-com excesses.
Corporate profits have ascended through three phases characterized by advancing financialization and globalization.
The first phase of "the great moderation" and "global savings glut" (phrases deployed by the Federal Reserve) fueled the dot-com bubble.
Once that bubble popped in 2001, the Fed and other central banks panicked. Their response--lowering interest rates, unleashing unlimited credit/liquidity, etc.-- inflated a monumental bubble that was further boosted by China's admission into the WTO and the full financialization / globalization of the U.S. economy.
When this bubble predictably popped, the central banks really panicked. If we strip away the hype and propaganda, we are left with a troubling reality: there is no engine of "growth" other than speculative bubbles based on cheap credit and soaring corporate profits.
We are now drifting through the troubled waters of the third phase, the phase of diminishing returns and stagnation: the tricks of increasing liquidity to fund stock by-backs and central; bank purchases of assets are no longer goosing profits or "growth."
We're in the endgame of financialization and globalization, and it won't be pretty for all the hostages of corporate profits. Giving Amazon et al. more tax breaks won't fix what's broken, and neither will lavishing subsidies or taxpayer giveaways on global corporations that maintain the useful illusion of being based in America.
Economies dependent on bubbles for their survival self-destruct.


My new book Money and Work Unchained is $9.95 for the Kindle ebook and $20 for the print edition.
Read the first section for free in PDF format.


If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.

NOTE: Contributions/subscriptions are acknowledged in the order received. Your name and email remain confidential and will not be given to any other individual, company or agency.

Thank you, Michael J. ($5/month), for your splendidly generous pledge to this site -- I am greatly honored by your support and readership.
 
Thank you, Thomas Z. ($5/month), for your marvelously generous pledge to this site -- I am greatly honored by your support and readership.

Terms of Service

All content on this blog is provided by Trewe LLC for informational purposes only. The owner of this blog makes no representations as to the accuracy or completeness of any information on this site or found by following any link on this site. The owner will not be liable for any errors or omissions in this information nor for the availability of this information. The owner will not be liable for any losses, injuries, or damages from the display or use of this information. These terms and conditions of use are subject to change at anytime and without notice.

Our Privacy Policy:

Correspondents' email is strictly confidential. This site does not collect digital data from visitors or distribute cookies. Advertisements served by third-party advertising networks such as Adsense and Investing Channel may use cookies or collect information from visitors for the purpose of Interest-Based Advertising; if you wish to opt out of Interest-Based Advertising, please go to Opt out of interest-based advertising (The Network Advertising Initiative)
If you have other privacy concerns relating to advertisements, please contact advertisers directly. Websites and blog links on the site's blog roll are posted at my discretion.

Our Commission Policy:

Though I earn a small commission on Amazon.com books and gift certificates purchased via links on my site, I receive no fees or compensation for any other non-advertising links or content posted on my site.

  © Blogger templates Newspaper III by Ourblogtemplates.com 2008

Back to TOP