Oh, it is time to rejoice, fellow citizens! Big profits on Wall Street and a one tenth of one percent drop in the official unemployment rate are being heralded as the signs that the recession is over. Everybody dance now! Well, except that The Wall Street Journal points out that the latest “green shoots” are just some slime mold growing on the ruins of the economy.
First, companies have been profiting because they can cut costs aggressively. It’s not as if demand in the U.S. or Europe has picked up. Take Starbucks, which reported a surprising surge in profits. Little of that was due to American consumers suddenly becoming comfortable with $5 grande mocha lattes. Instead, it was because Starbucks-faced with weak demand and sluggish sales-closed stores and laid off workers. That has been a trend across industries.
Second, many larger companies have been profiting because they can focus on where the growth is around the globe. Companies such as Intel, Caterpillar, Microsoft and IBM now derive a majority of their revenues from outside the U.S., with the dynamic economies of the Asian rim and above all China assuming an ever-larger role. Companies are thriving in spite of economic activity in the U.S., not because of it.
That suggests the connection between corporate profits and robust economic recovery in the U.S. is tenuous at best. In fact, the financial crisis hastened the trend toward efficiencies, toward leaner inventories, and towards integrating both technology and global supply chains that has been taking place over the past decade.
That has led to severe pressure on the American working class and eroding employment. As these companies profit from global expansion and greater efficiency, they have little or no reason to rehire fired workers, or to expand their work force in a U.S. that is barely growing. If you are a global company, you want to hire and expand where the most dynamic growth is. Unfortunately for Americans, that’s not the U.S.
Add to that cheery scenario the fact that there is all but open warfare on the “rich”, many of whom who happen to be small businessmen, and it is not a pretty picture. Without the jobs that small businesses – not global players – create, there will be no economic recovery. There will be no jobs created. Small business is more than a bit gun shy about investing in any expansion of their business when they may be subjected to punitive taxation under a so-called health care “reform”.
Sure, companies can post a paper profit by ruthlessly cutting costs and jobs. That isn’t a good thing for long term economic growth, however. I remain convinced that Obama and the Democrats in Congress grossly misread the “change” the American public wanted in November. I think the public wanted the economy to recover and prosperity to return. That’s the change they chose.
What they got is Obama and Congress actively spraying Agent Orange on any “green shoots” that popped up, killing the recovery before it had a chance to take hold.
“I remain convinced that Obama and the Democrats in Congress grossly misread the “change” the American public wanted in November.”
I remain comvinced that the American public had no idea what ‘change’ they wanted – they were voting for change for the sake of change. The public was so convinced by the Democrats and their lackeys in the DPMP first that the Bush presidency was a failed presidency and second that ANY Republican elected would mean a continuation of the Bush ‘failed policies’ that they became convinced that virtually ANY change from Republican government would be good. They didn’t bother looking into Obama’s history or even listening to what he actually said during the primaries and then during the campaign (which were often diametrically opposed to one another). They just knew they wanted change and this Obama guy was, in the words of his own VP, “the first mainstream African-American who is articulate and bright and clean and a nice-looking guy”. They never noticed the fact that the ‘change’ he was talking about was completely undefined or that he really had no actual plans for anything. Nor did they care. They just knew that the Democrats and DPMP were telling them they needed it.
Suppose the dems can’t get Cap & Trade, National Health care or the massive tax hikes enacted? What if the economy then begins to heal itself, and by this time next year the unemployment rate is really ticking down? Do the dems get returned to power as the ‘saviors’ of the economy?
Actually, that is not beyond the realm of possibility. Scary, isn’t it?
If you remember, feeb, prior to the inauguration in January there were a number of economists that specifically stated that the stimulus package was not needed. They said that if left alone the economy would adjust itself and we would be pretty much exactly where we are at about this point in time. That’s one of the ways you can tell that the stimulus was a complete and utter failure – it changed nothing, especially since less than 20% has even been spent yet. All that said, you have already seen Obama and his lackeys trying very hard to take credit for what recovery we have had up to this point. If, as you said, by this time next year the unemployment rate is really ticking down and consumer spending is on the rise along with other economic indicators, I will guarantee you that the Obamessiah will proclaim far and wide that HE and HE ALONE is the reason for the recovery. He will take full credit for a recovery that economists predicted would take place if NOTHING was done. And his enablers in the DPMP will swear to it.