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Big listed firms’ earnings have hit a wall of deflation and stagnation

10 points by Futurebot 11y ago

GFK_of_xmaspast 11y ago
Boy, it's almost as if the rate of profit has a tendency to fall or something.
carsongross 11y ago
Outsourcing the jobs of the same people you sell stuff to only lets you arbitrage price stickiness for so long as the consumers eat through their capital and expand their balance sheet. Then, deflation.
drawkbox 11y ago
Consumer based economy that survives on spending, held back with flat wage increases to grow spending from those same consumers. This is the result you would expect to get.
Gustomaximus 11y ago
Monetary and fiscal policy typically seen in western economies is increasingly geared to favor the upper end. We're essentially returning to a re-jigged form of trickle down economic policy without the openly admitting this. History has shown the effects this. The optimist in me says it's cyclical and we'll adjust over the next few political cycles in the natural ebb & flow of policy. The pessimist says the US dollar/Fed is due a serous correction in the style of recent EU event with some seriously negative flow on effects so I should be buying gold. Flip a coin?
- jazzyk 11y ago
  The resultant (net) pattern of growth is the sum of cyclical and structural forces. The reason why this cycle is not performing as well as before (and the next cycle will not either) is because of serious structural problems (not only in the US) - mountains of debt (private, government) everywhere, financialization of many economies, very weak productivity growth, etc. So yes, gold could have been a good idea, but the above issues have already been priced in. And you can;t eat gold, in case of a major crisis/depression.
  - Gustomaximus 11y ago
    Being 'priced in' assumes the market is correct. From that logic we'd never have a crash, so not a fan of that catch phrase. Also you pretty much cant eat ANY investment unless you buy productive farmland. Unless going full prepper (which is more insurance than investment) investments are about 1) wealth presentation to see you through the event, or 2) being in a position to take profit from a negative event.
tsotha 11y ago
>...finance was a crucial prop for profits in the two decades to 2007 (see chart 3), with the banking industry expanding rapidly and industrial firms such as GE and General Motors building huge shadow banks. The regulatory clampdown since the financial crisis means this adventure is now over. Is it a regulatory clampdown, or is it just that the financial sector can only drive the rest of the economy to the extent it isn't already saturated with debt?
- toomuchtodo 11y ago
  Can it not be both?

10 points by Futurebot 11y ago

Boy, it's almost as if the rate of profit has a tendency to fall or something.

Outsourcing the jobs of the same people you sell stuff to only lets you arbitrage price stickiness for so long as the consumers eat through their capital and expand their balance sheet. Then, deflation.

drawkbox 11y ago

Consumer based economy that survives on spending, held back with flat wage increases to grow spending from those same consumers. This is the result you would expect to get.

Gustomaximus 11y ago

Monetary and fiscal policy typically seen in western economies is increasingly geared to favor the upper end. We're essentially returning to a re-jigged form of trickle down economic policy without the openly admitting this. History has shown the effects this. The optimist in me says it's cyclical and we'll adjust over the next few political cycles in the natural ebb & flow of policy. The pessimist says the US dollar/Fed is due a serous correction in the style of recent EU event with some seriously negative flow on effects so I should be buying gold. Flip a coin?

jazzyk 11y ago
The resultant (net) pattern of growth is the sum of cyclical and structural forces. The reason why this cycle is not performing as well as before (and the next cycle will not either) is because of serious structural problems (not only in the US) - mountains of debt (private, government) everywhere, financialization of many economies, very weak productivity growth, etc. So yes, gold could have been a good idea, but the above issues have already been priced in. And you can;t eat gold, in case of a major crisis/depression.
- Gustomaximus 11y ago
  Being 'priced in' assumes the market is correct. From that logic we'd never have a crash, so not a fan of that catch phrase. Also you pretty much cant eat ANY investment unless you buy productive farmland. Unless going full prepper (which is more insurance than investment) investments are about 1) wealth presentation to see you through the event, or 2) being in a position to take profit from a negative event.

tsotha 11y ago

>...finance was a crucial prop for profits in the two decades to 2007 (see chart 3), with the banking industry expanding rapidly and industrial firms such as GE and General Motors building huge shadow banks. The regulatory clampdown since the financial crisis means this adventure is now over. Is it a regulatory clampdown, or is it just that the financial sector can only drive the rest of the economy to the extent it isn't already saturated with debt?

toomuchtodo 11y ago
Can it not be both?