5 ms·
Credit Suisse Warns That Workers Are Gaining Ground and U.S. Equities May Suffer
- rcarrigan87 10y agoUnlike corporations, people don't hoard their money. They spend it. So this is a good thing for everyone long-term.
- deciplex 10y agoI like how the report talks about political instability and risk as though this is a thing that "just happens". I guess it didn't occur to anyone working on that report, that maybe the piss-poor situation the middle and working classes find themselves in might contribute somewhat to that political instability? I mean, I know people who work in research in finance - they aren't this stupid. I don't know any that work at Credit Suisse, though. Yeah, of course a more equitable distribution of resources will be better for everyone long term. If you work in research at Credit Suisse and are too stupid to grasp the purely economic case, at least try working out how a Reign of Terror will impact corporate profits, maybe.
- nickff 10y agoUnless someone is literally putting their money under the mattress, the money is in a bank which is loaning most of it out, so the money is almost never actually "hoarded".
- deleted 10y ago[deleted]
- jackvalentine 10y agoOr its in a non-productive asset like being parked in vacant real estate in a world city or any number of other non-productive assets that remove it from circulation.
- nickff 10y agoThe money is not "parked" in the real estate, it has been transferred to the seller.
- nitrogen 10y agoBut the ongoing value derived from use of the real estate is lost. If someone were living there, both the seller and the local economy would benefit -- the seller got paid for the real estate, and the local economy benefits from the resident's own economic activity.
- prostoalex 10y agoAs long as property taxes are paid on time, the local economy has probably extracted bulk of renumeration from that property. In the age of giant corporate retail chains and Amazon, how much of the locals' spending goes towards their local butcher, seamstress, blacksmith, cobbler, milkman and vacuum repairmen anyways?
- jackvalentine 10y agoThat's true and I chose a poor example.
- sharemywin 10y agoincluding the trillion dollars the top 5 firms are holding offshore?
- ojbyrne 10y agoWhich is in a foreign bank, many of which have U.S. subsidiaries. What's your point?
- tobltobs 10y agoThat they are hoarding money, not loaning it.
- prostoalex 10y agoMost US-traded companies prefer to limit their foreign currency exposure and keep their offshore assets in USD by buying short-term US government debt, so in effect they are loaning it.
- sharemywin 10y agoexcept since 2008 business loans have only go up 400b and consumer loans are flat or have gone down some. The problem with the idea that banks loan out what isn't spent is wrong because they have underwriting and can't just loan it to credit unworthy borrowers. don't get me wrong it would have caused inflation and a bigger stock bubble if more money flowed into the US. But it's my theory why we haven't seen the massive inflation predicted from quantitative easing.
- rcarrigan87 10y agoGreat, so the banks can loan more money to people who can't afford anything.
- joobus 10y agoExcess reserves are near a record high: https://research.stlouisfed.org/fred2/series/EXCSRESNS https://research.stlouisfed.org/fred2/series/EXCSRESNS Banks are just sitting on their cash. Also, the Fed is paying the banks not to loan out this money, currently 0.5%.
- toomuchtodo 10y agoThe solution is negative interest rates for banks and corporations, positive interest rates for individuals. Forces business investment (or dividends), but promotes savings for individuals.
- orian 10y agowhat if us-corps keep most money offshore?
- toomuchtodo 10y agoAren't most first world central banks going negative interest rates already? I guess they could always try to park cash in Venezuela.
- skylan_q 10y agoIt's actually higher prime interest rates. Sure, people can borrow at 3% interest (or whatever is provided) but why would banks want to necessarily want to loan out at such a low interest rate?
- toomuchtodo 10y agoI don't understand the question. Are you asking why would banks use negative rates?
- skylan_q 10y agoPretty much. What's in it for the banks to loan out at incredibly low rates? Remember that there isn't only an aversion to high interest rates for people trying to secure loans. The banks want higher interest rates to make loaning worthwhile.
- prostoalex 10y agoThat is one of the economic maxims (Phillips curve is another one) that used to be true, but are no longer axiomatic. Availability of cheap revolving credit (ironically) distorts the spending cycle - people spend when times are tough and deleverage their debt when their wallets get fatter, e.g. http://www.usatoday.com/story/money/markets/2016/04/16/why-low-oil-hasnt-helped-economy/83035110/ http://www.usatoday.com/story/money/markets/2016/04/16/why-l...
- rcarrigan87 10y agoAs with all economic data, hard to tell what is what. Coming out of a horrible recession, I have to think a lot of people are still trying to get their head above water, which could be preventing more discretionary spending.
- kafkaesq 10y agoHeavens -- can't let that happen, now can we? Someone better think of a way to nip this trend in the bud, before things... get out of hand.
- foota 10y agoI understand the business implications of a higher cost for labor and that the primary intent of the advisory is positive, but yikes, this perspective is so pro-business that it reads like a caricature.
- cmrdporcupine 10y agoStraight out of Das Kapital... Only backwards An old friend used to always point out to me that if you want to know what's really happening in the world, read the 'bourgeois' financial press, not the 'news'. Ideologues can and will lie and distort at will in tabloids and on TV news, but if your customers are businesses looking to make money, you have to tell things closer to the truth, that's what they're paying for.
- nickpsecurity 10y agoExactly. I tell them the same thing. A good example is how the various media and politicians describe our system to public vs what Citigroup's analysts secretly described to rich investors: http://politicalgates.blogspot.com/2011/12/citigroup-plutonomy-memos-two-bombshell.html http://politicalgates.blogspot.com/2011/12/citigroup-plutono... Secret got out and is quite the confirmation of what many suspected. Of course, we rarely get info that good. So, have to read the same publications as the titan's of industry do for their investments to try to reverse engineer it out so to speak.
- mahyarm 10y agoLike the economist or something else? Analysts being full of shit is a running joke as far as I know
- nickpsecurity 10y agoWall St journal, annual reports... things like that. They focus on what business is actually doing and to benefit who. Also lots of indirect effects. Whereas, corporate media just say BS wholesale on these topics. No surprise given who owns them and pays ad revenue. ;)
- monochromatic 10y ago> We noticed that you're using an ad blocker, which may adversely affect the performance and content on Bloomberg.com. For the best experience, please whitelist the site. Actually, it speeds up performance and makes the content easier to read by removing distractions. Thanks for your concern though.
- raverbashing 10y agoComing from a site with an obnoxious auto playing video that's really ironic
- forrestthewoods 10y agoIt's not an ad blocker, it's malware protection.
- monochromatic 10y agoExactly. I can live with advertising. I can't live with advertisers who think they own my computer.
- intopieces 10y agoI recently discovered a master list of sites to block at the host level. http://someonewhocares.org/hosts/ http://someonewhocares.org/hosts/ I still use UBlock Origin, but it doesn't seem to do much anymore. The Internet is way better like this.
- matthiasb 10y agoI am not using an ad blocker but I still got that message... slowing performance and making my experience worse ;-(
- brown9-2 10y agoSame, but I imagine it's because I have plugins disabled.
- 10y ago
- johngalt 10y agoMany comments are painting this as a bunch of monocle wearing old money aristocrats lamenting the peasants demanding more. In reality what the report is saying is this: businesses are having to hire more people at higher wages without the corresponding increase in earnings. Earnings in excess of costs is the point of equity markets. Ignore that and you have Venezuela. The evil capitalists that you all describe would happily double worker wages if it meant doubling earnings.
- syngrog66 10y ago> The evil capitalists that you all describe would happily double worker wages if it meant doubling earnings. fair point. but another point is that, for the last 20 years or so, they've been increasing return to owners (to capitalists) without an equivalent return to labor. now that it's starting to shift a little bit more towards labor relative to capital? oh noes! EDIT: mine plus aaronbrethorst's point: 1+1=3
- gcb0 10y agothink of it as a equation. if you increase both sides, its not an increase. the only way workers wage increase is if the other side do not increase together. if it does, just call it inflation.
- tobltobs 10y agoLooking at earnings is obsolete in times of creative bookkeeping for tax evasion. Look at the pay and bonuses for managers, as they are rising since years it seems those companies have rising earnings. Else those bonuses wouldn't rise every year about 10%. If I compare that against the wages for common worker I think there should be enough space for a few crumbs for common workers.
- rue 10y agoWhere does the money from the higher wages go?
- aaronbrethorst 10y ago25 of the 26 highest-earnings quarters ever reported have occurred since 2000: https://en.wikipedia.org/wiki/List_of_largest_corporate_profits_and_losses https://en.wikipedia.org/wiki/List_of_largest_corporate_prof... (yes, adjusted for inflation). I think there's been plenty of increase in earnings without corresponding increase in worker wages. Not for us. I think we're generally doing fine. But for everyone else.
- somethingsimple 10y agoThis makes me feel dirty for being an index investor. I want my index funds to make me money, but not at the expense of American workers' quality of life.