For those who still question the two-tiered nature of this recovery, this week must have waylaid those doubts. No, it’s not about to collapse on itself, souffle fashion. That was predicted much earlier by a seer or two; we told our clients that was wrong. However, there is no denying the layered look.
The corporate world is lean and mean, healthy and profitable.
One individual played a key role in this US corporate transformation (although he’s modest about his accomplishment) and then another in the follow-up stock market performance we have witnessed recently. These two partnered up, working in concert; the first is Barrack Obama; the other is Ben Bernanke.
From the get go Obama scared the pants off of corporate America. We had that from CEO’s directly. His activist agenda (now mostly in tatters) meant that every new employee represented a threat. Thus the corporate world made changes long delayed, changes which did not postpone the need for new people but eliminated that need entirely, and permanently. Productivity! This goes a long way in explaining the stellar results in corporate earnings. And this explains in a sentence or two the so-called “jobless recovery.” It isn’t, but it seems that way to many.
Bernanke deserves credit too. Bernanke’s role is that he flooded the markets with liquidity. Nobody knew what to do with it all at first. Some went offshore because there didn’t seem to be much fun sticking around the house. And US bonds aren’t any better than a stick in the eye to a lot of folks, especially when there is the good risk of higher rates (lower prices) ahead. And Blue Chips seemed expensive. But Bernanke’s unending generosity eventually sparked an appetite for all kinds of things, including all kinds of stocks - that is, for companies which otherwise would have gone begging - money was so plentiful, might as well take a shot. That’s today’s reality. It’s that simple.
In the meantime, the rest of Americans - the other tier - are experiencing some pick up, some hint of recovery, or have just read about someone who has. Nothing stellar - Thursday’s Jobless Claims result showed that - but it’s catching on. And once the required retraining and relocation takes place, that adjustment forced on the American work force, the employment picture may look downright rosy.
Robert Craven
The corporate world is lean and mean, healthy and profitable.
One individual played a key role in this US corporate transformation (although he’s modest about his accomplishment) and then another in the follow-up stock market performance we have witnessed recently. These two partnered up, working in concert; the first is Barrack Obama; the other is Ben Bernanke.
From the get go Obama scared the pants off of corporate America. We had that from CEO’s directly. His activist agenda (now mostly in tatters) meant that every new employee represented a threat. Thus the corporate world made changes long delayed, changes which did not postpone the need for new people but eliminated that need entirely, and permanently. Productivity! This goes a long way in explaining the stellar results in corporate earnings. And this explains in a sentence or two the so-called “jobless recovery.” It isn’t, but it seems that way to many.
Bernanke deserves credit too. Bernanke’s role is that he flooded the markets with liquidity. Nobody knew what to do with it all at first. Some went offshore because there didn’t seem to be much fun sticking around the house. And US bonds aren’t any better than a stick in the eye to a lot of folks, especially when there is the good risk of higher rates (lower prices) ahead. And Blue Chips seemed expensive. But Bernanke’s unending generosity eventually sparked an appetite for all kinds of things, including all kinds of stocks - that is, for companies which otherwise would have gone begging - money was so plentiful, might as well take a shot. That’s today’s reality. It’s that simple.
In the meantime, the rest of Americans - the other tier - are experiencing some pick up, some hint of recovery, or have just read about someone who has. Nothing stellar - Thursday’s Jobless Claims result showed that - but it’s catching on. And once the required retraining and relocation takes place, that adjustment forced on the American work force, the employment picture may look downright rosy.
Robert Craven
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