Eric Fry reinforces the point on corporate profit squeeze
(taken from Daily Reckoning)
"Meanwhile, businesses are finding that various costs
have been stubbornly rising," observes Andrew Kashdan of
Apogee Research. "Richard Berner and Shital Patel, of
Morgan Stanley, note that corporate America is experiencing
a 'perfect storm' with regard to cost pressures. While
wages, which make up the majority of costs, have remained
relatively flat over the last few years, costs have
accelerated for health and pension benefits, insurance,
worker's compensation, security services, materials and
energy.
"For example," Kashdan continues, "health care insurance
premiums for large-cap companies are rising at a 13% rate
this year, wholesale energy prices are up 75% from a year
ago, and pension contributions, says Berner, will eat up
about $20 billion of operating profits in 2003. Our expert
grasp of accounting (profits equal revenue minus costs)
tells us that a problem could be brewing."
but dont fear, the annual 2ndHalf Recovery is coming
only within the minds of the TOTALLY DELUSIONAL AND IDIOTIC
in this economic environment, failure for 2ndHalf Recovery to arrive heightens the risk of a recession, rather than increase the likelihood of its eventual arrival
the changes in the mix for the last few months are rising material and energy costs, with some continued increases in health care costs
I thought for a while lately that the recession would be triggered by the car sector
now I think it will be the consumer who retrenches from higher energy costs
and it will be the corporate profit squeeze from higher production costs
which breeds layoffs and more consumer retrenching still
I still laugh every time I hear some fuching moron jerkweed on TV proclaim that good things will come from the war effort
not a single good thing yet has
only higher energy costs and federal deficits
precisely what easily takes our economy into recession,
while piling on for the dollar decline
an inflationary recession is coming!!!
/ jim |
