The price of labor is set at the margin. When stevedores in Australia go out on strike, you get solidarity for them here. When tugboats captains strike for 50%/annum wage increase, they settle for 18% over 3 years and everyone takes notice. It is in the psychology of society to resent others getting more pay for what seems no more deserving than what we do. The tenacity of these strikes both here and abroad is striking. It shows a perception that demands can be made non-negotiable. Those making the demands know nothing about the theory of tight labor markets, but they do observe that the dregs are being searched out at all cost and they observe useless execs making loads for overt failure (see AAPL). This attitude is of the essence when it comes to establishing the core ingredient of inflation. Getting something for nothing. The outright refutation of the conservation of energy. That's hubris. In the past monopoly labor unions set the tone for everyone else. If unions represent 10% of the labor force, they can set a precedent that practically forces everyone else to comply with only if because they have to protect themselves from the lagged inflation. And many aspects of our society are indexed.
Confidence is strong. Confidence in getting increased compensation is rising. It takes executive action to bust it. It takes bad times whoever or whatever brings them.
MSFT has problems. Just graph their top line. Can't justify a 50%/yr growth rate anymore, so 50 pe is out too.
I don't see the y2k problem as any big deal here or abroad. Windows is on 90% of worldwide desktops or clients. They don't have the problem. If you're company still is using a mainframe computing model, say IBM 360, you deserve to be blasted into something else.
The Chinese without a doubt will print horrible inflation and try to steal Alberich's gold.
Low LT treasury rate has been best on gov. What benefits corps is low taxes, not low borrowing rates. I know, I know, most corps have highly leveraged balance sheets, so they need lower rates, but they won't be around long unless they wash their sheets. You don't try to do anything too entrepreneurial with borrowings, because there is too much risk. But with extra cash from reduced taxes, it's throw-away money. So you use it to take risks many of which return 20 times on the investment and enrich everyone's life.
The Japanese financing of our perpetual deficits has created a store of wealth that will enable them to reflate their economy, so the virtual cycle has had several constructive effects. It must be mentioned that our peoples have gotten wise and constrained the government expenditure syndrome. But rising wage demands might tank all of this virtue. |
