Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : Politics for Pros- moderated -- Ignore unavailable to you. Want to Upgrade?

To: Glenn Petersen who wrote (437067)	7/25/2011 1:23:12 AM
From: goldworldnet	Read Replies (1) \| Respond to of 793955

Companies churn out profits but not jobs By Steven C. Johnson \| NEW YORK \| Sun Jul 24, 2011 8:06pm EDT reuters.com (Reuters) - The sluggish pace of hiring may be hobbling the U.S. economy, but it's not been holding back big U.S. companies' profits thanks to growth overseas and cost controls at home. And that's bad news for the more than 14 million Americans without jobs. Big businesses would normally be desperate for surging job growth as it would feed into domestic demand but these aren't normal times. Massive growth opportunities overseas, especially in China and other buoyant Asian economies, have some of the largest American companies on track for record profits, even if they're businesses are mostly treading water in the U.S. The message last week from the chief financial officer of one of the nation's industrial giants couldn't be clearer. "We've driven all this cost out. Sales have come back, but people have not," said Greg Hayes, chief financial officer at United Technologies Corp. "It's the structural cost reductions that we have done over the past few years that have allowed us to see strong bottom-line results. The company, the world's largest maker of air conditioners and elevators, said second-quarter profit rose 19 percent, and it is doing most of its hiring in emerging markets where demand for its products is growing fastest. It isn't alone in seeing profits climb in the current earnings reporting season. About 78 percent of companies in the benchmark S&P 500 index that have reported second-quarter earnings have beaten Wall Street expectations. Many benefited after slashing costs when the financial crisis hit and then keeping tight control on them even as sales recovered. Economists say the ability to do more with less has helped create a two-speed U.S. recovery. The S&P 500 has doubled in value since the recession ended and per-share earnings are currently on track for a new annual record, while employment remains below the level seen in late 2008 when corporate profits troughed. Employers added fewer jobs in June than at any time in the past nine months, and the jobless rate rose to 9.2 percent - not far below its level of 9.5 percent in June 2009 when the recession ended. "We've never seen the kind of shedding of jobs that we saw in this recession. America's corporations have never been running so efficiently," said Ellen Zentner, senior U.S. economist at Nomura Securities in New York. LITTLE WAGE GROWTH What's more, workers have never claimed such a paltry share of real national income growth. Economists at Northeastern University in Boston recently found corporate profits captured 88 percent of income growth between the second quarter of 2009 and the fourth quarter of 2010. Workers' take? Slightly more than 1 percent. "The only major beneficiaries of the recovery have been corporate profits and the stock market and its shareholders," the study concludes. The high jobless rate is also keeping wage growth severely restrained in the U.S., which is also good for profit margins. Recent Department of Labor data showed unit labor costs edged up 0.7 percent in the year to March, though not enough to make up a 2.9 percent decline in the prior 12-month period. Northeastern economics professor Andrew Sum called the mismatch "historically unprecedented" and said it bodes ill for future growth, especially given many companies are sitting on their cash rather than investing it. "Workers have no money, no purchasing power, so that's why consumption is not moving," he said. By sitting on profits, firms are acting like earners "who take their money and stuff it in the mattress. That's happening across the economy." U.S. economic growth slowed sharply in the first quarter and was expected to remain below 2 percent in the April-June period. Some blamed that on high energy prices and supply shortages caused by Japan's earthquake and are betting on a rebound in the second half. A July Reuters poll put the median estimate for 2011 growth at 2.7 percent, down from 2.9 percent in 2010. CHICKEN AND EGG Businesses' ability to do more with the same or less -- what economists term increased productivity -- has been rising since the 1990s, thanks partly to technological advancements and the ability to tap markets in fast-growing, lower-cost developing countries. Some of the most profitable firms are those with overseas markets. The largest U.S. conglomerate General Electric Co. tied its 21.6 percent rise in earnings partly to strong foreign demand for its heavy equipment, including jet engines and electric turbines. In the United States, things are obviously different. Consumers are still trying to pay down large debts built up during the boom years, which suppresses spending and means there is little incentive for companies to hire. "It's a chicken-and-egg thing -- whether demand or supply drives growth," Zentner said. "Studies show that lack of sales for small business is the biggest impediment to hiring." Even companies selling basic consumer products are feeling the pinch as the jobless and those on low incomes watch the pennies. Pepsi Co Inc tempered its full-year outlook this week and said performance in its North American beverage business was worse than expected. In the cost-conscious auto industry. General Motors Co's top U.S. sales chief, Don Johnson, told Reuters that its manufacturing managers have been "squeaking out extra units through improving line rates, adding on extra shifts". The company indicated it is in no hurry to build new factories or hire lots of new workers. Uncertainty about future tax rates and policy, a by-product of the deadlock in Washington over whether to raise the country's borrowing limit and how to rein in a gaping budget deficit, has also made firms cautious, said Jacob Oubina, senior U.S. economist at RBC Capital Markets. But Doug Cliggott, U.S. equity strategist at Credit Suisse, said investors and CEOs alike should probably prepare for more subdued earnings in the second half and beyond. For one thing, growth abroad appears to be slowing as booming economies such as China and Brazil try to tame inflation. Heavy machine maker Caterpillar blamed slower U.S. and global growth for disappointing quarterly earnings on Friday. And while U.S. interest rates are likely to remain very low for some time, companies won't be able to rely on massive federal spending, which Cliggott said also helped boost profits over the past two years. (Additional reporting by Scott Malone in Boston, Nick Zieminksi in New York and Clare Baldwin in Detroit; Editing by) Martin Howell) * * *

To: Glenn Petersen who wrote (437067)	7/25/2011 2:25:29 PM
From: KLP	Read Replies (1) \| Respond to of 793955

You're right Glenn...This group should be watched especially if Thomas Friedman is in favor.... No Special Interest Funding for Americans Elect? New York Times reports “Serious Hedge-Fund Money” Jim Cook 7/24/2011 [3] comments Americans Elect, a 501c4 corporation working to arrange the election of its own presidential ticket in 2012, has rolled out its publicity campaign today with a piece written by New York Times columnist Thomas Friedman. Friedman wrote his column after being invited by Americans Elect to tour “its swank offices, financed with some serious hedge-fund money, a stone’s throw from the White House.” That’s a curious turn of phrase, considering the point-blank declaration this month by Americans Elect that “None of our funding comes from special interests or lobbyists.” The definition of a special interest, according to Merriam-Webster, is a person or organization seeking gain through specific economic activity and standing to gain or lose depending on the shape of action taken by the government. Hedge fund investors and managers are market insiders who make money off of aggressive, high-risk investments. Government regulation of hedge funds has been a significant point of contention in recent years, making hedge fund managers and investors part of a special interest group. Indeed, concerns regarding the regulation of hedge funds almost perfectly bookend the creation and roll-out of Americans Elect. In July of 2010, as the old Unity08 finished its corporate reorganization through the Unity12 Task Force into the new Americans Elect corporation, the Dodd-Frank Act was passed by Congress and signed into law by President Barack Obama, introducing a new array of regulations of hedge fund activities. In July of 2011, as Americans Elect begins its public roll-out, government agencies, hedge fund managers, banks and investor groups are clashing over the implementation of the Dodd-Frank Act, especially rules that allow banks to get into the hedge fund business. When it comes to Thomas Friedman’s report that Americans Elect is “financed with some serious hedge-fund money,” there are two possibilities: Possibility 1: Despite having a gig with the New York Times and going to interview Americans Elect in “its swank offices,” Thomas Friedman doesn’t know what he’s talking about here. This isn’t inconceivable: Friedman refers to Kahlil Byrd as “the C.E.O. of Americans Elect,” but current corporate documents show Byrd is actually the Vice Chairman and Treasurer while billionaire Peter Ackerman is Chairman. Americans Elect corporate bylaws specify that “The Chairman shall serve as the chief executive officer of Americans Elect.” Possibility 2: Americans Elect really is awash with special-interest hedge fund money. Some other evidence pointing in this direction has already emerged. In a fawning promotional piece this weekend for the Daily Beast, No Labels co-founder John Avlon drops a useful statistic: that Americans Elect has raised $20 million from just 50 people, a whopping average contribution of $400,000 per person. Not just anybody can write a check for 400 grand; these are 50 mostly anonymous people to whom Americans Elect owes a big debt of gratitude. We know from other documents that two private investment executives have made donations to Americans Elect: Rockport Capital chief Peter Ackerman to the tune of $1.55 million and hedge fund operator Kirk Rostron in an undisclosed amount. Incomplete documentation of a “giving stream” to Americans Elect also names Melvin Andrews of Los Angeles as a contributor. Melvin Andrews of Los Angeles is the President of Lakeside Capital Partners. So let’s ask Americans Elect about this. Admittedly, Americans Elect’s track record in answering questions isn’t that hot: I’ve been reaching out to the group, asking various questions and trying to make contact with it for nearly a year now and have never gotten any communication in reply. But by gum, I’ll keep trying. I’ve posed the following question to Americans Elect today through its online contact form, through the e-mail address info@americanselect.org, and by a phone call to the newly disclosed media contact number of Americans Elect at 541-WE-ELECT/541-933-5328 (no live person answered the call, but I did leave a message after a recording promised that “we will get back to you as soon as possible”). If I receive an answer to my question, I’ll post it in the comments section for you to read. If you don’t see an answer from Americans Elect in the comments section, it’s because Americans Elect hasn’t given me an answer. Question: Americans Elect declares that "none of our funding comes from special interests or lobbyists." But in his Sunday New York Times profile of Americans Elect, columnist Thomas Friedman describes "swank offices, financed with some serious hedge-fund money, a stone’s throw from the White House." Given recent special interest advocacy of hedge fund operators regarding the Dodd-Frank Act, these two statements appear to be inconsistent. Is Thomas Friedman's statement regarding hedge fund contributions to Americans Elect inaccurate? Or has Americans Elect been accepting money from the operators of hedge funds? I’ll share any answer I get in the comments section below. If you don’t see any answer from Americans Elect in the comments section for this article, you’ll know that Americans Elect never got back in touch.