You’re still being screwed–where are the occupiers of Wall St?

This is just unbelievable

See The Business Insider

These are, of course, US statistics, but the same trends are happening everywhere. The Aussies may have a respite but don’t bank on it lasting.

When are the 99% going to wake up? This is the sort of thing that led to the French aristocracy having a date with Monsieur Guillotine. And here, in western democracies, despite having the capacity to decide who rules our countries, we’ve allowed the union movement to be destroyed and our wealth to be stolen.

Let them eat cake

Corporate profit margins at an all-time high

Companies are making more per dollar of sales than they ever have before. (And some people are still saying that companies are suffering from “too much regulation” and “too many taxes.” Maybe little companies are, but big ones certainly aren’t).

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Profits graph: higher than ever

Fewer people with jobs

Continue reading “You’re still being screwed–where are the occupiers of Wall St?”

Chickens coming home to roost again

The following is an extensive extract from the Business Insider. I recommend ignoring my extract and reading the full post right here, but if you’re determined not to, go ahead and read my truncated version.

It’s a little technical and although my knowledge of economic theory is improving, I don’t understand all of it. But the implications for all of us are very serious. This is the stuff that John Key and Bill English seem able to gloss over but which continues to make a mockery of their ever-optimistic and perennially wrong economic forecasts. The 95% that I do understand isn’t really debatable. As you’ll find when you read it, there’s an inevitability to what is happening that lends it verisimilitude.

This is just part of the reasons why John Key gave up on catching up with Australia and Bill English made a virtue of our being poorer than our mates across the ever-widening ditch. The ill-informed, self-serving and uninspiring people you put in power don’t get it.

The last paragraph is spine-chilling, provocative, and hopefully will not come to pass.

Not yet.

Over to Raul Ilargi Mendoz…

…and quotes within quotes:
Continue reading “Chickens coming home to roost again”

How the 1% are cleaning out the rest of us: Part 2

Talk about hoisting yourself by your own petard!

Trickle down theory seems to have struck a roadblock
The graphs at the bottom of this post are from the New York Times. They’re self explanatory. What isn’t clear is how the movers and shakers of the world can be so bloody stupid. The figures are for the USA but it all applies here in New Zealand and throughout most of the world.

At the top of the graphic you can see that for the last 30 years wages have pretty much stayed the same relative to inflation for 82% of the workforce. The top 18% however, have creamed it. (The top 1% and even more avaricious 0.1% have really creamed it; we’ll get to them at another time.) As a result, in order to be able to buy all the flash cars, flat screen TVs, the ever more fancy houses, and the iPads  that media advertising bombards we peasants with, we’ve been borrowing up to our ears. Hence the current mess, and a situation where the people doing the lending are almost as deep in it as the borrowers.

Almost, but not quite. In some cases, not at all. (Continued below the graphic).

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how the 1% are screwing the rest of us

Monumental stupidity from the top

What is mind-bogglingly and infuriatingly stupid about all this is that–as you can see from the second graph–it’s all happened before and it was perfectly clear that it was going to happen again. Not only that, it happened in the previous century (the 1800s) as well! More than once!


Here’s how it works–or not

Continue reading “How the 1% are cleaning out the rest of us: Part 2”

Recovery? Don’t hold your breath

John Key, in yet another triumph of hope over experience, maintains that we’re on an economic roll. There are some minor problems with Mr Key’s super-optimism. Not unlike the now abandoned “catching up with Australia” pledge, or the “Working for Families is communism by stealth” backtrack.

Over 50 years of voting I’ve been a swinging centre-right voter and a supporter of capitalism. I’m a slow learner. I didn’t notice that the system that once worked very well is now absolutely broken.

When Henry Ford invented the production line and started churning out Model T cars in vast numbers, he concluded that if he wanted to create an economic and transport revolution he needed to ensure that his car was affordable. More specifically, he had sufficient insight to realise that success depended upon the people who built the car being able to afford to buy it.

For several decades this was understood by economists, money managers, reserve bankers, and capitalists. For the market to work successfully ordinary workers had to be sufficiently well paid that they were empowered to be consumers. It’s no use producing vast quantities of junk if nobody can afford to buy it. Trouble is, sometime in the last 20 or 30 years they’ve forgotten the basic message. The ratio between the incomes of the top earners and the average worker has increased enormously, but for 10 or 20 years the inflation adjusted wage of the average worker hasn’t increased. The top earners are nevertheless creaming the system more and more with every passing day and they’re apparently oblivious to the fact that they’re strangling the golden goose.

From SmartBlog

In 2010, the average annual wage for U.S. workers in production operations was $33,770 while the average CEO pay in S&P 500 companies was $11,358,445. CEO pay was 336 times more than the average employee.

The Wall Street crowd and their cronies around the Western World are sucking more blood out of the system than they were before it all turned pear-shaped in 2007-8. Before your money bailed them out. It’s unsustainable.

From MarketWatch

The left-wing Institute for Policy Studies found that the CEOs of the job-cut companies on average took home nearly $12 million in 2009, above the $8.5 million brought in by the average CEO of an S&P 500 company. The study found that 72% of the announced layoffs came at a time when the company was reporting positive earnings.

“This reflects a broader trend in Great Recession Corporate America: squeezing workers to boost profits and maintain high CEO pay,” said the study.

The growth occurring in the US and elsewhere is a jobless recovery. How does China remain an engine for growth when the people who buy their products have empty wallets? Sure, they can generate some internal consumption from their massive surplus, but that won’t last long when their own individuals and local authorities have been indulging in a borrowing spree which has created a massive real estate bubble. Negative equity is knocking on China’s door too.

For 2 or 3 decades the underpaid workers in the Western World have been borrowing to buy stuff that they previously could afford to buy for cash, or that didn’t exist, or that they chose not to buy. Now those people are pulling up the drawbridge. Countries like China and Germany who have relied on manufactured exports for growth are heading for a train wreck.

Millions of people around the world have lost their jobs and their homes. The rich are getting richer after the system that feeds their greed was bailed out using the taxes of those who’ve been destroyed. A revolution is overdue and I suspect that it’s coming.

From the horses’ mouths

The Wall Street Journal and Forbes Magazine are hardly bastions of Liberalism, nevertheless they can spot a trend when it hits them in the eye.

As you can see from this graph from the WSJ, the rich are doing OK. In 1965 they earned, on average, a mere 24.2 times the average employee’s income. In 2009, long after the recession hit, it was 185.3 times, and if you check this link at Forbes magazine, you’ll see that the thin red line is now on the rise again.

These people just don’t get it.

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CEO salary disproportionate growth

Keeping ahead of Botswana

Catching up with Australia? Not at this rate

After 50 years of economic blundering it’s a big job to explain New Zealand’s economic doldrums in 6 minutes. In this video Paul Newfield has a good stab at it. If you plan for a future in New Zealand, please listen to Paul. His message is vitally important and it only takes 7 minutes.

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In a nutshell:

  • By 2025 we’re on track to be overtaken economically by Botswana and Khazakstan.
  • We’ve gone from being the richest country in the world to being 32nd by Paul’s count. According to my current figures we’ve sunk much further: to around 51st. Probably because his figures are for the OECD only. There are plenty of countries not even in the OECD who’ve left us in their dust.
  • Not covered in the video: since 2008 we’ve fallen 5 places in OECD per-capita GDP rankings, Australia have risen 5 places. Catching up with Australia seems to be needing little more work Mr Key.

Decades of economic vandalism and political opportunism have left us watching our children departing our shores in droves. We’re paying to educate the builders of the Australian economy. A million Kiwis are living overseas. That’s 20% of our population.

After you’ve watched this short clip please put aside an hour to watch the late and very much lamented Dr Sir Paul Callaghan’s entertaining, fascinating, but frightening presentation which you can see right here. The actual video is an hour and a half, but the last half-hour is just audience questions and not vital to the message. Sir Paul set out to find out where we’ve gone wrong and nailed it. Our current government made hime New Zealander of the year in 2011 but totally rejected his message.

These people don’t get it

If the views expressed by these leading lights are correct we may as well all bugger off to Australia on the next waka.

I belatedly watched the last episode of TVNZ’s Q&A. Interesting, not for enlightenment, but for the astonishing amount of waffle, cliches and platitudes crammed into one half hour programme.

And the total rubbish being talked.

Mike Williams, despite being a dyed in the wool lefty, spoke more sense than all the rest of them put together, although his fulsome praise of slippery slope Phil Goff put a dent in his verisimilitude. Watch the program yourself, then visit the websites of the Treasury, the OECD, the CIA’s World Factbook; review the facts and figures and make up your own mind whether these “experts” have got it together or not.

The panel comprised Dr Claire Robinson, very highly qualified and experienced in communications; Katherine Rich, front-runner for the National Party leadership not long ago; and Mike Williams, ex-Labour Party president. The views they expressed made me wonder whether we’re all in the same universe, never mind on the same planet.

Just to set the mood we had a clip of Dr Doom aka Allan Bollard saying: Continue reading “These people don’t get it”

The Treasury gets it

It’s a pity they don’t have the ears of our great and glorious leaders. Your taxes pay their salaries but it’s to no avail; the bureaucrats and the politicians are pulling in different directions.

John Whitehead, Secretary to the Treasury, gave a speech in November telling it like it is. These two images, which accompanied his talk, illustrate clearly the problems Just Wondering has been set up to address. When the Treasury Secretary tells the Government publicly that we’re in deep trouble perhaps we should be paying attention and perhaps we should be demanding that Mr Key and Mr English do too.

The must-read text of the full speech is here along with many more graphs showing the sorry state this country is in and indicating the desperate state we’re plummeting into.

GDP gets an F minus; this is the problem

I hate Powerpoint, but I’ll bite the bullet to inflict upon you these two images from the presentation. They say it all:

New Zealand long term growth record
"In 1950 we had the third-highest GDP per capita ranking among OECD countries. Last year we were ranked 22. Tumbling down a league table tells us that our competitors are doing things smarter and better. Imagine the outcry if a sports team suffered such a decline? The figure here shows that, since 1950, our average rate of growth – at 1.3 per cent – has been the lowest in the OECD. Treasury."

R&D gets an F too; could do better but just isn’t trying

This is a substantial part of the reason we have the problem. R&D is the key to the beginning of the beginning of restoring our prosperity.

New Zealand's pitiful R&D spending
If anything is going to get us out of the mess we're in, it's innovation leading to high tech businesses earning enough to pay high wages to skilled people. It isn't going to happen if we continue like this. It's not only business that's the problem. Government doesn't put enough into R&D either.