On 2010-08-16, at 11:13 AM, Wojtek S wrote:
> Marv, you seem to be missing the 800-pound gorilla in the room -
> profitability.
Not my views, Woj - Baghwati's. I thought the article might provoke some discussion on the list.
> There has been a secular decline in mfg profit rates, due
> mainly to foreign competition…
My understanding is profits have been soaring on both the manufacturing and service side, but that they're considered by many to be unsustainable because they haven't been generated by a robust expansion of demand and sales. Instead, they're mainly the result of a wholesale attack on workers', jobs, hours, and pay, extraordinarily low borrowing costs, and cash hoarding rather than capital investment by corporate execs fearful of the fragile and uncertain state of the world economy. There's only so much China and the other emerging economies can do to take up the slack, especially if they start slowing.