Two articles this week demonstrate between them how our new plutonomy works, and you'll notice that in neither case does any actual product have to be made or sold. Nodody has to build anything so it doesn't have to be quality-controlled and no laborer has to be paid to put it together. In fact one of them requires that you stop paying a certain number of your employees. (Via eRobin by email. Remember her?) Viz:
[Harley Davidson m]otorcycle sales are falling in 2010, as they have for each of the last three years. The company does not expect a turnaround anytime soon.
But despite that drought, Harley's profits are rising - soaring, in fact. Last week, Harley reported a $71 million profit in the second quarter, more than triple what it earned a year ago.
This seeming contradiction - falling sales and rising profits - is one reason the mood on Wall Street is so much more buoyant than in households, where pessimism runs deep and joblessness shows few signs of easing.
Many companies are focusing on cost-cutting to keep profits growing, but the benefits are mostly going to shareholders instead of the broader economy, as management conserves cash rather than bolstering hiring and production. Harley, for example, has announced plans to cut 1,400 to 1,600 more jobs by the end of next year. That is on top of 2,000 job cuts last year - more than a fifth of its work force.
Workers? We don't need no steenkin' workers. We can make money firing them. 'Course, that tactic isn't going to work forever, but with advanced computer automation, why, whenever the market in China gets interested in buying motorcycles, we'll be able to run our plants with hardly any workers a'tall. Maybe one, you know, to watch the dials.
Except that that China trend may be a looong time coming, which leads to 2 responses. The first is the kind of annoyance/bewilderment you often find on the NYT Business page and in the WSJ: The economic outlook is good. Why aren't you people buying more stuff?
The other is a work-around for those in the position to, well, steal.
The chief executive of Moody's Investors Service sold almost $3 million in company stock this year, and $7.1 million last year, both times right before his company's stock price fell from its peak levels, a McClatchy analysis has found.
In one case, CEO Ray McDaniel sold 100,000 shares of Moody's stock on the same day that the Securities and Exchange Commission notified Moody's that it was under investigation. The notice followed months of federal inquiries into Moody's business practices.
Moody's spokesperson[s] said the sale is legal because the timing was "pre-arranged", an automatic sale with a supposedly non-stock-price-relevant trigger. That might be OK except that Moody's refuses to explain what the trigger was or when it was put in place, something you would think they'd want to do to make the SEC go away. That they won't do it is....suspicious.
It's not like we haven't seen this sort of thing before, like at Goldman's and AIG and JPMorganChase and Citigroup and and and and.... It's become a standard ploy for banksters and other corporate hucksters to increase their take, since their outrageous salaries are clearly inadequate, in their opinion. Besides, it's not like anybody ever went to jail behind this shit.
The new plutonomy doesn't need us to make money. It doesn't need us to spend money, apparently. "Emergng markets" are going to replace us any day now and then, as far as Wall Street is concerned, we can all live in tents under bridges. This is capitalism. It's not their problem.
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