tag:blogger.com,1999:blog-6616959642391988608.post5360269252769288637..comments2024-03-28T00:18:25.641-07:00Comments on Calafia Beach Pundit: What happened to all the profits?Scott Grannishttp://www.blogger.com/profile/14028519647946868684noreply@blogger.comBlogger31125tag:blogger.com,1999:blog-6616959642391988608.post-14151433896932768482014-09-08T19:40:08.202-07:002014-09-08T19:40:08.202-07:00Gov't borrowing does not take money out of the...Gov't borrowing does not take money out of the financial system! In the medium to long term, the money spent by the Federal government ends up back in the banks in the form of deposits. Say the Federal Government finances some spending with debt. It sells 1000 dollars in bonds. 1000 'leaves' the banking system. Then the gov't spend the money. Now some agent in the private Mike Fellmanhttps://www.blogger.com/profile/17472130295479414074noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-38520912937570557502014-09-02T09:01:45.692-07:002014-09-02T09:01:45.692-07:00Matthew: I've long argued that the relative la...Matthew: I've long argued that the relative lack of corporate investment is symptomatic of a market that is still very cautious. Investors and businesses were so badly burned by the last recession that they have been very shy to take on risk. <br /><br />Confidence is returning and investment is improving, but it's still being held back, I believe, by an exceptionally onerous regulatory Scott Grannishttps://www.blogger.com/profile/14028519647946868684noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-54385257034823260452014-09-02T07:31:06.210-07:002014-09-02T07:31:06.210-07:00Scott: I fully see how govt borrowing and spending...Scott: I fully see how govt borrowing and spending takes money out of financial markets. That is, with lower levels of govt borrowing and spending, we'd see higher levels of money in the capital markets. That's pretty straight forward.<br /><br />But given the levels of govt borrowing and spending as they've been the last few years, it still doesn't explain (to me) why corporateGrechsterhttps://www.blogger.com/profile/08898953158865778397noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-56073142316663163902014-09-01T13:47:54.497-07:002014-09-01T13:47:54.497-07:00amritsari: several problems with your facts. The a...amritsari: several problems with your facts. The article you cite references profits from 2003 to 2012, whereas I reference profits from 2008 to 2014. I don't think anyone knows the share of profits in the latter period that was devoted to share buybacks, but it doesn't matter. Share buybacks don't involve wasteful activities, and they don't necessarily take money out of the Scott Grannishttps://www.blogger.com/profile/14028519647946868684noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-63849162613469759992014-09-01T12:50:33.008-07:002014-09-01T12:50:33.008-07:00You seem to ignore buybacks. According to this abo...You seem to ignore buybacks. According to this about 54% of earnings have been spent on share buybacks:<br />http://hbr.org/2014/09/profits-without-prosperity/ar/1<br />It is C-suite greed that is going to destroy America, not federal spending.amritsarihttps://www.blogger.com/profile/03968805404670583901noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-18415929468595207272014-08-31T15:59:40.005-07:002014-08-31T15:59:40.005-07:00"Where is there FEAR in markets? Where is the..."Where is there FEAR in markets? Where is there VALUE? Nothing - including bonds - are cheap anywhere"<br /><br />municipal bonds RELATIVE to treasuries are a STEAL and very likely to out perform for the foreseeable future.stevehttps://www.blogger.com/profile/07387986994469835875noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-54249391943800808422014-08-31T13:43:42.257-07:002014-08-31T13:43:42.257-07:00Mr. Grannis:
Many Keynesians try to refute argume...Mr. Grannis:<br /><br />Many Keynesians try to refute arguments regarding abysmal GDP growth, such as yours appearing in this post, by stating something along the lines of: It was the worst financial crisis ever and hence the 2% GDP growth is understandable.<br /><br />Wrong. How so? <br /><br />Take a gander at 18:30 to 19:41 of the 04/11/2013 lecture by John B. Taylor at Duke University. W.E. Heasleyhttps://www.blogger.com/profile/00368333904571061995noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-79522255599731484912014-08-31T11:32:17.366-07:002014-08-31T11:32:17.366-07:00This comment has been removed by the author.pimaCanyonhttps://www.blogger.com/profile/09477196225992507658noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-37293634197399238062014-08-31T11:20:55.977-07:002014-08-31T11:20:55.977-07:00Excellent exposition and discussion.
I wonder, tho...Excellent exposition and discussion.<br />I wonder, though, about measuring national debt against GDP rather than against some measure of assets, such as accumulated household wealth, which is, I think, about seventy trillion. I wonder if it would be fair to say that we have taken about a tenth of all our savings and spent it. We are ten percent poorer than before.Rusty in Pittsburghhttps://www.blogger.com/profile/12488141018837809024noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-2969793989120526012014-08-30T08:59:42.132-07:002014-08-30T08:59:42.132-07:00This is the article I couldn't find earlier:
C...This is the article I couldn't find earlier:<br /><b>Classic Car Market Revs Up</b><br /><br />"Last year, two Manhattan condominiums sold for over $90 million and a Francis Bacon painting went for $142.4 million. Now comes the $38.1 million car.<br /><br />While the Ferraris are rare — just 32 were built by hand between 1962 and 1964 — the price for the 250 GTO was hardly the only Williamhttps://www.blogger.com/profile/04418491109912775561noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-69007249746907177312014-08-30T06:12:03.096-07:002014-08-30T06:12:03.096-07:00AAII Investor Sentiment Survey
Bullish sentiment ...<b>AAII Investor Sentiment Survey</b><br /><br />Bullish sentiment soared through the "concerning" 50% mark in one week!! Aother markets are bullish as well - see the links below.<br /><br /><b>Bullish....51.9%<br />up 5.8</b><br />Neutral....28.8%<br />down 1.4<br />Bearish....19.2%<br />down 4.4<br /><br />Long-Term Average:<br /> Bullish: 39.0%<br /> Neutral: 30.5%<br /> Bearish: Williamhttps://www.blogger.com/profile/04418491109912775561noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-19260876248493451792014-08-30T01:39:40.059-07:002014-08-30T01:39:40.059-07:00OT--
Copper prices are back down to 2005 levels. ...OT--<br /><br />Copper prices are back down to 2005 levels. Basically copper prices spiked 2002-2005, then sagged in the Great Recession, then spiked to new highs in 2011, before falling back to 2005 levels. Been squishy now for three years.<br /><br />Seems to me many commodities got gamed in the great commodities inflation of 2000-2008.<br /><br />But, the market is the market. That brought on Benjamin Colehttps://www.blogger.com/profile/14001038338873263877noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-48251635546256092842014-08-29T10:48:22.185-07:002014-08-29T10:48:22.185-07:00Chirs: After-tax corporate profits are currently r...Chirs: After-tax corporate profits are currently running at an annual rate of 10.6% of GDP ($1.8 trillion). The federal government collected $304 billion in corporate taxes in the 12 months ended July 2014. Neither has much to do with the increase in federal debt.Scott Grannishttps://www.blogger.com/profile/14028519647946868684noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-54505417586909264632014-08-29T08:48:37.915-07:002014-08-29T08:48:37.915-07:00Dear Mr. Grannis,
I regret that I'm not rea...Dear Mr. Grannis,<br /><br /> I regret that I'm not really understanding your numbers. If, as per your post, corporate profits are 11% of GDP and corporate taxes are 35%, wouldn't it follow that the government can spend 3.85% (11 *0.53)of GDP per year from corporate taxes? This wouldn't nearly account for the increase in debt. Further, the 11% and 35% numbers are absolute highs. Anonymoushttps://www.blogger.com/profile/04631045123128769971noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-24920113761498287842014-08-29T07:50:26.404-07:002014-08-29T07:50:26.404-07:00Scott: In your response to EEE, you replied,"...Scott: In your response to EEE, you replied,"...I think a good part of the explanation for why it hasn't happened is that the government has consumed and wasted a significant amount of the resources (ie capital) that corporations have generated."<br /><br />Could you explain this a bit further? Is this a crowding out effect? I ask because I would think that corporations get to Grechsterhttps://www.blogger.com/profile/08898953158865778397noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-23951537798693959762014-08-29T07:43:11.266-07:002014-08-29T07:43:11.266-07:00Would you mind posting the link for all?Would you mind posting the link for all?PerformanceSpeaksForItselfhttps://www.blogger.com/profile/02710385857829942329noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-63541469123104519442014-08-29T07:42:00.344-07:002014-08-29T07:42:00.344-07:00Scott, I'm interested to hear your thoughts on...Scott, I'm interested to hear your thoughts on the source of profits as explained by the Kalecki equation. PerformanceSpeaksForItselfhttps://www.blogger.com/profile/02710385857829942329noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-53722635263698620612014-08-29T07:23:07.679-07:002014-08-29T07:23:07.679-07:00This comment has been removed by the author.Hanshttps://www.blogger.com/profile/05183141792723754273noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-81386025060026737312014-08-29T07:22:38.180-07:002014-08-29T07:22:38.180-07:00Mr Constable, I have bookmarked this thread becaus...Mr Constable, I have bookmarked this thread because of it's significants and it's conclusion.<br /><br />I believe, Mr Grannis, has made objective points, which can not be refused.<br /><br />Perhaps we can call it Grannis' efficiency of money.<br /><br />I am not sure if JMK would have approved the course of governmental unit intervention, over the past six years but certainly he Hanshttps://www.blogger.com/profile/05183141792723754273noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-16659360403906136412014-08-29T06:08:17.598-07:002014-08-29T06:08:17.598-07:00This article has it exactly backwards. Where did ...This article has it exactly backwards. Where did all those dollars that exist on corporate balance sheets as retained profits come from? Out of the ground? No, they were originally issued by government. (via the Federal Reserve system) Deficits increase the money supply because government borrowing drains reserves out of the banking system which the Fed must replace to make sure it hits its Mike Fellmanhttps://www.blogger.com/profile/17472130295479414074noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-83360602854989972832014-08-29T04:08:49.172-07:002014-08-29T04:08:49.172-07:00"If government borrowing is so wasteful why a..."If government borrowing is so wasteful why are investors willing to buy so much US debt ??? Don't they know they can get better returns investing in the private sector ? Nobody is forcing them. I don't buy any of your arguments."<br /><br />this makes absolutely NO sense. investors buy US debt because it is the safest debt in the world backed by the unlimited taxing power of USstevehttps://www.blogger.com/profile/07387986994469835875noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-53669018054137149992014-08-29T00:31:09.684-07:002014-08-29T00:31:09.684-07:00If government borrowing is so wasteful why are inv...If government borrowing is so wasteful why are investors willing to buy so much US debt ??? Don't they know they can get better returns investing in the private sector ? Nobody is forcing them. I don't buy any of your arguments.amritsarihttps://www.blogger.com/profile/03968805404670583901noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-13337544067684040472014-08-28T21:19:44.865-07:002014-08-28T21:19:44.865-07:00Thanks Scott for it explains why the stock market ...Thanks Scott for it explains why the stock market keeps going up when it is expected by many to fall badly. Can cooperate profits disconnect from the slow growth economy? Is that the new normal?Anonymoushttps://www.blogger.com/profile/08872273955828563597noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-48842906059868898072014-08-28T20:30:11.350-07:002014-08-28T20:30:11.350-07:00Hans, I have emailed a link to all my friends.
Th...Hans, I have emailed a link to all my friends.<br /><br />This is a lesson in fungibility. Fungibility is a hard concept to comprehend for a lot of non-accounting and finance people. It is fundamental to the post here.<br /><br />Economics is a lazy profession. It is easy. Economists just have to pontificate. Financial managers of corporations have serious accountability.<br /><br />I wish Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-60356782129929481662014-08-28T19:22:31.520-07:002014-08-28T19:22:31.520-07:00EEE -
If deficit spending is financed with new mo...EEE - <br />If deficit spending is financed with new money then corporate profits are increased. This is because the new money spent by the central government ends up eventually as business profits less any household savings along the way. Profits are savings.<br /><br />If government spending is financed from other peoples money then there is not an increase in corporate profits. This is Anonymousnoreply@blogger.com