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Old 11-30-2012, 09:00 AM  
Direckshun Direckshun is offline
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Why are corporations doing so well as the economy struggles?

This is something I'd like to see your explanations on.

Corporations are recording record profits in 2012. Not good profits, record profits.

And yet our economy struggles at a little under 3% growth and a high unemployment rate.

Why, in your opinion, is the economy so bad yet businesses are doing so great?

http://economix.blogs.nytimes.com/20...orate-profits/

Record Corporate Profits
United States corporate profits reached a record high in the third quarter of this year, even adjusted for inflation, according to a report from the Bureau of Economic Analysis.
By CATHERINE RAMPELL
November 29, 2012, 3:00 pm



The increase from the second quarter was entirely a result of stronger business at home. Profits received from American-owned businesses abroad fell slightly in the third quarter, which may not be surprising given the recession in Europe and the slowdown in China.

Additionally, all of the growth in domestic corporate profits was accounted for by the financial sector.

Domestic profits of financial corporations rose $71.3 billion in the third quarter, after falling $39.7 billion in the second. Domestic profits of nonfinancial corporations, on the other hand, decreased $1 billion in the third quarter, after rising $27.8 billion in the second quarter.

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Old 12-02-2012, 11:13 AM   #91
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Originally Posted by Radar Chief View Post
More like fizzle plop.
But I understand ranting about the corporate boogeyman sells in today's political climate.
A bunch of buzzwords and generic phrases causes emotional responses in some.
It's akin to others starting a thread about a crime, or some bizarre incident at a school and saying it indicates the country is going down the toilet.

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Old 12-02-2012, 11:46 AM   #92
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Originally Posted by HonestChieffan View Post
Would all you corp bashers feel better if corporations were all in the tank, layoffs like crazy, stockholders losing their investments? Wtf is wrong with you morons? Do you look at your 401k and pick companies to invest in that are losing money?
what is wrong with you?

When people realize the damage huge greedy corporations have done and continue to do, then maybe something can be done about it.
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Old 12-02-2012, 12:04 PM   #93
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Originally Posted by chiefzilla1501 View Post
Somewhere along the line, executives lost themselves. They no longer serve their shareholders or act in the best interest of the corporation they work for. They are more interested in serving their own self-interest.
Sounds to me that they're the same as they always have been, but your "no longer serve their shareholders" comment is way off the mark. If the shareholders aren't seeing a profit those executives will be shown the door, granted with a golden parachute but still out of work.
IMO what we're seeing is fewer companies owned by an individual and more run by a board of investors. That's why they're less concerned with a companies long term health as much as they are the quarterly report.
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Old 12-02-2012, 02:43 PM   #94
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Quote:
Originally Posted by Bump View Post
what is wrong with you?

When people realize the damage huge greedy corporations have done and continue to do, then maybe something can be done about it.
What is this "damage"? They pay the CEO too much? Or is this a Walmart is bad cause they get real big? And what is this "done about it"? Shall we break up GE? Maybe go after Apple? Make apple form multiple small companies? Im always interested in these threads cause they almost never have anything actionable or even close to specifics. Rage against the man is the norm and rage against what the top guy gets paid. Garbage.

Business functions to make, market, sell something for a profit and if they sell a lot of it they make a lot of profit. If they make crap, and manage like monkeys, they go broke. Go get a job with a company that fits your desires...small, unprofitable, and slowly dying. That will work well.
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Old 12-02-2012, 03:55 PM   #95
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Originally Posted by HonestChieffan View Post
What is this "damage"? They pay the CEO too much? Or is this a Walmart is bad cause they get real big? And what is this "done about it"? Shall we break up GE? Maybe go after Apple? Make apple form multiple small companies? Im always interested in these threads cause they almost never have anything actionable or even close to specifics. Rage against the man is the norm and rage against what the top guy gets paid. Garbage.

Business functions to make, market, sell something for a profit and if they sell a lot of it they make a lot of profit. If they make crap, and manage like monkeys, they go broke. Go get a job with a company that fits your desires...small, unprofitable, and slowly dying. That will work well.
ya you are right. There are no problems, everything is perfect in 'Merica. GOD BLESS IT
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Old 12-02-2012, 04:56 PM   #96
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Originally Posted by Radar Chief View Post
Sounds to me that they're the same as they always have been, but your "no longer serve their shareholders" comment is way off the mark. If the shareholders aren't seeing a profit those executives will be shown the door, granted with a golden parachute but still out of work.
IMO what we're seeing is fewer companies owned by an individual and more run by a board of investors. That's why they're less concerned with a companies long term health as much as they are the quarterly report.
Like I said, the biggest problem is compensation structures. The boards aren't always in alignment with the shareholders. They push for short-term targets and punish investment, or they are so in bed with executives that they let executives essentially raid the company of money they didn't earn. My biggest concern is compensation structure.

That and there is no downside risk. It is absolutely unfathomable that a CEO can make insane bonus money in a year where the company struggles financially.

But let's not downplay the role of greed. There are lots of CEOs who have cooshy long-term situations but still hoard cash because they know they can get away with it. There are other CEOs who will doctor books or push short-term profit boosters so they can boost their own pay. There are lots of corporations where executives are given a decision between making decisions that benefits the company and their shareholders, and making decisions that will boost their own income. And too many times they are making decisions on personal interest rather than the companies they serve. That is a tremendous shame.
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Old 12-02-2012, 05:18 PM   #97
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Originally Posted by HonestChieffan View Post
What is this "damage"? They pay the CEO too much? Or is this a Walmart is bad cause they get real big? And what is this "done about it"? Shall we break up GE? Maybe go after Apple? Make apple form multiple small companies? Im always interested in these threads cause they almost never have anything actionable or even close to specifics. Rage against the man is the norm and rage against what the top guy gets paid. Garbage.
Why are you bringing up successful companies? I have no problem paying executives that are successful. Strange you didn't bring up Hostess, who instead of investing in marketing, technology, new plants, etc... chose to pad their executive salaries while the company was bleeding money. Strange you don't bring up JP Morgan, whose executives are likely to earn flat or increased compensation despite making a string of unethical decisions that led to a $6 billion loss. Strange that people complain about regulation yet naively ignore the massive financial cost incurred by financial services firms either trying to game the system or cheat it.

No executive should be getting raises when the rest of the company is cutting costs or losing money. That is not a hard concept to grasp. It is driven by greed and by executives getting preferential treatment from their boards and by shitty compensation structures. You wanted solutions? We've presented plenty. Stop letting boards have so much power to determine compensation and allow shareholders a bigger voice. Stop jamming short-term incentives on executives that encourage behaviors that threaten a company's long-term health. Stop inflating executive salaries when they aren't performance-based.

Quote:
Business functions to make, market, sell something for a profit and if they sell a lot of it they make a lot of profit. If they make crap, and manage like monkeys, they go broke. Go get a job with a company that fits your desires...small, unprofitable, and slowly dying. That will work well.
This is a very naive view of the business world.

There is more to business than profits and it's exactly this ridiculous short-term orientation that is causing our economic mess and is leading to more smaller, unprofitable, slowly dying businesses. So you are essentially bagging on someone for valuing a dying business model, and then recommend that they adopt a dying business model of their own.
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Old 12-02-2012, 08:02 PM   #98
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There is no easy answer as it is sort of an "all of the above" answer. Greed of course plays a part of it, answering to stock holders on why you are not making as much per customer as any of your competition each and every quarter is part of it, rising health care costs for employees, unknown tax questions, unknown effects of Obama Care, outsourcing sounds cheaper. Very, very few companies feel any obligation to try to make the US a better country.
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Old 12-02-2012, 09:05 PM   #99
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Old 12-02-2012, 09:51 PM   #100
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Originally Posted by chiefzilla1501 View Post
Why are you bringing up successful companies?
That is what the OP was about. "Why are corporations doing so well as the economy struggles". Hostess was not a successful company for many years.
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Old 12-03-2012, 01:53 PM   #101
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Old 12-03-2012, 04:22 PM   #102
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Originally Posted by HonestChieffan View Post
That is what the OP was about. "Why are corporations doing so well as the economy struggles". Hostess was not a successful company for many years.
It depends on your definition of success. Cutting costs, not hiring workers, and scaling back investment is not success. Profit boosts from government handouts or favorable policy is not success.

Success is when companies start feeling confident enough to invest back into their company, and still experience growth. I can assue you that the majority of the people that work for a lot of these companies that are supposedly profitable don't feel like their company is at all successful.
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Old 12-03-2012, 05:28 PM   #103
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Originally Posted by Radar Chief View Post
So I take it you have your paycheck signed for and handed to you by a poor person?
If corporations get blame for the recession do they also get credit for the massive, record setting expansion that preceded it?
Huh? I don't understand what you mean. Why would I need my paycheck signed by a poor person? That doesn't make any sense.

Here's what I see:

Corporations have been given massive tax breaks and lack of regulation for several decades. It went way up under Reagon, slightly down under Clinton, then way back up under Bush. All this was done with the idea that these corporations would grow the economy better without oversight from the government.

But what's happened?

Instead of creating jobs, or reinvesting money, or expanding US development, these corporations have instead created the greatest income inequality that the world has ever seen.

CEO-to-worker compensation ratio, with options granted and options realized,1965–2011


Source: http://www.epi.org/publication/ib331...top-1-percent/

From 1978 to 2011, CEO compensation increased more than 725 percent, a rise substantially greater than stock market growth and the painfully slow 5.7 percent growth in worker compensation over the same period.

Using a measure of CEO compensation that includes the value of stock options granted to an executive, the CEO-to-worker compensation ratio was 18.3-to-1 in 1965, peaked at 411.3-to-1 in 2000, and sits at 209.4-to-1 in 2011.

Using an alternative measure of CEO compensation that includes the value of stock options exercised in a given year, CEOs earned 20.1 times more than typical workers in 1965, 383.4 times more in 2000, and 231.0 times more in 2011.

So yes, corporations get credit for growing the economy around the turn of the century. But what can you say they've done since then?

They've had an incredible advantage for a long time. So why are we in an economic crisis? We've given corporations all these incentives, yet when things get tough, they have mass layoffs and hoard the money, while retaining executive pay that's well over 200% more than its workers.

I'll ask you the same question that blaise never could or would answer.... How is this practice good for America? In what ways does this type of capitalism help the US economy?
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Old 12-03-2012, 05:43 PM   #104
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Originally Posted by Fish View Post
Huh? I don't understand what you mean. Why would I need my paycheck signed by a poor person? That doesn't make any sense.

Here's what I see:

Corporations have been given massive tax breaks and lack of regulation for several decades. It went way up under Reagon, slightly down under Clinton, then way back up under Bush. All this was done with the idea that these corporations would better grow the economy better without oversight from the government.

But what's happened?

Instead of creating jobs, or reinvesting money, or expanding US development, these corporations have instead created the greatest income inequality that the world has ever seen.

CEO-to-worker compensation ratio, with options granted and options realized,1965–2011


Source: http://www.epi.org/publication/ib331...top-1-percent/

From 1978 to 2011, CEO compensation increased more than 725 percent, a rise substantially greater than stock market growth and the painfully slow 5.7 percent growth in worker compensation over the same period.

Using a measure of CEO compensation that includes the value of stock options granted to an executive, the CEO-to-worker compensation ratio was 18.3-to-1 in 1965, peaked at 411.3-to-1 in 2000, and sits at 209.4-to-1 in 2011.

Using an alternative measure of CEO compensation that includes the value of stock options exercised in a given year, CEOs earned 20.1 times more than typical workers in 1965, 383.4 times more in 2000, and 231.0 times more in 2011.

So yes, corporations get credit for growing the economy around the turn of the century. But what can you say they've done since then?

They've had an incredible advantage for a long time. So why are we in an economic crisis? We've given corporations all these incentives, yet when things get tough, they have mass layoffs and hoard the money, while retaining executive pay that's well over 200% than its workers.

I'll ask you the same question that blaise never could or would answer.... How is this practice good for America? In what ways does this type of capitalism help the US economy?
Capitalism is great for the US economy. In my opinion, the private sector SHOULD be the engine of the economy, but not if corporate greed leads to executives hoarding cash. Which is what's happening today.

I don't know why this is a hard concept for people to grasp. Executive compensation is a COST, not an expense. Which means that when executive compensation goes up, cost goes up. It is hypocritical for businesses to cut costs across the board, then significantly jack up compensation costs for a few. The kicker is... while investing a million dollar in new technology is an expense that improves your chances of making more revenue, investing a million dollars in a CEO bonus gives you the same CEO you had 10 years ago, but for a higher cost. And raising executive compensation to astronomical heights during a recession is just outrageous -- compensation should be performance-based, not reward those who lose.

This isn't good for America. And it's not because corporations are "evil." I support corporations, but they have to stop serving the interest of the executives who run it and go back to serving the interest of the corporations those executives are supposed to be representing.
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Old 12-03-2012, 06:08 PM   #105
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Originally Posted by chiefzilla1501 View Post
It depends on your definition of success. Cutting costs, not hiring workers, and scaling back investment is not success. Profit boosts from government handouts or favorable policy is not success.

Success is when companies start feeling confident enough to invest back into their company, and still experience growth. I can assue you that the majority of the people that work for a lot of these companies that are supposedly profitable don't feel like their company is at all successful.
Couple questions without getting too personal...

Do you now or have you ever owned a business that has more than yourself as an employee?

Have you at any time worked for a large company in a management role that gave you financial decision making responsibility?

Have you or are you now responsible for a profit and loss statement? Do you or have you ever had to detail a bank or a board on the annual plans for a business and how that relates to a long term plan?

Now that that is out of the way, you can define success as you like. For most businesses, success is a mater of year to year survival, generating enough profit to compensate ownership at a level that makes them want to continue the business another year. Lots of small companies have 3 to 5 year plans but they deal with annual issues that drive the business. These people are currently in that group that likely has been hurt by the recession and have very real concerns about an unknown cost structure due to ObamaCare and tax treatments of expenses, depreciation, investments in new equipment and maintaining inventories. You can bet, and you know, these companies from two to probably 50 or 70 employees are not hiring, they are repairing not replacing, they have slashed inventories, and are doing more with less at all levels.

Take that to a major fortune 500. These companies operate, or at least the two I spent 30 years working for, on a very bottom up management of their divisions and markets. Any department is under intense pressure to achieve the annual plan set for that department. My experience was in sales and in marketing. I managed a $42 million dollar business. I had sales people and was responsible for expense management as well as people management. Over the span of my career we went through a number of downturns.

In those downturns we knew it was coming. The successful managers were those who sized the salesforce and expense loads such that people were not laid off. No one wants to lay off people who you have invested in training and who have built relationships at customer levels and internally. But sometimes it happens. You cut staff, you cut spending, you delay expenses. Company cars are driven 100000 miles where in the great times they were traded at 48000. And managers took on more people, more area, more responsibility and a few times raises were put on hold.

As a result, we made our goals, we actually came out stronger, more profitable, and better prepared not just for the growth times but for the next downturn.

Success in bad periods is a matter of survival, not spending, retaining profits, and building cash reserves. You grow the business in the up times and you protect the future business in downtimes. No business invests in expansion unless they have solid evidence that they are in fact experiencing demand for what they sell or do that justifies investment. And no business is going to spend on expansion until they know what the return to the business is going to be.

If an employee of any company does not understand why the company is making the decisions they are making, its managements fault for not developing an understanding of the companies goals, plans, outlook and the state of the industry they are in. Or its the employees fault for not listening when it is explained. Some people never do develop that understanding and often are unhappy a lot of the time. Those who are the worst at that are often the ones who have a new opportunity presented to them to find a job that makes them happy.
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Frazod to KC Nitwit..."Hey, I saw a picture of some dumpy bitch with a horrible ****tarded giant back tattoo and couldn't help but think of you." Simple, Pure, Perfect. 7/31/2013

Dave Lane: "I have donated more money to people in my life as an atheist that most churches ever will."

Come home to Jesus Dave. Come home.
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HonestChieffan is obviously part of the inner Circle.HonestChieffan is obviously part of the inner Circle.HonestChieffan is obviously part of the inner Circle.HonestChieffan is obviously part of the inner Circle.HonestChieffan is obviously part of the inner Circle.HonestChieffan is obviously part of the inner Circle.HonestChieffan is obviously part of the inner Circle.HonestChieffan is obviously part of the inner Circle.HonestChieffan is obviously part of the inner Circle.HonestChieffan is obviously part of the inner Circle.HonestChieffan is obviously part of the inner Circle.
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