Funny Money Fuels Corporate Profits

Elaine Meinel Supkis

Over and over, one learns that major corporations have made great profits. But most of the profit story is really accounting tricks that avoid taxes which is why our government is going bankrupt and playing the carry-trade yen/dollar game that boosts the bottom lines while producing exactly nothing useful. And sub-prime loans were a huge part of profitability for nearly all corporations.

This is a typical example:

By John Letzing & Rex Crum, MarketWatch
Last Update: 5:54 PM ET Mar 20, 2007

SAN FRANCISCO (MarketWatch) -- Adobe Systems Inc. said Tuesday that its first-quarter profit rose 37%, aided by nonoperating income and a lower tax bill, even as sales slipped from a year ago as customers delayed some purchases ahead of a major product launch.

The company also reaffirmed its fiscal 2007 financial forecast, helping send its shares 4% higher in late trading.
Adobe (ADBE :40.74, +0.50, +1.2% ) said net income for the period ended March 2 rose to $143.9 million, or 24 cents a share, from $105.1 million, or 17 cents, a year earlier.
The company's tax rate fell from a year ago due to a federal tax credit, and its results were also boosted by an investment gain and higher interest income. In the year-ago quarter, Adobe had booked a restructuring charge of $19 million.

'Restructuring' is reptilian for 'firing lots and lots of people and then outsourcing the rest to China and India.' It not only doesn't produce jobs, it reduces jobs. And the pressure of this allows the corporations to drop wages and benefits to the surviving employees. This brutal methodology pays off because the government rewards corporations who depart these shores.

I heard on NPR today the story about how several non-union southern states are giving a German corporation (and WHO exactly won WWII?) billions in tax breaks and goodies if they would only open a steel mill here! I remember when American companies had steel mills! And they were profitable. And they were unionized.

The need to make dollars stretch as our government over-inflates currency vis a vis all others especially the yen, means making workers work for cheaper and cheaper. The ideal American worker is an illegal alien who can't unionize, argue, sue or appear on the tax rolls.

In other words, third world peasants working as semi or full slaves. All empires are tempted to do this: slavery is the dark soul of imperialism.

Adobe used to make money making wonderful things, I use Adobe to do all my artwork, for example. It is well worth owning an Adobe program. I hope to buy another in a year or two. But they don't make money this way anymore, not if they want to 'grow' which means using the tricky money churned out by the Bank of Japan to buy other companies and thus, become a behemoth that hopefully creates some sort of monopoly/cartel that can jigger the market so they don't have to make much of anything in order to make money.

But the temptations of the carry-trade/yen/dollar/0.5%/5.45% Ponzi scheme lures all our rich bastards into playing this rigged game that is destroying our industrial base even as it is setting up the entire planetary banking system for a terrible collapse.

Because all this wealth depends upon Americans being forced to 'save' money by paying ruinous mortgages for grossly over-inflated properties. This hidden tax on our economic system was allowed to grow because for a brief while, the over-inflation of the housing assets allowed people to go into debt to buy other things. Now the American homeowner, buried under a mountain of debt, cannot soak up any more.

The only way for this to work was for the markets to shoot up higher and higher while interest rates go lower and lower due to inflation being hidden via the yen/dollar rigged game which requires Japan to have no inflation at all even as there is raging inflation hidden carefully from view by the simple expedient of beggaring the Japanese workers!

Now, with interest rates rising because the hidden Japanese inflation is now quite obvious and because the dollar, hidden from view when the Feds committed the crime of concealing the vital M3 numbers that tell us how much money they are printing, inflation is raging nearly out of control in all areas where one can't cut spending: medical care, energy and food.

In Japan, they dealt with this very brutally: cutting energy use in draconian ways, importing foreign food, driving down the profits of Japanese farmers who are now going bankrupt and thinking about joining the smart Korean farmers who are fighting 'free trade' with great violence. The loss of health care is sweeping all the industrial nations as the ruling elites claim, staying alive is bad, profits are above all, important.

Adobe shows the future: without these monetary games, the entire rigged system will collapse. Everyone is really running in the red, the record profits are due to vast seas of debts in the USA and rests upon the shoulders of the lowly workers and professionals caught in this massive Ponzi scheme. The rich will convert everything to cash, they are doing this already, and leave the workers of America holding a huge, epic bag of IOUs that can't be paid off, ever.

Note we are at the apex of our imperial power. And like all empires, the wealthy will loot it and bankrupt it.

Mortgage applications are still very high but they are dropping bit by bit.

By Rex Nutting, MarketWatch
Last Update: 7:00 AM ET Mar 21, 2007

WASHINGTON (MarketWatch) -- Applications for mortgages at major U.S. lenders dropped 2.7% in the past week as interest rates rose, the Mortgage Bankers Association reported Wednesday.
Total applications including purchase loans and refinancing loans - fell 2.7% week-on-week and were up about 18% compared with the same week a year ago.

The number of applications to refinance an existing mortgage dropped 4.5% in the past week after hitting an 18-month high the week before. Refinance applications are up about 40% compared with the same week a year ago. Refis accounted for 45.3% of applications, down nearly a percentage point.

It used to be, mortgages were forever. Namely, one paid it off, retired, sold the home and went to a vacation place to live or whatever. Or one lived at home, free and clear. But starting with the 1980's, getting rid of the mortgage by getting a new one started because of the effects of inflation caused by reckless government spending on wars and military adventures.

Then a new idea reared its ugly head: why not increase the mortgage while decreasing the interest rates? So instead of paying off a house, if it rose in value, the owners were encouraged to refinance the mortgage at a lower interest rate and higher principle. This meant, for example, a $100,000 house at 6.5% interest could go up to $200,000 at a 4.5% interest loan! Whoopee. Rich.

Only now the principle had doubled! Paying this off grew harder and harder. I know many people my age who have 15 or more years of mortgage payments on a much bigger principle than they started out with! Talk about reckless disregard of reality! One should have paid off the house entirely by 60, minimum!

Well, the boomers who fell for this scam peddled by the banks in the USA and the Japanese government (who won WWII???) have now beggared the biggest generation to retire in our history. And what does this mean?

The money is still rolling in!

By Greg Morcroft
Last Update: 7:42 AM ET Mar 21, 2007

NEW YORK (MarketWatch) -- Morgan Stanley--- the last of four big Wall Street banks to report earnings for their first quarter ending in February, said Wednesday that profit in the period rose 70%, to $2.67 billion, or $2.51 a share, compared to $1.57 billion, or $1.48 a share a year ago. Revenue in the quarter rose to $11 billion, from $8.55 billion a year ago. The company said favorable mortgage positions helped trading results in the quarter.

Those 'favorable mortgage positions' are certainly some sort of code talk. Like Morse Code, one has to know the lingo and the hidden meaning of these words. Last year was a bumper crop for those jerks who devised and ran this massive global Ponzi scheme.

They are rapidly pulling out and this is why they are selling off these future non-performing (ie, bankrupt) financial assets. These assets are the broken lives of desperate home owners who thought they were going to get rich without effort, rich off of their homes. I know of many boomers who expect to sell the house and depart. But most are in places requiring commerce. Like the many mansions outside Detroit that I visited yesterdy. Beautiful houses that are increasingly worthless because the auto industry is rapidly dying.

Few people live where this isn't true. The German steel mill will be, like all the colonizing companies built by arrogant winners of WWII, in the countryside where there are no cities or even large towns. Out where the cows moo, they build these things and will surround them with cheap housing and trailers that will get blown away by hurricanes and tornadoes. But who cares?

These are only American workers. Nearly worthless.

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Comments

[Canuck]

Metal Prices in Japan Drive Cemetery, Park Thefts

Thefts of metal objects in Tokyo reached 40 percent of last year's total in the first two months of 2007, a police spokesman said. In the same period in Osaka, they were more than half the 2006 total.

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a0EJ8NNhnPhs

[Elaine Meinel Supkis]

Thanks for the links, Canuck. Yes, crime is rising in the Land of the Rising Sun. And like all statistics there, it is hidden. Sort of like how China deals with unrest.

[Canuck]

Yes but the interesting thing is the type of crime. One could imagine that the Yakuza just turns away and shrugs it’s shoulders, not stepping on any toes here. This is Shanty Town activity indicative of social stress. I drive by mountains of recycled metal, we don’t have any proper public re-cycling for it. With container ships heading west empty it sure isn’t the price driving this.

[Elaine Meinel Supkis]

Figuring all this out is difficult because much vital information is deliberately masked. So I go to the IMF and other international agencies to get a whiff of what is going on. And getting data is like pulling teeth.

Maybe some hedge fund will hire me. Heh.

[moncler sweden]

Don't know what is wrong what is rite but i know that every one has there own point of view and same goes to this one

[Beats by Dre]

Money calls, but does not stay: It is round and rolls sway.

[Christian Louboutin shoes]

Cats hide their paws.