If you don’t think this country has turned into a corporate fascist oligarchy, just look at the S&P 500 earnings chart below. Even though real median household income is at 1989 levels, real median net worth is 40% below 2007 levels, food and energy prices have risen,the percentage of the population working is at 1978 levels, the number of people on food stamps tops 46 million, and total debt to GDP exceeds 350%, somehow the profits of the 500 largest companies in America are at record highs.
Janet Yellen can pontificate about the ignorant masses saving more money for their future, but she and her Federal Reserve cronies are the reason for this dysfunctional, corrupt corporatocracy run by and for the benefit of bankers and corporate executives. Zero interest rates, printing over $3 trillion and handing it to their owner banks, and rigging the financial markets for their friends has gutted our economy and left the middle class dying on thr side of the road.
The biggest corporations in America haven’t expanded their profits by growing their businesses. They’ve done it through financial engineering, low interest debt, firing workers, and keeping wages below the level of inflation. These earnings are an illusion built upon easy money from the Fed. There has been no real recovery in the real world. If you think the collapse in earnings in 2009 was epic, you ain’t seen nothing yet.
Chart of the Day
With Q3 earnings season well underway, today’s chart provides some long-term perspective on the current earnings environment by focusing on 12-month, as reported S&P 500 earnings. Today’s chart illustrates how earnings declined over 92% from its Q3 2007 peak to Q1 2009 low which brought inflation-adjusted earnings to near Great Depression lows. Since its Q1 2009 low, S&P 500 earnings have surged to all-time record highs. To further illustrate the significance of the current corporate earnings recovery, consider that the run-up in real earnings from Great Depression lows to credit bubble peak took over 74 years. The run-up from financial crisis lows to today has been similar in magnitude (actually slightly more) but was accomplished in a mere five years. Over the past six months, however, the upward trend in corporate earnings has slowed but continues to make new all-time record highs.
