Wednesday, September 30, 2009

What Employment Surveys Have to Do with Toothpaste and the Debt Culture

Rasmussen and Gallup each have current data on whether workers are seeing job growth or losses at their firms.

The findings remain miserable. The Rasmussen data is shown here. Please read the post just below on Nike if you have any doubt that large corporations are "beating expectations" due to their immense gross profit margins and employee headcount restrictions.

Perhaps this helps explain the strength in government bond prices.
Please think of why a tube of toothpaste costs whatever it costs. It just might be that the container and packaging cost more than the paste itself. Not counting costs of transit through the supply chain, gross profit margins on most mass-produced products are vastly higher than one would think. If you are a Nike and want to scrimp on advertising to beat your numbers (perhaps so the insiders can sell stock), or a P&G and go to "value" pricing, you can temporarily get people to buy at the "bargain" price.
Thus deflation can actually set hold, because these lower prices could go far lower and still be produced profitably. Thus, there is no way to know what the "right" yield for government debt is, should be, and will be.
Of course, the single most profitable "commodity" to produce is debt. At least toothpaste is tangible and at least lubricates the movement of an overpriced toothbrush across the teeth. Debt is "Promises, promises" = air. That is why this misguided financial system keeps cracking up. Debt is just too profitable. Since nothing is changing in that regard, expect lots of fireworks but remember that much of the stock market and indeed much of the modern financial markets comprise a shell game run by Big Finance for its benefit and those of its enablers in Washington and various shills and hangers-on.
Copyright Long Lake LLC 2009

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