Politics Corporate Profits or Corporate Piracy?

Corporate Profits or Corporate Piracy? Hot

It's a sign of how warped the values of the ruling class have become that dipping under 17% profits is suddenly a reason to start firing people - especially given the fact that such actions can only make the economy worse.

Just how much profit do they think they need? Does the concept of "reasonable profit" or "reasonable return" simply not exist anymore?

This may also be a sign of the extent to which the corporations are shifting their focus to serving the ruling class instead of making money by serving the working and middle classes.

Reuters:

"If the economy continues to slow ... I expect companies probably to continue to keep payroll very lean and for the unemployment rate to bump to 9.25 percent, conceivably it could go to 9.5 percent," said Michael Yoshikami, CEO of YCMNET Advisors a San Francisco investment house with $1 billion under management.

"As CFOs and (human resources) managers are planning going forward, you can't avoid the human dynamic here. And if the outlook is very uncertain, they're going to be very, very hesitant to make broad hiring decisions. It's not good timing because budgets are being set right now."

One warning sign that more belt-tightening could be ahead is that profit growth seems to be slowing down. Most U.S. public companies report quarterly results in the coming weeks, and earnings season has gotten off to a weak start.

Analysts have lowered their growth forecasts for the companies of the S&P 500 and now look for overall profit for the group to rise 12.5 percent in the third quarter, less than the 17 percent they expected at the start of July.

The sharpest downward revisions have come in the finance sector, where analysts now look for profit to rise just 1.7 percent, down from a prior expectation of 15.6 percent. They've also lowered estimates for companies that sell basic materials like metals, telecommunications firms and sellers of consumer staples like food.

The finance, retail and manufacturing sectors could all see cuts -- with retailers particularly vulnerable if the holiday selling season is weak, analysts said.

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