Racing for Global Profits

“The Associated Press, which released the study on CEO compensation, put it this way: In the boardroom, it's as if the great recession never happened.

CEO pay, including salaries, bonuses, and stock options, was up 24 percent last year, to a level higher than 2007, just before the recession hit. The study came a day after the Fortune 500 list was released, showing corporate profits increased by 81 percent last year, or more than $300 billion. CEO’s were rewarded because corporate profits soared in 2010 as the economy gradually got stronger and companies cut costs.”

When corporations talk of cutting costs, what they really mean is cutting the American worker, we cost too much. Corporations are raking in billions in profits overseas, they don’t even need us as customers, let alone as employees. Profits were up for companies last year and yet according to the AP “… companies could limit raises for rank and file workers because of the weak labor market.”

These global giants were made in America and exist because of our laws which at one time ensured a level playing field benefiting all Americans. Now, after decades of these megalith giants eliminating those laws and instituting their own through bought and paid for politicians, a majority of American citizens have falling wages, yet bonuses for the few “…Two-thirds of the executives got a bigger one than they had in 2009, some more than three times as big.” Meanwhile it’s debt for the rest of us due to uncontrolled price gouging for the necessities of life.

Deborah Wince-Smith, president and CEO of the Council on Competitiveness said, “… you know, the issue of corporate profits, companies sitting on, you know, over $1.5 trillion, where are they investing it? Are they investing it in the United States? There is a global race for the best investment, the best high-value activity.”

Actually it’s a race to suck up the wealth and productivity of this country into the hands of the few, by cutting out the American worker in a rabid search for obscene profits.

It’s glaringly obvious what is going on; CEO pay, bonuses and perks are on the increase because they cut pay and benefits of the American worker. Corporations sit on trillions, while racing for winner-take-all in global profits.

Deborah Wince-Smith also said “you know, 80 percent of all middle-class consumers will be outside the United States by 2020.”These corporations have outsourced our way of life and our standard of living. Well, almost all of us, the American way of life won’t change for the CEO’s, it’s only changed for the rank and file, who helped make these corporations the global blood sucking giants that they are today.

It's the Entitlements Stupid

Senator Mitch McConnell said “We have over $50 trillion in unfunded liabilities, that is, promises we have made that we cannot keep, to very popular things, like Medicare and Social Security and Medicaid, the health program for the poor, how much more do we need to know?”

A lot! For instance the Washington Spectator reports the real financial threat facing this nation is credit default swaps. A credit default swap is the swapping of risk with a third party, essentially to insure you against default. Now, because of decades of deregulation, credit default swaps and other complicated derivatives are traded without any regulation, resulting in “JP Morgan Chase, Citigroup, Bank of America, Morgan Stanley and Goldman Sachs holding more than 95 percent of derivatives exposure among the nation’s top 25 bank holding companies.”

A bank holding company isn’t just a bank, it’s a mega conglomerate and has a lot more companies under it than just banks, like insurance companies. Precisely why AIG, an insurance company who’s also a bank holding company, was included in the bank bail outs and why we’re on the hook for all those trillions in credit default swaps.

Eric Dinalo former superintendent of the New York Insurance Department stated “ in 2008 the total of private sector debt was about $16 trillion. So it appears that swaps on that debt could total at least three times as much actual debt outstanding.” Oddly enough, that’s close to $50 trillion.

The Spectator continues: “The numbers alone are terrifying. In 2008, Bear Stearns had written derivatives contracts backing credit valued at 10.2 trillion, a figure three quarters the size of the U. S. economy. When institutions with balance sheets like that go south, the entire economy goes with them.”

No wonder the Senator is “talking about trillions here, not millions -- I mean, not billions, we're talking about trillions.” It is easier to convince the populace that future debt is due to entitlements than it is to convince them it’s the bankers and their trick credit default swaps causing future debt. And this is just the tip of the iceberg, there’s a lot more spending on Wall Street that we need to know about, but sadly all we hear is the chant: it’s ‘the entitlements stupid‘.