by Chris Black
We were circling for a while. During that time, you think there might be a way to escape the whirlpool heading down. However, going down the drain was always inevitable.
We are witnessing the death of commerce in real time. I predicted the death within 20 years of 1999, back when I wrote a paper on it in economics in college. I wrote that the end result of globalism is a system where commerce dies after it becomes impossible to make a profit off any business.
That the push for higher margins and the pursuit of lower wages could only result in products becoming too expensive for anyone to afford.
We are witnessing this now as demand destruction rips through the economy. Prices are too high, but none of the publicly traded corporations can reduce margins, because that will burst the bubble valuations of their stock.
A public corporation does not have a duty of pricing product fairly and providing a valuable service. A public corporation has only one specific duty: to maximize the share price to return profit to investors.
The only end result of this fiduciary duty is bankruptcy.
The duty of any company in a functional economy is to provide a valuable product or service to the general population and maximize the earnings of employees, thus creating a healthy consumer base.
Henry Ford knew this.
His pursuit of efficiency actually lowered prices while increasing the wages of those who worked for him, which is the exact opposite of the mantra of the modern corporation.
A company like Apple has more in common with a communist government than the Ford Motor Company of the early 20th century.
Apple’s grand profitability is a figment of the imagination, based on tax dodging, creative accounting, inventory stuffing, and access to nearly unlimited loans.
The real ledgers are dripping with red ink, which would be found if a real audit was ever done.
That is an impossibility though, because Apple shares are worth almost $3 trillion. The real truth would cause a cataclysm in the stock market, decimating the massive fortunes of the few.
People forget that the BS bull market born in 2009 that has continued until now was initiated by a change in accounting rules.
This allowed hundreds of millions in losses to be booked to make it look as if the company made a profit. Inventory was changed from a liability to an asset.
This was the great Citigroup letter that the losses were not as great as feared. One of the biggest success stories of Q2 2009 was Select Comfort. The company magically went from a $250 million loss to a massive profit in one quarter during a period with some of the lowest consumer activity on record. This was only possible because of the accounting rule changes.
The company’s business didn’t actually change, but the skyrocketing share price brought a massive cash infusion, not only allowing a bankrupt company to survive, but actually thrive.
Nothing done since 2009 actually changes the fact that the economy is dead.
The corpse has just been moved around like Bernie Lomax.