Filthy Rich

The single most important columnist in America, Paul Krugman in the New York Times, raises an important issue today--how the gusher of profits in corporate America is not having the promised effect, namely increasing the amount those companies spend on research, production capacity, and God-forbid, their employees. Instead, it appears a disproportionate amount of those profits is being used to 'buy back' a company's stock from current shareholders. What this does, among other things, is increase the value of executive stock options.
At the same time, another feature article last week pointed out that the beleaguered Japanese giant, Sony, continues to suffer a 'crisis of the week', but still has seen its stock grow at a healthy pace. Buried in the report was the acknowledgement that most of the people buying that stock are Americans.
These two issues are related in this way: they both indicate how the richest of Americans simply have more money than they know what to do with. The deck has been stacked so heavily in their favor that they really have run out of safe and sound outposts for their wealth, so they artificially prop up troubled concerns like Sony.
For the last five years and more, our economy has run on two very powerful cylinders. The first was housing, which had the advantage of not only creating jobs, but also creating something tangible--even if we have now reached the point where we've built more Florida condos than can ever be used.
The second cylinder is more cynical--it's simply the transfer and handling of money. It requires very few jobs (even though those who have those jobs tend to be excessively well rewarded), and this part of the engine produces nothing. When a stock or a company is bought or sold, nothing really makes our economy or our nation inherently better.
With the decline of the new housing market, faux wealth is now even more reliant on just shifting money around. And when an economy relies on creating something out of nothing, a bad ending draws nearer.
The rich get richer, and the rest of us will be left again paying the price.

diderot