DoomwatchTM vs. Timesizing®

Collapse stories - April 1-15, 1999
[Commentary] ©1999 Philip Hyde, The Timesizing Wire, Box 622, Cambridge MA 02140 (617) 623-8080

4/14/99 SEC's [Arthur] Levitt: Wall Street too bullish, Reuters via Boston Globe, p. E3.
[Kinda simplistic in the light of the story below, but at least he's getting creepy 'bubble, not boom' feelings.]
America's chief stock-market regulator yesterday said Wall Street analysts were issuing too many bullish stock reports [which] in an age of finance-industry mergers - appear to be shaped by the lucrative ties analysts' firms have with the firms they follow....

[Coals to Newcastle dept.]
4/14 Gates donates $20m to MIT's computer lab, by Ross Kerber, Bos Globe, E6.
[So the best endowed technology school in the world gets another 20 mil and the concentration of wealth remains essentially unchanged. This must be what the neo-classical economists meant by 'the marginal efficiency of wealth'. He may as well have just transferred it to another of his own accounts.]

4/14 Dr. Death gets 10 to 25 years in 2nd-degree murder, by Justin Hyde [no relative], AP via Boston Herald, 28.
[Gee, that's taking death pretty seriously - too seriously. So seriously that you think you have to force-to-live people in pain who just want to die. Americans still don't know how to say "Goodbye." And a decent, controlled, high-quality death is essential for a decent, controlled, high-quality life. Freedom is always at least 2-way: freedom from and freedom for, and if we don't accept and find design solutions to the basic human right to die, we will not be the nation that makes the real strides toward voluntary mortality aka functional immortality. Future generations will honor Dr. Kevorkian as a pioneer in achieving this most fundamental dream of humanity. As Lao Tzu says, "What you would build up, you must first tear down." Consider - the humans who first learned to fly (the Wright brothers) stopped taking flying so seriously and crept up on it, playing all the way, via flying toys, fans, kite-flying, gliding, bicycling and motor-biking, gradually increasing their control, inch by inch. The way ahead is not by rejecting more responsibility and control, but by facing its challenges. (But just don't force cloned or hormone-doctored foods on me by not giving me disclosure of the facts without which you rob me, the potential consumer, of control.)]

4/13 Taking measure of the great divide - Chasm between stock values of tech, traditional firms could not be wider, by Syre & Stein, Bos Globe, C1.
The stock market has divided...into two camps: new-economy companies and old-economy companies. New-economy companies do technology, including the Internet. Old-economy companies do everything else.
[And the old is better - "blessed are the meek" - but so unbalanced is the centripetal force on money in this leprous "robust economy" that the rich have nowhere else to stow it. The new economy is nothing but a naive, arrogant, kamekazi, faddish & fragile "Tower of Babel".]
The stocks of new-economy companies command tremendous price/earnings ratios, anywhere from 70 for Microsoft to 450 for America Online. Old-economy companies have ordinary multiples in the 10 to 25 range.
[The money in the new-economy stocks is money that should be reinvested in its own markets, now with the halved earnings of Compaq, and the negative profits and revenues of US corporations overall, verging on collapse. But the lemmings continue on their trail of human misery. Now they have their traditional solution to labor glut - WAR - to bail them out, if only they can ship enough missile fodder over and bury them fast enough.]
New-economy companies see nothing but blue skies ahead.
[The more fools, they!]
Old-economy companies have to worry about all the traditional problems that have always plagued businesses: interest rates, weak overseas [markets], stiff competition.
[But new companies think they're invulnerable.]
On some level the gap reflects an underlying reality....
[Yes, on the level of unprecedented human stupidity, arrogance, and death wish.]
...The technology sector is growing much faster than the economy as a whole.
[Define "growth." If you reference GDP, you'll find yourself with an empty bubble, not an organic mass of happy people. Humans are a social species. Every non-cosmetic step in our progress has been an advance in our technology of sharing. Until we start applying high-tech design principles to this supreme technology, we are unsustainable and self-frustrating. The direct automatic reinvestment (DAR) feature of Timesizing makes this connection and application.]

4/13 Confidence vs. conceit - US economy defies predictions but is not invulnerable, by Robert Samuelson, Bos Globe, C4.
[Robert covers himself slightly with his rhetorical "not invulnerable", but he has swallowed so much of the prevailing happytalk, 'hook, line & sinker', that he's basically a cheerleader for our current Coolidge-era rerun, and we don't even want to start.]

4/13 Auditing the audits - Some good news for anxious taxpayers: IRS less active, especially against rich, AP via Bos Globe, C3.
[Great, so they're going to waste what they collect by harrassing the poor for peanuts?]

4/11 Untangling economic complexity, by David Warsh, Bos Globe, F1.
What are we to make of the current vogue of "complexity studies" in finance and economics?
[David misses the most obvious answer - complexity studies are postulating more and more "epicycles" to prop up a profession-full of lethally flawed "geocentric" theories of the economic solar system - see Thomas Kuhn's *The Structure of Scientific Revolutions (1962) for the full background on this. The glaring flaw consists in externalizing worktime from consideration as a significant economic variable, let alone a control variable. The only part of the profession that still considers worktime, now that even most labor economists ignore it, is historical economics, mostly in Europe, plus outside fields such as leisure studies (Benjamin K. Hunnicutt) or history (Howard P. Segal) or sociology (Arthur O. Dahlberg).]

[This author exemplifies an economist who ignores worktime and is driven to obscure or backwards conclusions - ]
4/11 Deregulation and insecurity, by Robert Kuttner, Bos Globe, D7.
This past week the unemployment rate hit a 29-year low of 4.2%. Yet with consolidations, downsizing, and outsourcing accelerating, a great many employed people nonetheless feel very insecure.
[First question - why does Bob take the "low unemployment" at face value? Why isn't he reminding us that any unemployment over 2% was seen as problematic during World War II? Why isn't he reminding us of the weakening changes in the definition of the American unemployment rate and how out of step it is with such definitions almost everywhere else in the world? Why isn't he mentioning the decreasing percentage of the workforce that is eligible for unemployment? Why isn't he mentioning our record prison population? The fact that he is gulled by this statistic leads him immediately on into quicksand.]
On epochal change...is the indirect effect of economic deregulation on economic security. Consider how differently the economy looked a quarter-century ago.... Even government contractors of that era enjoyed more predictability.
[Bob is postulating that deregulation reduced economic security, when deregulation happened as early as the Taft-Hartley Act with little impact on economic security, and did not accelerate to a large extent in the last quarter-century until the Reagan era in the 1980s when there had already been some fundamental unpredictabilities in the economy, such as the joint rise of unemployment and inflation ("stagflation") in the first half of the 1970s. In addition, Bob is driven to try to excuse detailed regulation of industry by searching out competitive or self-optimizing areas that survived in several such industries, areas that we would regard as institutionalized holdovers from a previous period of genuine aggregate labor scarcity (or at least, balance).
[Bob should be asking questions like -

  • What happened to worktime the last 30, 60 years and how did that affect the aggregate supply and demand of labor in the context of inflooding technology? (We expect that worktime was roughly stable 1940-1970 as the labor shortage of the War ended and gradually rising 1970-1999 as a labor surplus built up, a surplus that is evidenced by growing concerns, at all levels of government, for jobs programs, block grants, enterprise zones, and taxbreaks to corporations for promises of more jobs or at least, not fewer jobs.)
  • What was the parallel-timeframe behavior of real wages? (Roughly increasing the first 30 years, stagnant the last 30.)
  • What was the parallel-timeframe behavior of union membership? (Roughly stable during the first 30 years and then declining as employers exercised more power in myriad ways thanks to the growing power drain on unions thanks to the growing cheapening of labor due to spreading aggregate labor glut.)
  • Should we be looking at the possibility that the glut and cheapening of labor, thanks to the frozen official, rising unofficial, workweek caused the deregulation rather than vice versa? (Yes).
    [We have to agree with his lament that -]
    ...We have lost something of immense value - an entire social contract between company and employee.
    [But we "timesizers" blame that not on deregulating so much of the economy but on the fact that we allowed our official standard workweek to remain frozen indefinitely regardless of time-saving technology, and the resulting huge and growing labor surplus - and the real problem is not even the "bleeding-heart liberal" lament for the lost "social contract" but the fact that the labor glut has allowed a huge and growing spread between the supply of productivity and spending-borne demand for it. With labor superfluous and with flat wages, the huge profits from technology have concentrated in the top income brackets where they are not being spent - the rich just don't have the time. So effectively we have allowed the rich to vacuum the spending power away from the productivity which their own astronomical investment money is anchored to - they have suctioned the markets away from their own investments. This has to crash, either with a bang or a whimper.
    [In short, regulation did not provide all the good things Kuttner lists as the former portion of employees, such as pension plans and good health insurance. Aggregate labor shortage did. It wasn't a lack of competition (in prices) that made things better for employees. It was whole 'nother dimension of competition that's been lost - fierce competition among employers themselves for overall-scarce employees.]
    By sparing industry the kind of ruthless price competition that exists in the 1990s, America spared workers the insecurity and dislocation that today is considered normal.
    [Well, as noted above, we at The Timesizing Wire believe that Bob's sentence should read, "By sparing industry in the 1990s (and back to the 70s) the kind of ruthless competition for labor that existed 1942-1966 (stagflation flickered briefly in 1967), America subjected workers to a "normal" situation of insecurity and dislocation" - a pre-Depression situation, by the way, of diminishing demand and deflationary boom which has not been seen since the 1920s. Good fringe benefits are only seen as threats to competitiveness when industry is engaged in a toughening competition for diminishing demand, instead of an equally tough or tougher competition for employees and, since that raises wages and benefits and spending and markets, an ever-easing competition for increasing demand.]
    Today, except in occupations where very highly skilled people are in scarce supply,...
    [Great sentence start, Bob, but now you should continue "...there is a vast and expanding redundancy of labor." Instead, you continue...]
    ...loyalty by managers to workers is considered sentimental and inefficient.
    [which is to say "there is a vast labor redundancy" anyway, but Bob and the rest of standard economists don't realize it because of their strange habit of externalizing worktime and even labor supply and demand (not to mention the intimate relation between the two) as significant factors.]
    If someone on the street can do your job for lower pay, you are at risk.
    [And they can, Bob, they can. Here, you are SOOO close to realizing the gross and growing labor glut!]
    Hard as it is to believe, that attitude was unheard of even two decades ago.
    [So Bob, open your eyes. It is hard to believe because it's so gradual and close. It's happening to us. Even perceiving it is like trying to view our own retinas, let alone operate on them. But you of all people should not be closing with sentences evincing the such unquestioning acceptance of "low unemployment" as...]
    That's why the unemployment rate can keep going down while the feeling of anxiety keeps going up.
    [And Bob, it's about time you ended your love affair with regulation. If regulation could have worked in the absence of war, it would have - between 1933 and 1939-40. But it did not. So it's time to get a little more sophisticated and move your thinking from "any regulation" which rapidly turns into "many regulations", and consider the possibility of "little regulation", and especially "one regulation". Bob, what if there were a single all-sufficient regulation that would allow us to safely, nay, compassionately, dismantle all other regulations? What would it look like? Where would it be positioned? That is the focus of The Timesizing Wire and this website.]

    [The increasing pace of change spreads speculation (short-term "investing") - ]
    4/10 Hold on, by Charles Jaffe, Bos Globe, E1.
    Last month at an investor fair in Miami, a young man pulled me aside to ask about a particular stock. "I bought it two weeks ago, and it hasn't done anything since," he said. "I'm thinking, maybe it's a dog."
    America has become the land of the incredible shrinking time frame.... The stock market has seen a tremendous increase in trading by individuals [but] those numbers are dramatically inflated by...day-traders.... The average holding period for mutual funds is about three years. Three decades ago, [it] was more than 11 years.... [Experts who used to preach] holding onto investments during rough periods...for at least two years...today...would have you jettison [them] after no more than 12 months....
    The current surge in the market has been driven by a few stocks.... The result has been people bailing out of all but the hottest of funds \and a\ trend...against diversification.
    [Note the "performance gap" cited by the Washington Post by Derrick Jackson (scan to 4/02 "Raging bulls" item below) "in which the 30 blue-chip stocks of giant corporations in the Dow...had risen in the past year by 8.99%, while the Russell 2000 index of small stocks had fallen 5.26%....".
    [All this is how guru Darvas made his fortune in the late 1950s and it's exactly what he preached in his best-selling books throughout the 60s - purely technical playing based on daily or oftener information. Compare story on 4/10 below about "hyperactive stock traders".
    [And one of Darvas' books was called something like The Wall Street Casino. Isn't this all in line with our whole growing casino mentality? Look at who's running lotteries these days - state governments! Charles Jaffe is whistling in the wind trying to "fight...for a long-term investment strategy". The real issue here may be that the whole concept of "stock market" is evolving from something useful to the economy into something destructive to the economy. The whole concept of "going public" has taken on a short-term "grab and run" ring to it. Some of the best companies are privately held. Let's see if their numbers increase as daily downsizings drag the rest closer to the cliff edge of economic Armageddon.]

    4/10 Compaq warns profits to be less than half of forecasts, Globe Wire Services via Bos Globe, F1.
    ...The [Houston-based] number one maker of personal computers warned that its first-quarter profit will be less...because of plummeting prices and weak demand....
    [Hey if you guys aren't going to provide employment, we can't very well provide markets now, can we!]
    Compaq hasn't implemented a plan for direct sales or for Digital Equipment Corp., which it bought for $9 billion in June....
    ["Gorsh, fellers, lookit us'uns caught - 2d biggest 'puter company in the world! Uh, whaddawe do now, huh?"]

    4/10 'Hyperactive [stock] traders' face nightmare - Accounting horrors await some investors with April 15 looming, by Steven Wilmsen, Bos Globe, F1.
    [Ah, terminology violation, Steven - "traders" does not equate to "investors", especially if they're "hyperactive". Why don't you take a deep breath and come right out and call a spade a spade - "speculators"! Say it now, Steven - "speculators". There, you can do it.]

    [The shape of the coming Crash becomes clearer - ]
    4/08 World Bank: Global crisis may continue, AP via Bos Globe, D2.
    [What else can it do, you morons? You haven't even identified the problem = freeze-drying money by concentrating more and more of it in the hands of fewer people who have neither the time nor the need to spend it.]
    The bank, in a report assessing worldwide financial conditions, expressed concern about the possibility of protectionist trade policies....
    [Are they still hawking free trade? Kiss it g'by, boys. It daid.]
    Uri Dadush, a senior bank official, said the world economic growth "has become extremely dependent on domestic demand in the United States," including a surging stock market....
    [Verrrry interesting. If this is true then the US can't reverse its record trade deficit ($169b last year) without taking down the world economy. So we've got Hobson's Choice on one hand and Catch 22 on the other -

  • We can save "world economic growth" and domestic demand by reversing our trade deficit to save domestic jobs (but reversing our trade deficit is going to take down world economic growth anyway),
  • Or we can save world economic growth and increase our record trade deficit to offer the world more of our domestic demand despite sacrificing domestic jobs (but sacrificing domestic jobs also sacrifices domestic demand - because of the little detail that employee earning = consumer spending - and takes down world economic growth anyway).
    [Why do we keep getting the feeling that the big boys operate without the silly detail of JOBS anywhere in their thinking? The stock market is there, financial conditions are there, domestic demand, currency and inflation are all there, but nowhere in this little squib does the word "jobs" appear, or "employment." No wonder Dadush deduces that this is - ]
    "Not a healthy situation."
    [Here we go again. The big problem with current brainstem capitalism is, how to have many markets with few jobs. And the only surviving answer to that one - now that governments everywhere have abysmally failed to keep job creation (at the 40-hr level) apace with time-saving technological efficiency - is work sharing, no matter how low the workweek becomes. And folks, that means *Timesizing, Not Downsizing.]

    4/08 Hoax draws attention to on-line trading pitfalls - Firms shares grow after false report put on Net, LA Times via Bos Globe, D2.
    In an elaborate hoax that underscores the concern over stock fraud on the Internet, share of PairGain Technologies soared 31% yesterday morning after someone posted a false report that thefirm was being acquired.... [No mention of the culprit or any attempt to apprehend. Raises again the notso scifi possibility that at the whole stock market is a fraud during this pre-Depression period of declining corporate revenues, profits, jobs, wages, markets, and domestic demand.]

    [Adding to the story on 4/03 below "Chip equipment sales fall 21%," the deflationary spiral reaches further into high tech - ]
    4/06 Intel expected to cut chip prices by as much as 25%, by Molly Williams, Bloomberg News via Bos Globe, C3.
    ...as it looks to boost demand....
    [Isn't Intel one that's been laying off its own best markets, its own employees? Ooooyeah. 9/23/98 - "Intel to lay off 675 in Hudson [Mass.] - Chip maker vows output at facility won't decline" on our Downsizing page - "In April, Intel vowed to cut its worldwide headcount of 65,000 by 3,000 workers this year, mostly by attrition. Even before then, in January, Intel laid off about 1,100 workers at a chip plant in Arizona. And in May, the company cut 600 more jobs by shutting a plant in Washington that made private-label computers for retailers.... Like most plants, the Hudson facility runs 24 hours a day on three shifts."
    [Yeah, these are the brilliant top execs (in high-tech even!) who can't figure out that if they ran 24 hours a day on four 6-hr shifts instead of three 8-hr ones, they and their fellow CEOs would have 33% more employee-customers (like Kellogg's Cereals in 1930), and if they ran 24 hours a day on six 4-hr shifts instead of three 8-hr ones, they and their fellow CEOs would have 100% more employee-customers. They haven't even noticed that when they and their fellow CEOs get more and more work done by fewer and fewer people, they don't have enough markets. Gee, what a surprise!]

    4/06 Tech stocks rocket Dow to new high - Index rises above 10,000 for 2d time as investors look [forward] to strong [Q1] earnings..., by Phil Galewitz, AP via Bos Globe, C1.
    [Gee, I guess these lemmings didn't notice that yesterday (see next story below), Fortune 500 revenues were down for the first time in 7 yrs, and 5 days ago (see 4/01 story below), overall corporate profits were down for the 1st time since right before the '90-91 recession. As Phil's grandparents so loved to intone, "None are so blind as those that will not see" - Louise Elizabeth Reppen (Hyde) of Nottingham (&Toronto) and Philip Edward Hyde of Toronto, RIP.]

    [Follow-on from 4/01 item below "Corporate profits fall for 1st time since '89" report from Commerce Dept.]
    4/05 Profits at Fortune 500 firms fall for 1st time in 7 years - Fortune said 1998 'will probably be considered a watershed year...when the New Economy fundamentally parted ways with the old [and high-tech consolidated its role as the driving force behind the growth of big business]', AP via Bos Globe, C8.
    [Gee, maybe now standard economists will wake up to the fact that "Yes, Virginia, technology DOES destroy more jobs than it creates." That's its whole purpose in the minds of most CEOs who forget that productivity needs markets. It needn't destroy jobs but if you cut your workforce instead of your workweek, it DOES destroy jobs, and all the silly rhetoric about "Lump of Labor Fallacy" ain't gonna change that reality.]
    ...Overall, profits for the 500 fell 1.8% last year, compared to 7.8% earnings growth in 1997...
    [Compare overall figures for corporate profits from Commerce Dept on 4/01, +16% in 1994, +22% in 1995, +7% in 1996, +7.5% in 1997, -2.2% in 1998.]
    ...as US companies found demand for their products and services stifled by the ongoing financial problems overseas [in Asia, Russia and Latin America]....
    [We disagree. Exports are only 12% of GDP. Something more internal, inherent, endogenous and ominous is going on.]
    Revenue growth shrank to 4% from 8.7% in 1997.... GM [$161.3b] remained No. 1 for the 11th straight year on the list, which ranks companies acccording to revenue. It was followed by Ford Motor [$144.4b], Wal-Mart [$139.2b], Exxon [$101.7b] and General Electric [$100.5].... IBM was sixth with $81.7 billion [in revenue], followed by Citigroup with $76.4b, Philip Morris with $57.8b, Boeing with $56.1b and AT&T with $53.6b. Chrysler, a perennial top-10 finisher, disappeared from the list as its merger with Daimler-Benz made it a foreign company and therefore ineligible. No less than 33 of the 47 new arrivals [reached] the list by way of a merger....
    [And you can't turn on the TV without seeing car commercials - but how long can we keep buying cars at these prices? And discounter WalMart is trimming profits so small that they're going to have to put every other retailer out of business to keep it up on volume. Then they'll become the one big retail chain with only one employee per store, and most former customers jobless and starving to death. Exxon's starting to have troubles now that OPEC is getting it together to raise oil prices again. See our goodnews page 3/23 and 3/24/99 items on OPEC....]

    4/05 Japan fears [record] jobless rate may rise further [to 5.2%], AP via Bos Globe, C7.
    ...chief economic planner [Taichi Sakaiya of Japan's Economic Planning Agency yesterday] was quoted as saying by Kyodo News Agency..\.. [He also said] the worst was yet to come in the employment situation..\.. Last week [see story below on 3/30/99] the government announced that unemployment in Japan had [risen, 0.2% is not a "jump"] 0.2% in Feb. to an unprecedented 4.6%, dampening hopes for an imminent recovery....

    4/05 Russians hope to settle differences with IMF on loan terms this month, AP via Bos Globe, C7.
    ...The IMF suspended its loan program to Russia after the country's financial crash last August, when th eruble tumbled and the government defaulted on some of its debts. Russia desperately needs new loans to avert a looming default on its foreign debt.
    [No it doesn't. It just needs to stop concentrating and hemorrhaging wealth. According to economist Alexandr Buzgalin, who spoke in Boston on 4/03, Russia has experienced some $25b in capital flight, presumably since the end of the USSR.]
    The government is supposed to pay $17.5 billion to foreign creditors this year, but has said it can pay only about half the sum. Russian officials have said they were asking for $8b. But [Finance Minister Mikhail] Zadornov said yesterday that Russia did not need such a large loan.... "We do not seek to live in debt.... Going deeper into debt makes no sense"..\.. "We need a sum that can ensure the fulfillment of our basic tasks in the financial sphere"....
    [Well, not even an infinite sum can ensure that until Russia plugs the leaks that are draining it as fast as it replenishes. And the biggest, as everywhere in the fin de millenium world, is the "Big Leak Upwards" - the concentration of wealth that requires the Russian (and evey other) economy to implement a new technology of sharing - and balancing production and consumption - such as Timesizing.]

    [Here are more of the bizarre handstands (Kuhn: "epicycles") that we get into when we try to legislate solutions to fix every peripheral problem instead of just balancing the center - ]
    4/05 [TV] Ads warn workers on illegal labor practices, by Diane Lewis, Bos Globe, C7.
    ...The ads, which will run for the next four weeks, serve to remind workers on publicly financed projects that, under state law, they should be paid prevailing wages....
    [Oh we're sure that approach is going to be REAL effective. As Lao Tzu said, "Perfect Virtue is unconscious of itself as virtue.... When Virtue is lost, Charity appears; when Charity is lost, Righteousness appears; when Righteousness is lost, Propriety appears." And when Propriety is lost, LEGISLATE!]
    "We hear from workers every day who are being taken advantage of by contractors who know the law but choose to break it," said Karen Courtney, director of the Foundation [for Fair Contracting]....
    [Difficult as the timesizing approach may sound - in engineering an overall labor shortage by shortening the workweek - it is a hundred times, nay a thousand times, easier than the way we're trying to help labor now - namely, consciously fixing every one of the millions of instances where the over-supply of labor gets pushed down toward its real market price. We used to blame the Russians for trying to second-guess the free market and fix prices. Now we do it all the time to prevent the price of labor of almost all skill levels and types from collapsing and introducing mass poverty and starvation. In an automating and robotizing world, the jobs are just not there at the old 40-hour a week level. And the increasing numbers of people in this so-called "robust economy" who are working 50-60-70-80 hours a week are doing so out of fear and job insecurity, and are daily worsening their own position.]

    [More suicidal stupidity from the fishing industry, who want to bring back Georges Bank scallop dredging = the "clear-cutting" of the seas - ]
    4/05 Return to Georges Bank - As scallopers push for the reopening of fertile fishing grounds, environmentalists warn of the dangers, by Scott Allen, Bos Globe, C1.
    [Yeah, warnings like "Please don't commit suicide, fishing industry! Please, puhleez." Hey, let's try the opposite approach. "Guys, just dial 800-KEVORKIAN if you can't change jobs so you don't take the rest of us with you."
    [Compare the situation of the barndoor skate along the New England coast, noted on the Boston Globe front page 4/10/99 - "Humans fueling fish's decline, biologists warn", by Scott Allen - ..."The barndoor skate could earn the dubious distinction of becoming the first saltwater fish that humans have driven to extinction in modern times.... The same fishing crisis that decimated the cod on Georges Bank...has almost wiped out the humble skate as well...because so many fishermen unintentionally kill barndoor skates..\..when these sting ray-like creatures turned up in fishing nets...."
    [Compare also the situation of the toothfish in the Antarctic fisheries. The Economist magazine had a 2/13/99 article on this, p. 41 - "New Zealand v the toothfish pirates - WELLINGTON - As the world's fish stocks become increasingly depleted, long-range fishing fleets sail to ever more remote areas. Now New Zealand is trying to stop the plunder of one of the last great fishing grounds. It has dispatched its newest frigate, the Te Kaha, to patrol the Southern Ocean off Antarctica in a bid to prevent what it regards as "pirates" making off with the Patagonian toothfish [from] the Ross Sea, New Zealand's Antarctic dependency...."]

    4/4 Snapping back - Its glory days faded away, Polaroid turns away from a rich heritage in innovation and emphasizes marketing in its battle for survival, by Ronald Rosenberg, Bos Globe, F1.
    [Big pre-depression trend here, folks - the shift from innovation to marketing (and then, more and more hungry producers marketing harder and harder to fewer and fewer super-rich as the middle class shrinks). Witness the withdrawal of research funds nationwide over the last two decades. Compare the shift of state money from education to prison construction - NY story 12/02/98 and Calif story 10/02/98 on our prisonwatch page.]

    [More pre-depression desperation - this time for borrowers - ]
    4/4 Credit-card debt not a liability in this market, by Jennifer Babson, Bos Globe, F1.
    ...The new willingness to lend to those who a decade ago wouldn't have survived an initial credit check comes as more customers have begun paying their credit-card balances off each month - thereby denying lenders the interest rate charges that have traditionally been their bread and butter....
    [Well, used-to-be that you could let it ride for a couple of months and just pay their exhorbitant interest. Now you let it ride and they slam you with a $29/month "late fee," which on a $100 balance equates to a zillion % annual interest, way beyond exhorbitant. What seems to be happening is that consumers burned by these monstrous late fees open and pay the goddam card bills as soon as they arrive in the mail, and more often than not, pay off the whole goddam thing. And we here at Timesizing Central are SO glad that these greedy SOBs in the banks are hurting. What a stupid change! We'd rather pay a $20-30 annual membership fee any time than "No annual fee" and hidden $25-30 late fees. But they don't get it - they think WE'VE changed - ]
    "Consumers have changed, that's the thing that has become most unsettling," said Robert B. McKinley, president of CardWeb.Com, a Maryland firm that tracks the credit-card industry. "Your best credit risks are paying their balances off in full."
    [That's because you clowns tried to gouge us, whaddaya expect?! Oh God, the death wish grows stronger in more and more industries. Check out these prime auto-Kevorks - ]
    McKinley estimated that between 29% and 43% of all card holders...no longer carry a monthly balance. Credit-card firms have perversely dubbed them "deadbeats," and in some cases have slapped annual fees on those who refuse to revolve their debt.
    [Whatsa matter with these morons. Don't they get 5% of each transaction off the top?! "Cursed be they that call evil good and good evil."]
    Have a history of shirking your bills?... Aspire Visa will issue you [a card] for 27% a year and stiff late charges....
    [At last, a mention of the actual snickersnee that the card industry has plunged so completely into its own belly = late charges. Plus, as partner-in-critique Kate points out, brokerages have started paving the way to margin accounts. Talk about 1920s déja vu!
    [It takes a lot of moves to bring a big economy down, but looks like we're making every one of them!]

    4/4 Behind the numbers, a few engines and a lot of dead weight - Dow hoopla hides lackluster returns for most funds, by Lynnley Browning, Bos Globe, F4.
    ...The chasm between funds doing well and those performing poorly provides a glimpse into the strange new terrain of the stock market, whose landscape is increasingly one of a few spectacular peaks and many low valleys....
    [Another big Sign of the End. This is exactly what you'd expect in a stock market with no fundamentals sustained only by the lack of alternative investment targets of a super-rich elite flooded with the lagtime profits that should be massively reinvesting in their own markets via wages - and we DON'T mean executive pay. That's "lagtime" as in "Like the Roaring '20s, we're again in a lagtime between raises in productivity with no raises for employees and the discovery that productivity with no purchasers is pointless."]

    [Redflag terminology appearing - ]
    4/03/99 Chip equipment sales fall 21% - Asian fiscal crisis, oversupply of small wafers blamed, AP via Boston Globe, B5.
    [The earmarks of pending depression mount - the frequency of certain items in the spoken and written lexicon like "falling sales" and "oversupply." Get used to it. Watch also for "overcapacity" and "overproduction." The media seldom have the insight to talk about "under-consumption" or "sinking demand" and ask "Why?"
    [And the root of the problem is always somewhere else - "the Asian slowdown" - or something in the black box of high tech - "an oversupply of small wafers and a delay in making the transition to large wafers." It's never the fact that virtually everyone in the world who is still working "full time" is working too many hours per person for this high a level of labor-saving technology. The result is that redundant labor cannot command the relative-to-now huge wages we should all be getting for the huge productivity we're putting out with our robots and highspeed computers. And the result of that is that the top 1% is compacting all the spending power and...not spending it - they just don't have time - or desire, let alone need. So much for the much-relied-upon infinite demand of the human being. It just ain't so, and the "marginal utility" theory alerted standard economists of this over 100 years ago. They chose to ignore it in its application to wealth.]

    [Computer viruses with unpredictable effects - ]
    4/03 Electronic infiltration is burgeoning war zone of hackers worldwide, by Patti Hartigan, Bos Globe, A2.
    [Right now, as concentrated wealth changes more and more of "one person, one vote" in the public sector into "one dollar, one vote" - same as the private sector - we have less and less incentive to cooperate. Why not go after the top 1% or if you're angrier and less strategic, after everybody, like the Unabomber or the guy in New Jersey they just nabbed for the Melissa virus (see Glimmers 4/03).
    [One criterion for an adequate next-generation economic design is that it must not only restore our incentive to cooperate to levels achieved by "one person, one vote," but it must also extend our self-interest much further.
    [Timesizing and its underlying worktime economics achieves this by redesigning the leak-prone "one person, one vote on candidates" into a referendumized "one person, one vote on important issues" and adding a new level of balance = "one person, one range of natural, free-market employment per week." For example, 10 to 30 working hours per person per week. That range would have a reinvestment threshold at its top that would incentivate conversion of overtime into training and hiring. In other words, there would be a real sharing of work. And as the old saying goes, "it's easier to share the work than the wealth."]

    [It's a time of randomization and disorder, a time of entropy, with reason replaced by the crapshoot. Virus writers commit crapshoot vandalism (story above). Otherwise intelligent people spend good money on crapshoot approaches to the American Dream (story below). ]
    4/03 Workplace lottery pools take chance on a dream, by Thomas Farragher, Bos Globe, B1.
    [So this is what the American Dream has become for most people despite our constantly parrotted "robust economy" "robust economy" "robust economy" - hitting the lottery or suing the deep pocket.
    [We're getting pa-the-tic!]

    4/02 Raging bulls on Wall Street, by Derrick Jackson, Bos Globe, A21.
    A bull market in a china [shop].... The New York Times said, "The Dow achieved a perfect 10 yesterday. Thousand, that is," reflecting "the unparalleled strength of the economy...."
    You have to go deeper into the stories to [notice the broken china]..\.. The Washington Post said the Dow underscored "the optimism of new investors dazzled by the high-tech boom and the nation's robust economy."...
    [More to the point, the Dow underscores the extreme concentration of wealth, leaving the beneficiaries with few alternatives but to throw it into stocks. As for the nation's "robust" economy, read on - ]
    The Post cited a "performance gap," in which the 30 blue-chip stocks of giant corporations in the Dow...had risen in the past year by 8.99%, while the Russell 2000 index of small stocks had fallen 5.26%....
    [So the concentration of wealth applies not only to the human population but to the stock population as well.]
    "The underpinnings of the market are slowly getting whittled away," said Mark Arbeter [of] Standard & Poor's....The same can be said about the human [population]. This week, *United for a Fair Economy...released a report showing that the boom has enriched only the top 5% of households in America. An astounding 95% of households have seen a decline in net worth. The report, "Shifting Fortunes: The Perils of the Growing American Income Gap," found that between 1983 and 1995, the richest 1% of households saw a rise in net worth of 17.4%, adjusted for inflation. The top 2 to 5%...saw a rise in net worth of 0.5%.... The top 91st to 95th percentiles...saw a drop of 2.3%.... The top 81st to 90th...a drop of 5.3%.... The 61st to 80th...fell by 6.5%. Then the [china] really breaks into pieces.... The 41st through 60th...fell 11.5%.... The bottom 40%...saw a collapse of 79.6% in net worth.
    The richest 1% of US households now [hold] 40.1% of America's wealth. That is double the 19.9% [they] held in 1976.... The last time [they] had this much wealth was in 1929, just before the crash of Wall Street and the Great Depression.
    [And even if they manage to postpone disaster, aided by the greater momentum of our much huger economy today and by what's left of the "wealth centrifuge" mechanisms of the New Deal and subsequent versions of Keynesian life support, there is still really nothing to prevent the top 1% from concentrating 99% of the nation's wealth. That would turn us into a very very rich country on paper, but with pervasive misery and squalor in reality - the world's most powerful and high-tech but feudal and third-world nation. All for the lack of an automatic centrifuge mechanism to replace the woefully inadequate discretionary fixes of the Democrats' social, or the Republicans' military, Keynesianism. Is there a published prototype of such a mechanism? Only one that we know of - in our manual Timesizing, Not Downsizing - see chapters 7-9. Derrick adds a couple more clinchers here - ]
    Weekly wages for the average American are 12% below their inflation-adjusted levels of 1973.
    [So much for the statement in the middle of our first 4/01 story below that "the tight labor market pushed up wages."]
    Middle-income families are putting in the equivalent of eight weeks more on the job thatn in 1979. But over the last decade the real pay for the extra hours to $2.20 an hour....
    [Well this would be in line with our expectations based on overall American economic history that, contrary to some people's supply&demand-ignoring instincts, longer hours goes with lower pay (and shorter hours goes with higher pay).]
    Debt as a percentage of personal income has risen from 29.9% in 1949 to an estimated 84.8% in 1997. Credit card debt in the United States has more than doubled in the last decade, from $243 billion to $560 billion. The poor bear the heaviest burden of [such debt]....
    The wealth gap is so huge that Lester Thurow [in his] foreword for the report said: "The great American middle class has become a nonparticipant in the American dream."
    [But note that the "gap" metaphor is misleading and tends to be unactionable or mis-actionable. Better is "concentration of wealth," leading to solution metaphors of deconcentration or "centrifuging." This is demonstrated in the tried and failed "solutions" that the report cites - ]
    It [the gap] is so huge that the report concludes that serious measures have to be taken to address it, such as wealth taxation, capping corporate tax deductions, and stronger taxes for estates and capital gains.
    [This is all too removed from the source in the private sector, and too discretionary. We need massive automatic reinvestment in training and hiring at the grassroots and up and down the frontlines of the private sector. It can initially be based on overtime conversion - that is, reinvesting the profits (corporate) and earnings (individual) from overtime in training and hiring. We'll never be able to share the wealth unless we can share the work. Work sharing was the middle way in 1933 that FDR mistook for leftism, but wound up realizing the mistake he made when by 1935, he saw that he'd actually fallen into leftism (many lame off-center controls) instead of the center (one effective control in the center).]

    [The Spread of Speculation dept. - ]
    4/02 Impatient investors not waiting anymore, Syre and Stein, Bos Globe, E1.
    ...Mutual fund buyers are pulling the trigger quicker than ever.... They are bailing out of funds that are not keeping pace with the market averages and piling intto funds that are....
    [Question - What's another name for an "impatient investor"?
    [Answer - A speculator. The whole development highlights the whole sinkage of mixed market/command capitalism into short term values, meaning short term valuable - long term suicide. And with an accelerating pace of change, the long term is getting here faster every day.]

    [Day after, happytalk intensifies - ]
    4/02 Economy advancing briskly - All news is upbeat in series of reports, by Dave Skidmore, AP via Bos Globe, E2.
    [They're not mentioning the drop in profits noted below.]

    [Hang on afficionados, a special treat tonite - ]
    4/01/99 Corporate profits fall for 1st time since '89 - As economy robustly expands, the margin of earnings shrinks..., by Aaron Zitner, Boston Globe, p. D2.
    [YOU SAW IT HERE FIRST - 3:30am, 4/2/99 (c) Phil Hyde, The Timesizing Wire - a breakthru in deep-structural economic theory, as usual a BGO (blinding glimpse of the obvious). We've always wondered how the end will come this time, in the sense of, how will the depression be "fully" recognized as such (granting that it's NEVER fully recognized, some people are just too insulated) = how will it "begin" this time granting that Problem 1 this time will be that they're going to avoid the word "depression" as long as they can for political reasons....but, anyway, how. This little article makes one likely pathway visible.]
    WASHINGTON - Only days after investors pushed the Dow Jones industrial average over 10,000...the Commerce Dept. [reported yesterday that] aftertax corporate profits slumped by 2.2% in 1998, the first drop since just before the recession of 1990-1991.
    With investors paying record-high prices for stocks, the profit squeeze adds urgency to the question of whether today's high stock prices are justified or due for a fall. On average, stocks in the Standard & Poor's 500 index are trading at 34 times earnings, compared to 21 times earnings just before the market crash of 1987....
    The government said US gross domestic product [GDP] surged in the 4th quarter of 1998 at an annual rate of 6%....
    [This means that the concentration of wealth via mergers and downsizings throughout the year, plus burnt fingers in Asia in Q3, funnelled a jump of investment into speculative production in Q4.]
    For all of 1998, the US economy grew by a robust 3.9%..\..
    ["Robust economic growth." That little phrase depends ever more exclusively on GDP. And as GDP behavior contrasts ever more often and dramatically with corporate profits, people are going to start really wondering about GDP. How fundamental is it? How grounded? Is it grounded at all? And once that happens, the wholesale withdrawal of money from stocks will begin.
    [OK, here's the BGO - we don't need a GDP, we need a GDMSP - a gross domestic market-supported product, or the MSGDP. We had previously come at this from the other direction, criticizing Herman Daly/John Cobb's GDP substitute, the ISEW (index of sustainable economic welfare) as too complex. All we needed, we thought, was a comprehensive unemployment rate including welfare, disability, homelessness, prisons, forced part time and forced self-employment regardless of clientele. Here's the join...
    [Question - how do you determine the market-supported GDP? Answer - all you can do is maximize markets, i.e., maximize economic dynamism alias the velocity of money. How do you do that? You activate every potential consumer. How? You provide FULL EMPLOYMENT. How in a high tech age with robots and automation everywhere? By sharing the vanishing work. How? By thawing the frozen workweek and tying it to comprehensive unemployment - with the above inclusions. Unemployment goes up, workweek comes down. Frills? You automatically convert expanding overtime into training and hiring. This is all in our manual, Timesizing, Not Downsizing.
    [What about the spreading knowledge of the contrast between our rising old GDP and our sinking corporate profits? Our advice - you've seen a huge runup, you've hit 10,000. Be satisfied. Get out NOW. Into what? Treasuries. Money market. Whatever. But not stocks.
    [Rationale - In the distribution of wealth in an economy, after a certain point of concentration, there's an inherent dissonance between (1) the anchoring currency or circulatory function of money, (2) the storage function and (3) the investment or job-maintaining or currency-maintaining function. The investment function gets tougher and tougher, because it's investment in productivity (or more generally, in "servicivity") which has the hidden requirement that, for significance/relevance and non-triviality, IT MUST BE MARKET-SUPPORTED. In other words, making products/performing services for which there are no or too-few markets starts a deflationary spiral and ends up foundering on the shoals of the test for "art" vs. "art therapy," i.e., does it sell? Today's degree of wealth concentration is making it harder and harder for anything outside the luxury markets to sell. Basic necessities are going to sell, but we are being driven down to lower and lower levels in the definition of "basic." This is being somewhat offset, of course, by deflation, but deflation is turning around and clobbering corporate profits, as this article testifies. Without even small profits, investors are finally going to look around and realize they are alone. There's nobody and nothin' holding up the whole house of cards except the fact that they have concentrated so much money from the weakness of labor that they have had nowhere else to put it but stocks, and as Greg Jones, chief economist at Briefing.com puts it in this article...]
    "We're not only at a record high, but blowing away anything ever seen before"....
    [But what about this - ]
    Some analysts have said stocks will rise in 1999 as the world recovers from the Asian financial crisis.
    [Oh yeah? How will it recover - without timesizing? There's no way because the big leak is still unplugged and widening - the unbalanced concentration of wealth.]
    But Roger Brinner, chief economist at the Parthenon Group, a Boston consulting and investment firm, said the stock market is overvalued by about 15%.
    [At least! Because in terms of the P/E ratios given above, it's overvalued by 34/21 -1 = nearly 50%.]
    Key to his analysis is the fact that..."Rising share prices can't be defended by rising earnings." \Secondarily supporting\ his analysis is the fact that bond yields have been rising, making them...more attractive [relative to stocks].... \Thirdly supporting his analysis\ the United States is living through "a peculiar economy [read, "psychology"] where people are investing in [Internet] stocks with no profits."... Corporate profits had jumped...16% in 1994..\..22% in 1995..\..7% in 1996..\..7.5% in 1997 \but\ slumped by 2.2% in 1998....
    They declined last year, analysts said, because the tight labor market pushed up wages, which are the largest cost in producing goods and services.
    [OK, here is where our analysis diverges 180 degrees from the "analysts." We believe they are trapped in the superficial rhetoric of the prolonged New Deal or Keynesianism, which said, "Work sharing is defeatism. Job creation is triumphal." Then they mistook the economically "positive" results of war for the results of Keynesianism and said simply, "Job creation is triumphant." We say Keynesianism failed, so job creation is mere triumphalism, and flexible bidirectional work sharing (not the fixed or downwardly one-directional worksharing of the 30-hour bill of 1933) was valid all along.
    [What we got out of the Federal Labor Standards Act of 1938 was the worst of all possible scenarios - fixed or upwardly one-directional work (and wealth) concentration. Result: a huge and accelerating worldwide labor SURPLUS - totally denied by the consolidated media and general wealthy elite in the major superpower (USA) and to some extent in its puppydogs, UK, Japan, Canada, etc. but not successfully denied in Europe or at all denied in the Third World.
    [In short, we do not have a tight labor market except on a spot basis (where some exceptional wages are indeed getting pushed up - after all, executive pay is way WAY up, general employee training is down, and resume-flooded employers expect to pluck an exact fit right out of the labor market). In general, however, we have a huge worldwide LOOSE labor market - to wit, a gigantic and uncontrolled LABOR SURPLUS, worsened every day by further huge mergers and downsizings. Now let's go back to the article to see the highly qualified "party line" on all this.]
    At the same time, companies have not been able to pass [the cost of alleged "pushed up" wages, actually astronomically inflated executive pay] on to consumers. The key reason is the Asian crisis and its ripples throughout the world.
    [Wrong. The Asian crisis was simply an early manifestation of the developing worldwide crisis of market starvation via wealth concentration - "the more concentration, the less circulation" or in academic economese, "the marginal utility of wealth." And market starvation is rapidly followed by profit starvation and investment starvation, whereupon the whole inflated investment bubble bursts.]
    That [Asian crisis] has cut the demand for all kinds of goods, leaving the world with an oversupply of everything from soybeans and steel to automobiles. When consumers can pick [or "MUST pick" because of generally sinking wages interspersed with spot rocketing executive pay] among competing products [and services], companies find it hard to raise prices.... Overall, [Cynthia] Latta [chief US economist at DRI in Lexington] said, "The pricing power of companies is nil."...
    [Nice wrap! A possible node on a future diagnostic flow diagram. But what about inflation?]
    Yesterday's government reports also showed inflation to be well in check. A price index tied to the GDP rose just 1% in 1998. [It hasn't been that low since 1959, or] lower since 1950.
    [Of course! - they can't raise prices into this sinking spending power, and general wages are sinking because overall, employees are so scared of downsizing. Neutron John and Chainsaw Dunlap are about to see the real results of their no-real-balls macho. Real men don't bully, they manage.
    [Bottom line? You've seen your stock equity grow phenomenally in the last 7-8 years. You've got your 10,000 Dow. Be satisfied, get out now and try to save what you've gained. If you don't and others do, you're back where you were 7-8 years ago when the bubble was just medium-sized and not huge. Maybe you'll miss out on some future action. Do you need the risk in this fragile an environment? And maybe you can take advantage of it on a closely watched day trading basis. But if you don't have the time or the interest for that kind of market attentiveness, assume most of the action from now on will be on the short side. Get out of stocks, NOW.]

    4/01/99 Zuckerman, Linde get $55m in stock options, Bloomberg News via Boston Globe, p. D8.
    [Oy, this one's so poorly written, it's difficult to really figure what's going on, but it looks like Sumitomo Bank may just have gotten the worst of it and conflicts of interest were avoided by the rhetoric of making "all the 'economics' of {a} property flow to the REIT, and not the partners" - so let's skip that part.]
    Boston Properties Inc., headed [and exactly what title does that equate to??] by publishing magnate Mortimer Zuckerman, gave Zuckerman and its chief executive [and would that be Edward Linde perchance? and ifso, why not sayso?] stock options potentially worth about $55 million each, one of the most lucrative option packages ever given to the heads [there's that fudge again] of a real estate investment trust.
    The company awarded the option package, which was made in lieu of a large salary and cash bonus [how do we know that?], to Zuckerman and Linde during a year in which they oversaw an almost tripling in the company's property holdings through the purchase of such assets as San Francisco's Embarcadero Center for $1.22 billion and Boston's Prudential Center for $546 million....
    [Looking over references to the pre-crash shenanigans in the '20s, we've always wondered just what kind of wheelerdealing went on. This article probably gives the flavor. It indicates just how much of what goes on MUST depend on stock price management (but not, of course, manipulation). The operative phrase here is "options potentially worth $XYZ."]

    For earlier collapse stories, click on the desired date -

  • Mar.15-31/99.
  • Mar.1-15/99.
  • Feb/99.
  • Jan 16-31/99.
  • Jan 1-15/99.
  • Dec/98.
  • Nov/98.
  • Oct/98.
  • Sep 16-30/98.
  • Sep 1-15/98.
  • Aug/98 and before.


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