If you want to know a society, study their money. I no longer remember who told me that, but I always circle back to it when noodling through the issues of our day. We think of money as the bits of paper in our wallets, but money is simply a store of value that is easily transferred. For most of us, money is electronic bits of data these days. Almost all of my transactions are done electronically.
We live in the information age and that means information has become a form of currency. It always has been, but it has not always been very portable. Fifty years ago the guy who knew something big about a publicly traded company could trade that with a small circle of people, mostly in person. Today he can sell it to the world in seconds. Just as sound societies have sound money, sane, well run societies have sound information.
In the Cold War, the Soviets routinely told lies to their people. They did this to devalue information, to make it useless. If the people cannot trust their currency, they don’t use it. If they can’t trust information changing hands, they won’t act on it. We don’t think of information as currency, but it is probably our chief currency today. Most of our labor is put to the task of creating information.
It’s why I’m surprised governments have not become much tougher on this sort of stuff we see going on with public companies.
Those record profits that companies are reporting may not be all they’re cracked up to be.
As the stock market climbs ever higher, professional investors are warning that companies are presenting misleading versions of their results that ignore a wide variety of normal costs of running a business to make it seem like they’re doing better than they really are.
What’s worse, the financial analysts who are supposed to fight corporate spin are often playing along. Instead of challenging the companies, they’re largely passing along the rosy numbers in reports recommending stocks to investors.
“Companies are tilting the results,” says fund manager Tom Brown of Second Curve Capital, “and the analysts are buying it.”
An analysis of results from 500 major companies by The Associated Press, based on data provided by S&P Capital IQ, a research firm, found that the gap between the “adjusted” profits that analysts cite and bottom-line earnings figures that companies are legally obliged to report, or net income, has widened dramatically over the past five years.
At one of every five companies, these “adjusted” profits were higher than net income by 50 percent or more. Many more companies are in that category now than there were five years ago. And some companies that seem profitable on an adjusted basis are actually losing money.
The stock market is vitally important to modern societies. In fact, it is the tent pole holding everything up now. It used to be said that Main Street is not Wall Street, but no one says that anymore. Everything counts on the equity markets, often in ways no one understands. The mortgage bubble is a great example. Even the pros did not fully understand what was happening. As soon as it faltered, however, everyone knew it had to be fixed no matter the cost.
That may be why the Feds are turning a blind eye to this. When they can no longer keep the plates spinning, maybe they put someone in jail for faking their numbers. As long as the lying works to keep the markets levitating, there’s no reason to clamp down on this stuff. Like it or not, the business of America is to keep the plates spinning.
Of course, the Feds could very well be faking their numbers too. Every month they tell us that unemployment is low, but that record numbers are not working. The BLS does this thing where they report numbers that seem good compared to last month, but then adjust those numbers down so that the next month’s figures look good in comparison. It’s a maddening game of whack-a-mole.
Regardless of the motivations, it is increasingly difficult to accept the official data at face value. Is inflation really averaging 1.9% since the crash? Is the unemployment rate really just 5.5%? Has the economy really been growing by 2% a year since the crash? I have no idea and I don’t know many people who would take those numbers at face value and most of the people I know are Progressives, who worship the state.
I think that’s what is at the heart of these record low public trust figures. It is assumed that the low trust ratings reflect dissatisfaction with public policy. Maybe it simply reflects the fact no one can trust the information we’re supposed to rely on as a society. Everything is a con where disinformation is peddled to the public so some sharp insider can profit. We are becoming a low trust society buried in bullshit data.
Chomsky said that if you want to understand the World you should read the Wall Street Journal and not the New York Times because money do explain Peoples action.
Well, the thing about the Fed and Wall St being a crooked game is, if you come into a crooked game, it’s already crooked, and nothing you can do will change it. This has all been rigged for decades, what’s happening now is the level of manipulation has reached a point where even the players understand that they’re being played.
Or as they say on the trading floor, “the firm made money, I made money, two out of three ain’t bad.”
I have long said that our politicians and leaders no longer understand the world they profess to rule: it is too complex, too variable, too much a mystery wrapped in an enigma. That means we will increasingly see the likes of Obama and Cameron who will say one grand thing but be ready all too quickly to jump to the demands of small groups, simply because they cannot possibly see the big picture. Our leaders will be led increasingly, and if we the voters should benefit that will be an unintended consequence, not an aim.
True they will have experts and advisors by the thousand but there is too much going on to warrant a lot of time and effort trying to understand it. All the data in the world will not help sort it out, but when you are being advised on the numbers and listening to those who want something for themselves then that saves lot of time and effort. And so what if the people who elected you don’t vote for you again? So what if they think you turned out to be every bit as shallow as feared. The ‘leaders’ are safe, the ‘great and good’ have made it big when they were never big enough all along.
I don’t trust anything any government puts out, any more. Come to think of it, I haven’t trusted anything any government puts out since 1969.