How Main Street Destroys Wall Street

2013 March 12
tags:
by drdog09

At the time, workers could count on about $2.25 per day, for which they worked nine-hour shifts. It was pretty good money in those days, but the toll was too much for many to bear. Ford’s turnover rate was very high. In 1913, Ford hired more than 52,000 men to keep a workforce of only 14,000. New workers required a costly break-in period, making matters worse for the company. Also, some men simply walked away from the line to quit and look for a job elsewhere. Then the line stopped and production of cars halted. The increased cost and delayed production kept Ford from selling his cars at the low price he wanted. Drastic measures were necessary if he was to keep up this production.

Source

Ford solved a labor problem by raising his rates. That his employees could afford his cars was a surreptitious side benefit. But there is a tale to weave here. The Ford example is the hilight of positive effects of funded employees — Corps get new customers. But there is the other side at the same time — down funded employees (part time work, layoffs, unemployment coverage, etc.) no longer being able to be a Corp customer.

In the US the consumer is 70% of the real market (forget financial instutionals for a moment), the balance being B2B industrials that make the goods that the consumer side buys. Of course that is the rub for the multinational corporations they are dependent on the consumer side even if they deny such linkages. Yes the CEO will stand forward at the annual meeting and proclaim — “Yes times are tough but we have expanded into emerging markets overseas that will buffer us from any US downturns in the economy!” What said CEO fails to follow up with is the fact that for most multinationals 75-80% of the world’s GDP is tied to the North American and EU markets still. Worse their debt structures could not be supported solely on the incomes from the emerging markets. So these firms, eg GE, are still wedded to legacy markets.

When 40+% of the US is on food stamps. When bank failures are still moving at rates higher then they were in the S&L mess. When most households are highly leveraged or in some cases underwater. When college grads are living with Mom & Dad at the highest levels since before the post war period. Its time to consider that the American consumer is on the verge of being tapped out. Once that occurs the revolving death spiral begins. Or should I say, it has already begun? At that point the corporations will start to unravel. Over leveraged in relation to their reduced income streams they will slowly fall one by one. Some quietly, some in a flash like Enron.

Nor should the Corporations consider more automation or advanced robotics as a way out. That at best is merely a stopgap that accelerates their demise. Even a company that has reduced labor to near zero will still fall if they lack customers. It is at this point that Main Street reeling under its own problems triggers the demise of the large companies. The simple lack of demand for product ends their prominence. Now it won’t be pleasant, we will have depression level issues. Spain is feeling them already. Soon Britian and France, then the US.

That is when Main Street wins, corporatism dies.

An interesting backgrounder —

PS: I would be remiss if I did not point out that Main Street wins only because they will be one of the few entities left. By watching everyone else above them fall they are the last man standing. It is the most terrible way to win, but a win none the less.

28 Responses leave one →
  1. 2013 March 12 4:57 am
    [1]
    justrand permalink

    I’m sure you’ve heard this old saying from the Soviet Union:
    They pretend to pay us, and we pretend to work

    As the American dollar reduces in value the pay is increasingly “pretend”. And when you throw in massive government bureaucracies that produce NOTHING, the “work” is increasingly “pretend” as well.

    Then you layer in the “credit” machinations that appear to produce wealth…but instead simply set up the unwary for collapse.

    yup, we’re on the Eve of Destruction!! great thread…scary and sobering…but excellent and folks needs to understand it!

  2. 2013 March 12 5:21 am
    [2]

    bump

  3. 2013 March 12 5:34 am
    [3]

    Trading one for another

  4. 2013 March 12 5:36 am
    [4]
    drdog09 permalink

    Hmmmm. I can figure out how/who could do the bronze plaque. But I have not figured out how I cement that memorial to the wall at the CIA.

  5. 2013 March 12 5:38 am
    [5]
    justrand permalink

    IP, at least he’d be up-front about it! AND, his Conservative principles are vastly stronger than Graham’s (ok, that a pretty low bar to clear)

  6. 2013 March 12 5:44 am
    [6]
    drdog09 permalink

    3, more on this guy — http://www.policymic.com/articles/17506/goproud-and-gay-republicans-bruce-carroll-wants-to-change-the-notion-that-there-are-no-gay-conservatives

    I look at it this way. We have been watching the Graham horse lose every time on the back stretch, throwing our betting slips on the ground in disgust. Maybe its time to bet on a new horse.

  7. 2013 March 12 5:58 am
    [8]
    drdog09 permalink

    Oooooh boy this is good optics if it was pushed — http://spectator.org/archives/2013/03/12/bolling-hannity-trump-battle-f

  8. 2013 March 12 6:03 am
    [9]
    bc3b permalink

    Regardless of image, both parties are driven by big business. What’s Wall Street, multi-national corporations, amazon.com, the U.S. Chamber of Commerce, etc. often isn’t good for Main Street.

    That’s a reason the one tax I do not oppose is the Internet sales tax. Why should amazon.com and other Internet merchandise merchants have an advantage over the local electronics store or even Sears or Best Buy simply because they don’t have “bricks and motar” in the state.

  9. 2013 March 12 6:06 am
    [10]
    justrand permalink

    drdog, but Moran has the magic (D) after his name…thus he could rape and murder a woman DURING the TownHall, and NOW (et al) would be absolutely silent!!!!!!!!!!!!

    But let a Republican call a woman “Dear”…and the long knives are out!

    Hell, Teddy Kennedy DID murder (at least 2nd degree) a woman…let he drown slowly while he constructed an alibi, and then abused various women for DECADES…and the supposed “Feminist” orgs adored Teddy!

  10. 2013 March 12 6:32 am
    [11]
    drdog09 permalink

    9,

    Right observation, wrong conclusion. Remember it was generally accepted during the last recession that no tax on internet sales was a good thing. Maybe the question ought to be if it is good for a business to not collect sales tax on the internet maybe it would be even better to not collect taxes for a B&M. Hmmmm?

    Probably not a practical observation, but it does point out that we have been conditioned to think in these terms rather than some other alternatives.

  11. 2013 March 12 6:34 am
    [12]
    drdog09 permalink

    10, What you say is true. Though based on the crowd reaction I don’t know if Moran was exactly getting away with anything.

  12. 2013 March 12 6:35 am
    [13]
    drdog09 permalink

    What common sense could not kill, the bean counter will — http://thepointman.wordpress.com/2013/03/08/a-species-facing-extinction/ — So sad, I’m glad.

  13. 2013 March 12 6:47 am
    [14]
    bc3b permalink

    Jim Moran is the thug whose son was arrested for voter fraud.

    Speaking of voter fraud:

    http://www.wvxu.org/post/three-indicted-hamilton-county-voter-fraud-case

  14. 2013 March 12 7:02 am
    [15]

    “Maybe its time to bet on a new horse.”~~~

    There are plenty of non pickle puffing horses out there to pick from, rather than let the GOP become a ~~~(G athering Of P icklepuffers )

  15. 2013 March 12 7:05 am
    [16]
    bc3b permalink

    Voter fraud is like enforcing e-verify: nothing works like throwing peoples’ a$$es in jail.

  16. 2013 March 12 7:06 am
    [17]
    MI Conservative permalink

    For over 4 months Rasmussen has had Obama over 50% approval while others have him sliding to under 50. 52% today.
    First time I checked Real Clear Politics since the election because I saw that Marist Poll.

  17. 2013 March 12 7:15 am
    [18]
    drdog09 permalink

    Folks, you are aware that InTrade was shut down?

  18. 2013 March 12 7:24 am
    [19]
    drdog09 permalink

    Leadership??

  19. 2013 March 12 7:42 am
    [20]
    MI Conservative permalink

    #19 If Kerry didn’t marry money he’d be in a gutter because he’s a punk who never wanted to work a day in his life. He’d be piling up govt assistance all day long. In fact, he is.

  20. 2013 March 12 7:48 am
    [21]
    MI Conservative permalink

    Think about it.

    Romney has money.

    Kerry has money.

    Who earned it and uses to better peoples lives?

  21. 2013 March 12 7:49 am
    [22]
    MI Conservative permalink

    How come I never learned how to link two posts together as one?

    Because I’m a lazy SOB on govt pension! HAHAHA

    If someone wants to teach a teacher how to do it — I’ll try. But don’t spect miracles.

  22. 2013 March 12 8:09 am
    [23]
    bc3b permalink

    drdog09 –

    I heard that about In-Tread. Do you have nay details?

  23. 2013 March 12 8:14 am
    [24]
    bc3b permalink

    I hate not having the “edit” feature because I can’t fix my “typos.”

  24. 2013 March 12 8:32 am
    [25]

    The edit feature is inop for now it seems.

  25. 2013 March 12 8:38 am
    [26]
    drdog09 permalink

    BC,

    No details. Just saw it in a Ars Techinca piece a couple of days ago. Seems they just up and shut her down.

  26. 2013 March 12 9:27 am
    [27]
    Mr Evilwrench permalink

    Shut it down entirely? That’s sad. I know it was denied to Usanians a bit before the “election”. Also, I can’t recall where, but I’ve seen it written that picture of Lurch with Hanoi Jane was faked.

  27. 2013 March 12 11:17 am
    [28]

    19 – strange I don’t recall that photo being used at all in the 2004 campaign. 🙂
    24 – me too.

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