Sunday, October 25, 2009

What Exactly is Recovering?

The growing symphony of economic experts crying out that the recession is over, seems to be missing something very important. When seen through purely economic blinders a company with an improved balance sheet starts to look pretty good in this times. But I wonder what kind of improvement we are really seeing when that robust balance sheet comes as a result of slashed jobs, reduced inventories, and the shedding of unprofitable parts of their business?

Can we really consider a company to be doing well when it has decimated its workforce, scaled back its holdings, closed stores and plants, and slashed the wages and benefits of its remaining employees? There is something deeply wrong when we consider these measures to be the signs of improved health and recovery.

I see the excitement surrounding improved earnings and the current run-up in the stock market as a futile attempt to squeeze out the remaining profits before the economy resumes its downward slide.

My 2¢...

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