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But such is life when one runs a ministry of truth with far too many controllable variables. Furthermore, the economic growth through inventory accumulation is continuing, as inventories increased from 51.5 to 52.5. And most importantly for EPS numbers, kiss those margins good bye: prices paid increased from 63.2 to 70.0.
That doesn't seem to matter right now though.
The market is CALLING for deflation right now to bring down costs. The market can't tolerate price increases because of the very high unemployment rate and lack of confidence. 40 million people on food stamps and what not.
And yet, the government is forcing prices up through QE, and now these companies margins are being squeezed because the cost of raw materials is going up, their customer base can't afford the increase-and now they're stuck between a rock and a hard place....Shares plummet. Now they have a set of choices, all predicated on taking huge chances with little room for error:
1 lay people off and buy a little time while keeping prices low-
2 Raise prices and keep your employees even though this will virtually guarantee that you'll be operating at a skin of your teeth margin, and if prices of raw materials don't stabilize and instead keep going up, the good intention will just turn into postponed pain, and the layoffs will happen anyway.
3 Lay people off and raise prices. Which will also fuel the inflation cycle. Mind you, no where in there do we see wage increases, because that would further squeeze margins. So the price inflation in commodities, and the lack of purchasing power through devaluation and unemployment is squeezing businesses from both sides. What do you do?
4 Restructure(if even remotely possible), file for bankruptcy and manage your debts, or go out of business-meaning, KABOOM.
My guess is companies are going to start laying people off real soon, and the price of goods going up is going to feed on the unemployment and vice versa. This is a BAD position to be in. If wages were going up with inflation we would be able to weather this storm, but that would mean businesses are operating at wide margins, which is not the case. So, Kaboom, basically.
Originally posted by wisdomnotemotion
reply to post by projectvxn
This revelation is merely the tip of the iceberg. Unfortunately, people will still be deluded by mainstream media lies as long as they don't care to look into the entire details/statistics of information.
There will sure be imbalances soon. I presume that Federal Reserve and its puppet companies have been absorbing all the irregularities in recent events. That's why there's no noise, just blossoming flower stories everywhere.
Ability to see the truth is the most gracious gift from God right now, regardless of religion, race and status.