The poor and what used to be our middle class buys goods and food from Mattel, McDonald’s and Home Depot, which all raised their dividends 30% or more last year. The name of the game is shareholders value not lower prices.
In spite of another year of hefty profits of the blue-chip S&P 500 Index the number raising or initiating dividends was 304 down from 317 in 2005. That breaks a strong uptrend in place since 2003, when 267 of the companies in the index lifted or initiated payouts.
Corporations have had incentives to lift cash payouts to investors most of whom are wealthy. Congress in 2003 slashed the top federal tax rate on dividend income to 15% from 35%, making dividends much more lucrative for shareholders.
We find it of interest that as corporations have made massive amounts of money they have virtually, until this year, frozen pay. This is a very lopsided situation as productivity officially increased by 3-1/2%. Shareholder value is the clarion call but the employees have been left behind and in the end corporations will have to pay for that in higher wages and less productivity. This is part of what is causing the widening gap between the rich and the poor and what is decimating the middle class.
There will be pressure ahead to raise dividends as baby boomers increasingly turn to stocks of companies that raise dividends to meet their obligations, particularly interest rates as bond rates stay relatively low. Pension funds also may have to rely more on raising dividends to meet their obligations.
A lawyer for a former CIA station chief accused of involvement in the kidnapping of an Egyptian terror suspect has withdrawn from the case, saying statements by Italian spymasters implicating US agents had underminded her attempts to head off a criminal trial. The CIA spymaster who planned the snatch, Robert Seldon Lady, said the Italian government should have had the courage to reach an agreement with the US government. In other words, we should be allowed to break the laws of every nation on earth with impunity.
The Bush administration has lifted a long-standing moratorium on drilling in Alaska’s Bristol Bay, as OPEC accelerated plans to reduce oil supplies in order to prop up sagging crude prices. The administration also decided to boost royalty rates by a third for ultra-deep-water oil and gas drilling. It eliminates extra incentives that had been given to offset some of the high costs of operating in those offshore areas. Also to be opened is 5.6 million acres in Alaska’s North Aleutian Basin for oil and gas development. Alaskans have decried the decision, saying development would bring in less than $8 billion once all the energy was tapped, while undermining a fishing industry that brings in $2 billion a year. Conservationists say the decision is irresponsible. The Bay has the world’s biggest wild Sockeye Salmon run as well as abundant Red King Crab, Pacific Halibut and Bering Sea Pollock and Cod fisheries.
Daniel Ellsberg spoke at the National Press Club and said Mr. Bush and Mr. Cheney have to go because they are dangerous. He urged Congress to cut off funding for the Iraqi War and to investigate the serial crimes of the Bush-Cheney gang. Ellsberg echoed what we have been saying for a long time and that is “Another 9/11, while they are in power then I think you will not distinguish this country very much from the police state in Germany in the summer of 1933. We have to get them out. If we do not try to impeach them, then we accept the legitimacy of the criminal moves they have already made. Torture is clearly illegal - it’s clearly criminal to be doing this. NSA wiretaps are already illegal. You are accepting a man who thinks of himself right now as a dictator. If we do not tell him otherwise through the Congress, he and all future presidents will be the same.” Ellsberg has been calling on members of the Bush administration to do what he did and that is to release evidence. Do not wait until the bombs are falling, don’t wait until it has started.
The CIA now tells us it cannot reveal “alternative interrogation methods” because doing so would cause grave damage to national security by telling enemies how the Agency gathers intelligence. They must think we are super stupid. National Security is being used as a pretext for withholding evidence that high-level government officials in all likelihood authorized abusive techniques that amount to torture. This is disgraceful.
Phoenix’s resale market for homes finished in 2006 with 67,035 resales, down from the boom years of 2004-2005. The glut of resales is 42,000, double that of 2005. The median house price fell from $267,000 to $255,900. The national median was $222,100 for last year.