The Ignorant Investor

Bank of America reports a small rise in first-quarter earnings. The bank continues to rack up losses in consumer loans in the real economy that regular people live and work in, but it made a lot of money trading assets in the financial economy.

The financial economy is truly a kick ass place in which to work. Meanwhile, profits are getting better, but look at the state of gross revenues instead of profits to get a sense of what business conditions are like after GE came out with 1st quarter numbers:

New orders for equipment and services at GE's industrial units--which the conglomerate has been focusing on to drive future growth--fell 8% to $17.1 billion. This is below the $18 billion in new orders reported in last year's second quarter, which Chief Executive Jeff Immelt previously referred to as a possible low point for new orders amid the broad economic downturn.

In other words, demand for GE's widely used industrial products was actually down even from the craptastic first quarter of 2009, when people were talking about society exploding in a bank-induced economic Chernobyl. An eight percent decline in demand as a recession is ending doesn't fit with the "we're accelerating out of the corner" story that's been making the rounds.

Yes, corporate profits are rising. That's good for shareholders and investors, and by extension, the trading houses that feed off of them (via the sucking of blood, naturally). But it's not good for government, since fewer orders means fewer sales, lower production, and less tax revenue. What it does to employees is even worse. CEOs start cutting even more employees to maintain profit levels and "beat expectations" so they can get a bump in the value of their stock options.