Interesting Economist article, found here, about the decoupling of corporate success and national economic conditions. It relates to several themes which we've discussed including the growing meaninglessness of the nation, as an economic unit, as well the dispersion of outcomes among actors within an economy (i.e. top-line numbers like GDP or the S&P won't necessarily reflect what's going on underneath):
Feb 23rd 2006
From The Economist print edition
The health of companies and the wealth of economies no longer go together
Ronald Grant
“NOTHING contributes so much to the prosperity and happiness of a country as high profits,” said David Ricardo, a British economist, in the early 19th century. Today, however, corporate profits are booming in economies, such as Germany's, which have been stagnating. And virtually everywhere, even as profits surge, workers' real incomes have been flat or even falling. In other words, the old relationship between corporate and national prosperity has broken down.
This observation has two sides to it. First, as Stephen King and Janet Henry, of the HSBC bank, point out, companies are no longer tied to the economic conditions and policies of the countries in which they are listed. Firms in Europe are delivering handsome profits that are more in line with the performance of the robust global economy than with that of their sclerotic homelands. In the past two years, the earnings per share of big listed companies have climbed by over 100% in Germany, 50% in France, 70% in Japan and 35% in America. No wonder Europe's and Japan's stockmarkets have outpaced those in America, despite the latter's faster GDP growth.
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