Blog Posts by Henry Blodget

One of the big problems in the U.S. economy right now is that big corporations are generating record profits not by growing revenues but by cutting costs.

"Costs," as everyone who works for a big corporation knows, are a synonym for employees, employee wages, employee perks, capital investment, and research and development.

As a result, we have reached a point where corporate profit margins are at all-time highs and corporate wages are at all-time lows as a percent of the economy. (See charts here.)

That's not sustainable, says economist Gary Shilling of A. Gary Shilling & Co.

The employees whose collective wages are stagnant or dropping account for most of the spending that drives the economy. So if employees aren't getting paid well, and corporations aren't spending, the economy can't grow quickly.

Shilling observes that, from a philosophical perspective, what is happening is that "capital" (the owners of corporations) are dominating "labor" (the rank and file employees who make and

The United States government has had two years to head off automatic "sequester" spending cuts that most people agreed were unnecessary and almost everyone hated.

But these days, the government doesn't do anything unless public anger hits such a state of fervor that Congress -- people actually begin to fear for their jobs.

Most of the sequester cuts have so far gone unnoticed, except insofar as they have contributed to the latest "spring swoon" in the economy.

But one of the cuts--a 10% hack to the budget of the Federal Aviation Administration (FAA) --has already infuriated almost everyone.

This week's flight delays due to the "furloughing" of FAA air traffic controllers, in other words, has done what two years of lead time has not:

Congress was actually forced do something.

Today the House of Representatives passed the Senate plan designed to allow the FAA to recall the air-traffic controllers by a 361-41 vote. White House spokesman Jay Carney said President Obama plans to sign the

For the past five years, a fierce war of words and policies has been fought in America and other economically challenged countries around the world.

On one side were economists and politicians who wanted to increase government spending to offset weakness in the private sector. This "stimulus" spending, economists like Paul Krugman argued, would help reduce unemployment and prop up economic growth until the private sector healed itself and began to spend again.

On the other side were economists and politicians who wanted to cut spending to reduce deficits and "restore confidence." Government stimulus, these folks argued, would only increase debt loads, which were already alarmingly high. If governments did not cut spending, countries would soon cross a deadly debt-to-GDP threshold, after which growth would be permanently impaired. The countries would also be beset by hyper-inflation, as bond investors suddenly freaked out and demanded higher interest rates. Once government spending was

Over the past six months, Wall Street has gone from thinking that Apple can do no wrong to thinking that there's no way Apple will ever again do anything right.  And, that said, Tim Cook's role as CEO has been brought into question.

As a result, the stock has collapsed from a high of $702 to a recent low of $390 last week.

And Wall Street is now bracing for what most people expect will be a terrible quarterly earnings report and outlook on Tuesday.

Apple's results in the December quarter disappointed many analysts, and the company's outlook for the first quarter was also meh. But now, after a steady flow of news reports suggesting that first-quarter sales have not gone well, as well as Apple's failure to release any new products so far this year, many on Wall Street think that Apple will miss even its low guidance for the quarter. Worse, many expect that Apple will provide an outlook for the June quarter that is far below what Wall Street is currently expecting.

In other words,

The U.S. economy may be hitting another "spring swoon," the same way it has for the past several years.

A slowdown from the economy's already slow rate of growth would not be surprising given the impact of the "sequester" and tax increases that went into effect earlier this year. These moves trimmed government spending across the board and increased taxes on most Americans

Not surprisingly, the sluggish economy has led to increased pessimism among American consumers. According to a new Associated Press-GfK poll, only one in four Americans expects their financial situation to improve over the next year. And only 46% of Americans now approve of President Barack Obama's handling of the economy.

The government certainly bears some responsibility for the state of the economy. The sequester, especially, was widely viewed as bad policy, and many economists thought it was not only unnecessary but would hurt the economy.

But much of the blame for our weak economy also lies with the private

It's the oldest market pattern in the book.

A long-ignored asset finally gets hot, and its price rises for a while. The rising price of the asset attracts new investors, which drives prices even higher. And as the price rises, investors develop compelling explanations for why that's happening, only some of which may have a solid basis in fact.

The price continues to rise, more investors arrive, and their buying drives prices even higher. Soon, the stories that explained the early price increases get repeated so often that they start to be regarded as fact. The price rises even further. More investors hear the stories and believe them, and hurry to get in on the action. And so on.

At some point, however, for any of a number of reasons the spell breaks. The "story" hasn't changed, but demand for the asset no longer outstrips supply, and the price drops.

At first, investors brush off the price drop as a temporary fluctuation--a "buying opportunity." Then, when the price drops even

In a surprise move, satellite-TV operator DISH Network (DISH) has made a $25.5 billion bid for Sprint, the U.S.'s third-largest wireless operator.

Sprint (S) is already in the approval process to be sell a majority stake to Japanese telecommunications firm Softbank.

DISH's bid is higher than Softbank's and may therefore trigger a bidding war between the two suitors.

DISH has offered about $7 a share for Sprint, with a mix of cash ($4.74 per share) and $2.26-worth of DISH stock. DISH's stock fell about 5% on the news, and the total value of the offer will continue to fluctuate based on DISH's stock price. DISH estimated that the initial offer was worth about 13% more than Softbank's offer.

The ultimate fate of Sprint, and the price of the winning deal, won't likely be known for months.

But DISH's bid represents the next big move in a tectonic shift that is revolutionizing the media and communications business.

Right now, the communications and media industries are dominated by 6 big

President Obama published his proposed budget this week.

The budget uses a combination of increased taxes and spending reductions to trim the deficit by about $1.8 trillion over the next 10 years.

The budget was greeted by howls of outrage from both sides of the aisle because it contained some provisions that mortified extreme conservatives and infuriated extreme liberals.

Related: Obama’s Budget Is a Ridiculous Charade: Doug Casey

Liberals, for example, were outraged by Obama's proposal to tie Social Security benefit increases to the so-called "chained CPI." This inflation measure will produce lower annual benefit increases in benefits than the measure that is currently used. So liberals are howling.

Conservatives, meanwhile, are annoyed about the budget's proposed tax increases--especially the tax increases that fall primarily on richer Americans.

Related: Obama Finally Unites Washington…In Opposition to His Budget: Yahoo's Knox

The most notable of these proposed tax increases is