Yves,
Corporate profits as a % of GDP remain at a very elevated level. During the early 80s recession, they fell to 6% vs. 11% today. trichet is saying that wage push can not be allowed to occur, hence the raise bias. In essence, lets jump to the early eighties and have a good fleecing. The Fed on the other hand seems anchored to the staglationary 70s, perhaps with good reason being afraid of the dire consequences of what a repeat of the early 80s would look like given the leverage in the system (Argentina being the extreme example). Neverthless, look at how corproate profits performed in the late 70s, they actually increased share (stocks were flattish). However, the pain was just delyaed uintil the early eighties when you had a peak to trough move of 400 bps. Unless we have entered a new paradigm and corproations are simply sustainable more efficient. Considering that wages are really the sole remaining turley variable cost, I infer from the chart that either unemployment is going to begin skyrocketing or profits are wildly overstated. Either way not good news.

I think we’re starting to see pushback against the trade deals that permit all this competition from abroad. The US might start going the way of Japan and Germany which have a more protectionist stance than the US.