At Least 43,000 New Obamaconomy Workers Freed Up 33 comments
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Just at a quick glance of the headlines I see 43,000 future bulldozer operators ready to go with Obama's stimulus plan. [Jan 18: 87,000 Big Company Job Losses Already Announced in 2009; Deflation Starts to Hit Wages] Toss on the 5000 from Microsoft announced late last week, and let's call it an even 48,000. I'm sure I missed some other announcements because I could devote an entire blog just to job loss announcements and do 8-10 entries a day.
On the positive side, at least some of the Caterpillar (CAT) workers will already know their way around a backhoe. Not so much for the IT guy or accountant let go at Caterpillar or the software designer at Microsoft, the scientist/researcher at Pfizer (PFE) / Wyeth (WYE), or retail associate at Sprint (S), but not to worry - 2 million... err, 2.5 million... errr, 3 million.... errr, 4 million to be put to work under SuperObama's plan. These jobs better come quick, since so many states' unemployment funds are going into the red.
I'd like to be long whatever company makes those bright orange vests that the construction guys wear ... going to be a huge bull market in that area.
As an aside, 3 of the 4 companies announced today are quite excellent proxies for the 'real economy' spanning from industrial to retail. It is worthwhile to read these reports to see where the weakness is (basically everywhere not related to federal government spending); 5 months to go until the "2nd half 2009" recovery fixes the mess. Caterpillar; 20,000 gone
- Caterpillar, seeing sales for its bulldozers and other heavy equipment sinking in a worldwide economic mire, said Monday that its business was “whipsawed” during the fourth quarter and that it would eliminate 20,000 jobs in the face of a “very tough” 2009.
- The Peoria, Ill.-based company said the job reductions would affect every line of business and every geographical area where it has operations.
- The company said 2009 would be one of its weakest years since World War II.
Sprint: 8,000 gone
- Sprint Nextel Corp. is eliminating about 8,000 positions in the first quarter as it seeks to cut annual costs by $1.2 billion. The nation's third-largest wireless provider said Monday it will complete the layoffs, which comprise about 14 percent of its 56,000 employees, largely by March 31.
- The company said it is also suspending its 401(k) match for the year, extending a freeze on salary increases and is suspending a tuition reimbursement program.
- The company's announcement comes a month after AT&T Inc. announced it was cutting its work force by 4 percent, or 12,000 jobs, to deal with the effects of the recession and the continued erosion of its traditional wireline business.
Home Depot: 7,000 gone
- Home Depot Inc. plans to eliminate 7,000 jobs while closing four dozen stores under its smaller home improvement brands as the recession continues to batter the nation's housing market. Its shares climbed more than 5 percent in morning trading.
- Those stores will close in the next two months.
Pfizer 8,000 gone
- As Pfizer confirmed Monday morning its plans to purchase Madison, N.J.-based Wyeth in an $86 billion cash-and-stock deal, it also announced a cost-cutting initiative that will include the elimination of more than 8,000 jobs.
- Pfizer said it is cutting 10 percent of its worldwide workforce of 81,900, slashing its dividend, and reducing the number of manufacturing sites.
Meanwhile in Europe where there is no SuperObama to save them from market forces (USA! USA! USA) a quick glance shows about 16,500 today
- The banking and insurance group ING said it would cut 7,000 jobs; the electronics company Philips, 6,000; and the steelmaker Corus, 3,500 worldwide.
For those of you newer to the stock market, one of the fascinating (sickening) situations is historically when companies make mass layoffs the stock increases quite substantially (cost savings baby!) Great for the "Wall Street economy", not so great for the "Main Street economy". Remember, these are 2 parallel universes that only seem to intersect when Main Street needs to bail out Wall Street.
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This article has 33 comments:
Not all of the new jobs are in construction, many will be in IT and other areas. At least the government is trying to do something as opposed to just throwing money at the banks so they can get fatter or buy some more 1.2 million dollar office redesigns. There is going to be a lot of pain ahead.
This statement is the problem. Just for the record I am against all bailouts. The government cannot create jobs or wealth. The government has no resources. It has to steal them from us via taxes, borrow them which we pay interest, or create inflation. Where in the history of the world did government create prosperity?
Where in the history
> of the world did government create prosperity?
The government can help wealth creation by funding public goods and taking of infrastructure, education level etc
However, after a certain point the effect is marginal, and I'd think that point has already been reached and further spending is of little use.
The most common fallacy today's Keynesians fall under is that gov. spending increases wealth, well it temporarily may boost GDP but at the flipside it also boosts debt, which if taken into account would negate the effect on GDP.
Obama's stimulus programme is one giant hoax. We all can too spend hundreds of billions and feel good about putting people to work, the difference is that we understand that all this is offset by higher debt-levels and that the money spent is money spent, not invested.
Hmmm, anyone recall what supposedly got us out of the Great Depression? WWII if I recall correctly. Now maybe I'm living in fairy land but most wars are funded 100% by government taxes (and issuance of debt that eventually has to be paid back by taxes.)
That's what I really love about pure capitalists, they says that the market always takes care of itself. Then someone asks well what about the Great Depression, it took the governments New Deal to end the Great Depression. Pure capitalist then respond with no the New Deal did not help end the Great Depression, it was WWII, like WWII was some market driven force. Well, if you research WWII, the level of control that the government had over the economy in WWII (rations, taxes, the industry of the entire nation converted to make war machines, a draft of all able bodied young male adults), makes the level of government control of the economy by the New Deal look like childs play.
Now, I don't have a crystal ball, so I can say if our problems are as bad as the Great Depression, but many are mentioning parallels between the current crisis and the one that started the Great Depression. Therefore, if we are in a crisis like the Great Depression, based on historical example people should be talking about the level of government intervention (New Deal or WWII style) that is needed not whether the market can fix it's self or government intervention is needed.
Now maybe there is a counter example to the Great Depression farther back in history (that I've not studied), but based on the current history of free market capitalism, the market works very well 95-99% of the time, but when it fails it fails spectacularly and can only be rescued by the government.
Of course, we can try to let the market run it's course, but they did the same in 1929 and three years later when Rosevelt was elected in 1932 things were a lot worse! Therefore, to the pure capitalists I have to ask, are you willing to have at least 2 more years of continually deepening recession/depression in hopes that the market can fix it's self this time, or go with the only proven fix (government intervention.)
On Jan 26 06:02 PM Yamu wrote:
> On Jan 26 05:48 PM John Polomny wrote:
> Where in the history
The TVA was a highly successful government project created by the Roosevelt administration in 1933 that provided tens of thousands of jobs while building highly useful business related infrastructure. The TVA built a large number of hydropower construction projects which of course were built by public construction companies. That equals earnings where their were none, and jobs to carry people through so they could feed their families until the economy recovered.
The TVA project controlled the flood waters of the Tennessee River and improved navigation (business stimulus). It provided cheep access to clean water at an affordable price which allowed the region to become an agricultural power house… Lots of business stimulus and jobs… The TVA became a major recreation provider (business stimulus) To this date, TVA electricity is cheaper, and as a consequence, businesses that get their power from the TVA pay less (yet more business stimulus). The presence of cheep and reliable electric power resulted in the creation of a lot of electric power intensive businesses being created in that region. A region that prior to the TVA was mostly a wasteland. The TVA brought electricity to millions of people at an affordable price. It currently serves 8.5 million residents of the Tennessee Valley.
So in answer to the question "Where in the history of the world did government create prosperity?" I offer the Tennessee Valley. In answer to the statement that "government cannot create jobs or wealth", I offer the TVA.
> I offer the TVA.
jim.com/econ/chap04p2....
;)
On Jan 26 07:15 PM EMS wrote:
> Money spent on infrastructure is an investment.
Whilst that's technically true, I ideally don't want to see any gov. spending labeled 'investment' as it just increases the risk that spendings which are anything but investments will be considered 'investments' and thus lead to higher gov. spending.
Just brings the unnecessary risk of pork-barrel meddling into it and makes it harder get to the true bottom lime.
Therefore, Government run economies nor the free-market economies create wealth, they only dictate what is produced (the manifestation of wealth) and how the wealth is distributed. They can however influence the amount of wealth created by their ability to influence the efficiency of production and their ability to determine what is produced. Basically all economies manage wealth creation.
This is important to note because in all economies wealth is created (otherwise it wouldn't be an economy.) It is the amount of wealth created that is determined by the government or free-market manages the money.
And the funny thing is if you look through history there are case where most would agree that both the free-market (creation of monopolies) and government (USSR's communist government) mis-managed the economy. So at least in my eyes it's all about finding the right mix to maximize wealth creation.
I just want to make a couple of comments:
EMS: "Money spent on infrastructure is an investment." It depends... Why build highways? When oil shoots back up as id did this past summer the governments were not getting enough in taxes to maintain the highway system we have now. QUESTION: Is this the future? OR... Do we need to build a better mass transit system for both urban and rural areas. It seems to me that working on our current system is an answer for the 1950's, not today.
I really feel that they are going to be way off on the spread of unemployment -- it can be exponential since our economy is consumer-spending dependent. If realistically reported, unemployment could reach 20-30 percent by the end of this year. I know that sounds crazy, but I think it is possible.
Then... The unemployment reduces revenues and on and on it goes... Next we'll need to bailout every state, county, city and town in the United States. How is this going to work out?
I've always enjoyed you items on SA, but the "Obamaconomy" reference was a bit caustic. This problem, as I see it, has spanned both Democratic and Republican administrations and is the result of sweeping things under the rug so long that it finally bit us where "the sun don't shine."
Personally, I didn't vote for Obama, but I sure wish him all the luck in the world. He's going to need it.
that is too funny!
I think you forgot to add "Hope is here" and "the messaih is here"
On Jan 26 06:00 PM Trader Mark wrote:
> John, we are about to make history. We can do it. We are a special
> people. Just believe. Change is here.
On Jan 26 07:36 PM Bob Lunn wrote:
> I could answer sarcasm with sarcasm, but instead I recommend looking
> up three little letters on the web… TVA.
>
> The TVA was a highly successful government project created by the
> Roosevelt administration in 1933 that provided tens of thousands
> of jobs while building highly useful business related infrastructure.
> The TVA built a large number of hydropower construction projects
> which of course were built by public construction companies. That
> equals earnings where their were none, and jobs to carry people through
> so they could feed their families until the economy recovered.<br/>
>
> The TVA project controlled the flood waters of the Tennessee River
> and improved navigation (business stimulus). It provided cheep access
> to clean water at an affordable price which allowed the region to
> become an agricultural power house… Lots of business stimulus and
> jobs… The TVA became a major recreation provider (business stimulus)
> To this date, TVA electricity is cheaper, and as a consequence, businesses
> that get their power from the TVA pay less (yet more business stimulus).
> The presence of cheep and reliable electric power resulted in the
> creation of a lot of electric power intensive businesses being created
> in that region. A region that prior to the TVA was mostly a wasteland.
> The TVA brought electricity to millions of people at an affordable
> price. It currently serves 8.5 million residents of the Tennessee
> Valley.
>
> So in answer to the question "Where in the history of the world did
> government create prosperity?" I offer the Tennessee Valley. In answer
> to the statement that "government cannot create jobs or wealth",
> I offer the TVA.
"anyone recall what supposedly got us out of the Great Depression? WWII if I recall correctly."
There are very many misconceptions about the Great Depression. However, the quote above is perfectly correct.
Neither Hoover nor FDR believed in a free-market economy. Hoover started "a New Deal" and FDR accelerated it.
We can argue about many things but the fact is clear: the WWII ended the Great Depression in the USA. [Note that Nazi got Germany out of their depression in just 24 months.] Prior to the war, in spite of all "Deals", America was in a depression.
Why? Because
- The world was at war
- America had an enormous industrial and agricultural capabilities to supply the entire "Anti-Axis coalition" with everything from food to war material and supplies
- After the WWII was over, the entire world was terribly devastated and the USA took full advantage of it
- Everybody needed the US$ to buy American goods and services. The US$ became a world reserve-currency.
Now, back to the present world situation:
- American industrial might was terribly compromised during the last 20 years
- America became "a post-industrial society" [by B. Clinton and his advisers definition. The same Clinton people who presently advise, develop, and implement Obama economic vision]
- Until recently, America's "consumer society" economy has survived on
-- Huge influx of foreign goods
-- Huge international borrowing
-- Printing huge amount of US$-reserve currency "at will"
The above US economy drivers are in a great jeopardy since everybody understands that America will never be able to pay back it debts. This is the fact.
Obama thinks government spending, without fixing the under lining American problems, will get America out of the present disaster.
Yes, government spending can get America out of the present recession/depression like Hitler and Stalin have done it in 1930s and FDR during the WWII.
But, does America like to try Hitler's fascism or Stalin's socialism or the WWIII? This is the question!
"The Soviets also improved peoples lives relative to what they had under the czar yet I do not think anyone would argue for that economic system."
The above it totally untrue. It was the Soviet propaganda:
- People did not starve under the last czar.
- Following the 1917 revolution, Bolsheviks gave Russia the civil war (15 millions killed and 7 millions starved)
- In 1929-1931, 23 millions starve deliberately by Soviets. The purpose was to break peasants resistance to collective farms.
- In USSR, peasants and farm workers did not have passports. Consequently, they were literally slaves.
- 70% of Soviet budget went to military & industrial complex. This why Stalin was the major initiator of the WWII, Korean war, and was planning the WWIII. 37 millions Soviet people paid with their lives for the Stalin WWII adventure...
- Up to the last day of USSR, good many people went hungry
I can continue but you got the point.
The TVA , while generally considered a success, was one of many programs of that era, most of which created nothing but "make-work" jobs. One succesful program out of many--that's not prosperity.
Government does not create prosperity except by taking from those who are successful and giving it to those who are not, much like the bailouts going on now. How's that working out ?
Government, which got us into this by backing mortgages for anyone who could sign their name, can also spend a trillion dollars (taking it from others, or just printing it) and create a "stimulus package", larded up with wasteful spending in order to get themselves re-elected. The last stimulus package was about as successful as this next one will be at leading us back to prosperity.
On Jan 26 07:36 PM Bob Lunn wrote:
> I could answer sarcasm with sarcasm, but instead I recommend looking
> up three little letters on the web… TVA.
>
> The TVA was a highly successful government project created by the
> Roosevelt administration in 1933 that provided tens of thousands
> of jobs while building highly useful business related infrastructure.
> The TVA built a large number of hydropower construction projects
> which of course were built by public construction companies. That
> equals earnings where their were none, and jobs to carry people through
> so they could feed their families until the economy recovered.<br/>
>
> The TVA project controlled the flood waters of the Tennessee River
> and improved navigation (business stimulus). It provided cheep access
> to clean water at an affordable price which allowed the region to
> become an agricultural power house… Lots of business stimulus and
> jobs… The TVA became a major recreation provider (business stimulus)
> To this date, TVA electricity is cheaper, and as a consequence, businesses
> that get their power from the TVA pay less (yet more business stimulus).
> The presence of cheep and reliable electric power resulted in the
> creation of a lot of electric power intensive businesses being created
> in that region. A region that prior to the TVA was mostly a wasteland.
> The TVA brought electricity to millions of people at an affordable
> price. It currently serves 8.5 million residents of the Tennessee
> Valley.
>
> So in answer to the question "Where in the history of the world did
> government create prosperity?" I offer the Tennessee Valley. In answer
> to the statement that "government cannot create jobs or wealth",
> I offer the TVA.
Crappy title if you ask me. Better title would be "Reagan Republican Revolution Comes Home to Roost"
Just to be clear, I have a capacity to believe. Unfortunately efficient Government is not one of those things that I could ever believe in.
I don't believe that throwing good money after bad makes sense. I don't believe that bad businesses need to be rescued. I don't believe that those of us who lived within our means should be forced to pay off the debts of others... But then who cares what I believe, the Government will do what Governments always do - cater to the least common denominator!
You can hope that Obama will somehow make things better, but you can also be a realist!
There is something fundamental which each share, that neither can do without, because we are talking about the literal essence of each. Do you know what I am referring to?
Human beings. Human beings are underneath both, and run the Gov and private enterprise. And human beings can be selfish, short sighted, ignorant, lazy, prejudiced, blind, and intelligent, aware, etc., and whatever else we can say about ourselves. There's a big difference between George Bush and Abraham Lincoln. Would we not expect their presidencies to reflect this?
Gov and PE have their value for any society. The more intelligent and concerned their leaders are, the better they will be run and the better off their constituents will be.
If Gov is run by people interested more in the society as a whole rather than moneyed special interest groups, won't that be a better deal for all concerned? And if PE is run by people who have more in mind than short term profits and bonuses for higher ups, isn't that also a better deal for all concerned?
The wrong people in charge of any institution can destroy it and severely hurt other institutions it is connected with, Gov or PE.
It all boils down to the people running things, their sense of ethics, and the spirit of the motivations that guide their behavior.
Power corrupts, and absolute power corrupts absolutely. We see this in both Gov and PE, and we see the opposite, too.
The fact is, we have both of these institutions and we can get rid of neither. They both will vie for power and as such, must be controlled by us, as history has shown us time and time again. We must insist that both Gov and PE be limited power wise and answer to us for their behavior. We are in charge of them and simply have to exercise our power when necessary to control them. We are the "government" and we are the "private sector." Not realizing this has allowed these institutions to wreck havoc on our economy and our lives. But we are waking up and the slow process of bringing them under our control is again beginning, as they both have gotten way out of hand in recent decades.
This will not be easy or happen quickly, but don't forget who you are.
We will take the long view and we will prevail.
On Jan 26 06:41 PM ScottIvan wrote:
>
> Hmmm, anyone recall what supposedly got us out of the Great Depression?
> WWII if I recall correctly. Now maybe I'm living in fairy land but
> most wars are funded 100% by government taxes (and issuance of debt
> that eventually has to be paid back by taxes.)
1. Economics is not just about producing goods and services, it's about distributing them. Any economy that doesn't distribute goods and services in a manner to keep the majority relatively happy about its quantity and fairness will not survive long. It will be overthrown by either the gun or the ballot.
2. The goal of an economy is generally to produce more, and distribute wider. Perhaps not the Amish, but we won't depend on them to cure cancer or respond to the killer asteroid, will we?
Given these criteria, the TVA was successful. The Interstate Highway System was successful (though Henry Hazlett may say it overshadowed the system of boats and dirigables that may have emerged.) I personally believe the war on terror will ultimately be successful, as it should make countries harboring terrorists think twice about that.
But I also recognize that a project worth doing is worth doing with private dollars, if the risk is reasonably low enough. The government's ability to award itself a monopoly and back itself with the collective earning power of its citizens is a great risk mitigator. For private companies to approach this low level of risk they need assurance that their monopoly- or at least target market segment- won't be taken from them, and that their profits won't be stolen by massive increases in debt service requirements as happened between 2004 and 2006, higher taxes, or higher input costs, such as minimum wages. The Fed needs to stop trying to create artificially high interest rates.
If enough money is created, and government promises not to extract profits from innovators, more projects like the TVA- perhaps the Nevada Solar Authority- can be financed with more private money.
the ideals were cutomer service and customer service.
After the founder's departure things went down hil. Under Nardelli's stint he shreded the customeer service with retired zombies and left for shelter some place.
I foresee a day Home Depot will be like GM & Chyrsler begging for govt funds.
I think the term is misleading. The whole nation is engaged in the biggest POOPER-SCOOPER chain-gang, cleaning up after Bush and the irresponsible GOP congress he milked.
What you are witnessing is the POST-BUSH POOPER-SCOOPER
ECONOMY.
It will take years, if we ever recover. Just remember the source accurately.
I think nova hit it closest above - WWII got us out of the Depression because we had productive capability and capital from all the world flooded in to the US to pay for weaponry.
We've spend the next 60 years squandaring (sp?) it, accelerating in the last 30 (with a small deviation during Clinton years)
I don't mind "investments" - but a lot of what we will do in this stimulus will be political/lobbyist favors. As always. For all of Obama's good intentions the structure of our politics is at the heart of many problems. A country run by attorneys (no offense to attorneys)
I liked You're Kidding's thoughts as well - we need people in power who are thinking about the system; not how they can serve for a few years and hit it rich once they become a lobbyist and make 'the real money'. The term representative has completely lost its meaning.
"While nothing final yet it looks to me the Obama stimulus bill will end up to be all talk and no action.
We were told for months and months about how it would build our infrastructure and as now that component will be less than 10% of the whole package.
The tax rebate will comprise a decent 40% portion while social spending will be the major spending item.
Unemployment benefits, health insurance, family planning and aid to the states are the major costs.
All and all this plan won't stimulate anything unless you get your condoms from the government...
Some day we'll find out the states are actually in worse shape than the banks and this plan lets the states continue their bad ways."