As Congress and the President wrangle over who will pay for the New Austerity—guess who!—and Larry Summers seeks a guarantee that no big financial institution in any country should be allowed to fail, the Real Economy is suffering through a new surge of layoffs. The Wall Street Journal tells the story in Layoffs Deepen Gloom.
Cisco Systems Inc., Lockheed Martin Corp. and troubled bookstore chain Borders Group Inc. are among those that have recently announced hefty cuts, while recent government numbers underscore how companies have shifted toward cutting jobs.
The increase in layoffs is a key reason why the U.S. recorded an average of only 21,500 new jobs over the past two months, far below the level needed to bring down unemployment, which now stands at 9.2%.
The cuts also reflect the shifting outlook of employers, many of whom had expected the economy to gain speed as the year progressed. Instead, growth has faltered. If the pace continues to disappoint, more companies will feel pressure to pull back. "Layoffs have played a big role [in weak job growth] over the last few months," said Mike Montgomery, an economist at IHS Global Insight. "The soft patch is more layoffs and nothing else to pick up the slack."
In May, U.S. public and private employers shed 1.78 million workers, the highest level since August 2010. Among those layoffs, 1.66 million were from the private sector [graph above].Other data indicate that employers are cutting more jobs. The government's most recent comprehensive jobs report, released in early July, showed the number of people out of work for less than five weeks—a figure many economists use as a proxy for layoffs, since it tallies those recently let go—grew 15.5% from May to June to a total of 3.1 million.
Optimists and propagandists are getting crushed again. Perhaps if these fools would stop talking about the pace of "the economic recovery" and start talking about coping with a 21st century Depression, employers would not have expected the economy to gain speed as the year progressed. Then Americans could stop fooling ourselves, stop inflating their expectations about the future and actually come to grips with the tragic economic situation in the United States. But clearly that is too much to ask.
I was particularly sad about the Borders bankruptcy, although I still remember when they, along with the now-deceased Barnes & Noble, put many independent book sellers out of business. But as the race to the bottom progresses, we are grateful for any crumb we can get.
NEW YORK (CNNMoney) — Borders Group will liquidate its remaining assets after efforts to find a buyer fell through, the bookstore chain announced Monday.
The nation's second largest book seller, which filed for bankruptcy protection earlier this year, currently operates 399 stores and employs approximately 10,700 workers.
The liquidation process is expected to start as soon as Friday, pending bankruptcy court approval, Borders said in a press release.
Mike Edwards, president of Borders Group, said in a written statement that he was saddened by the development and that the decision came despite "the best efforts" of all parties.
"We were all working hard towards a different outcome, but the headwinds we have been facing for quite some time, including the rapidly changing book industry, eReader revolution, and turbulent economy, have brought us to where we are now," Edwards said.
Goldman Sachs netted only $1.09 billion for the quarter, which isn't enough to please investors, spurring the company to shed 1,000 jobs. The trading-focused bank suffered a 63 percent drop in trading fees collected from the first quarter.
Bloomberg quotes an analyst who says the bank underperformed compared to its peers and felt the need to shift into cost-slashing mode. The bloodletting will thin out the company's 35,500-strong workforce, which was up 100 jobs from the previous quarter.
With net earnings coming in at a paltry $1.09 billion in the second quarter, there was a clear and present danger that those hefty bonuses at the top of the food chain might have to be cut. It was a no-brainer to shed 1,000 jobs. Looking on the bright side, there is no need to worry if you are an overseas employee of the Vampire Squid. From Bloomberg—
Job cuts will be “broad based” and are likely to affect both junior and senior employees, he said, adding that Goldman Sachs’s plans to grow in countries such as China, India and Brazil, where the firm has been doing the most rapid hiring, won’t be affected.
This should not be a post about Goldman, but I thought you might be curious as to how their 35,500-strong workforce stacks up against that of Apple.
As of September 26, 2009, Apple Inc. has a total of 34,300 full-time regular employees and 2,500 full-time temporary and contractual employees, bringing its total employee count to 36,800. This is according to the Annual Report filed by Apple Inc. to the U.S. Securities and Exchange Commission in October 27, 2009.
There you have it, America's problem in a nutshell. The Giant Vampire Squid employs about the same number of people as Apple did in 2009. The Apple number does not include the approximately 250,000 Foxconn workers in southern China who assemble the iShit Americans are so eager to buy. Looking at it the other way, why does a Wall Street investment commercial bank need to employ 35,500 people? The thought of that many people working hard everyday to rip people off, to truly earn those big year-end bonuses, is simply terrifying.
The U.S. is headed for another (technical) recession, and we may even be in one now. That's what the surge in layoffs is telling us. But that's actually beside the point. There was never any reason to believe the American economy would grow by leaps and bounds this year. All of the bullish estimates we've seen over the past few years were based entirely on Blind Faith, or Wishful Thinking, or Delusional Optimism, or Self-Deception.
In short, it was all typical American bullshit.
Bonus Video — And as George Carlin tells us, "bullshit is the glue that binds us as a nation."