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As protesters find new ways to “Occupy Wall Street”, major financial firms have been busy handing out pink slips this week.
It’s the second week of what’s expected to be a brutal season for job cuts as big banks have already announced that there will roughly 75,000 fewer people working at their firms.
Mid-to-late November is typically the season for layoffs, as banks want to avoid making cuts during the holidays in December. By doing it before year-end, these employees aren’t eligible for bonuses.
“Layoffs have been expected, but what’s a little different this time is that firms are being more open about it and in some cases, actually inflating their numbers,” said Alan Johnson, managing director at Johnson Associates, a compensation consulting firm. “Firms are trying to show how prudent they are.”
Meanwhile, analysts think the worst may be over unless the economy does dip into another recession.
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SIDEBAR:
People (i.e., the “99%”) are right to outraged. Now, that “99%” includes people who are “solidly” upper middle-class (households making $100K+), but those households account for the 95.1-99th percentiles (think “professionals” like lawyers, doctors, judges, and yes, financial planners), but even those people aren’t immune to the severe downturn in the economy and have gotten into just as much trouble as we “95%” through bad investments and mortgages they cant afford (which you can argue they shouldn’t have taken out, but, the lenders were practically giving loans away….). The fact is, that “Top 1%” owns 40 percent of the wealth in this country, most of it in the form of non-liquid assets such as stocks, bonds, and yes, those infamous mortgages and “credit default swaps” that tanked the economy in the first place. So, not to go all radical and “power to the people,” but, Shab, you’re absolutely right that the rich 1% really are the people who got bailed out and who are now sitting pretty while working people continue to lose their jobs and go without income. The top 1% are the real “power elite” in this country, a combination of wealthy entrepreneurs (think Bill Gates) and investment bankers (think Warren Buffet, George Soros, etc.), as well as the people they hire to run their companies at the top–the CEOs who receive the “golden” parachute multimillion dollar bonuses. I’m not saying “Occupy Wallstreet” doesn’t have it’s problems (a lack of clear, coherent message and goals being the most significant), but what else are people supposed to do when the wealthy who wield immense power in the political system are gaming them, and the politicians they pay for are ignoring them? To me, this is what democracy is about. If the cities across the country don’t like it, they should tell their state governments and their congressional delegations to get off their @$$3$ and do something about it instead of continuing to make sure the so-called “job creators” (who haven’t created very many jobs the last 3+ years) are taken care of with budget-busting tax breaks. So, by all means, go out and raise hell. For whatever problems are associated with the camps (the assaults and drug use and so forth), the fact is they’re doing what people in a free society should do–telling their government and the ruling class they’re pissed and they’ve had enough. Traffic backed up and ruined your evening commute to your nice home in the burbs? Sorry. We don’t have jobs, so we’ve got nothing better to do….
Bangalore – The CME Group raised margins for trading Comex 100 Gold Futures by 22.2 percent on Wednesday after economic worries in the US and Europe sent investors scrambling for refuge in bullion and pushed volatile prices to records.
The move, anticipated in the market, brought gold futures down to USD 1,800 an ounce from a record high of USD 1,817.6 hit around the time of the margin announcement. The contract has since rebounded to trade at USD 1,807.7 by 0026 GMT (8:26 p.m. EDT).
Spot gold prices also hit a fresh record, touching USD 1,813.79 by 2237 GMT.
The sharp rally in gold futures, which have risen more than 9.5 percent in the past four sessions, had prompted market talk of a margin rise.
A series of CME margin rises on silver in May provoked a massive sell-off in that metal and gave momentum to a slide across commodities markets.
The CME, the world’s largest commodity exchange, raised maintenance margins on gold futures to USD 5,500 per contract from USD 4,500 a contract for speculators, effective from the close of business on Thursday.
“Historically when margins are raised significantly it tends to cause a bit of sell-off,” said Darren Heathcote, head of trading at Investec Australia.
“We’ve seen some of it now, but it’s difficult to see a great deal of selling, because we are in very, very volatile and uncertain times when markets are moving very violently. Gold has proven too much an attraction as an alternative investment and the margins may not have as much influence.”
The margin hike came after the US Federal Reserve’s statement to keep interest rates low failed to calm investors reeling from the news of a debt downgrade of the United States.
A sharp fall in French bank stocks on Wednesday added to concern that the euro zone sovereign debt crisis could spread further.
Investors flocking to gold to preserve the value of capital as other markets plummet have fueled the biggest rally in the precious metal since 2008.
The Shanghai Gold Exchange will raise trading margins on three of its gold forward contracts to 11 percent from 10 percent starting August 12.
When the Bell telephone system – aka AT&T – was broken up in 1984, consumers were told this would be a good thing because it would increase competition.
When the U.S. telecommunications market was deregulated in 1996, consumers were told this would be a good thing because it would increase competition.
And now AT&T wireless is planning to merge with T-Mobile, the latest in a string of acquisitions that effectively restores Ma Bell to her former girth yet allows the company to operate in a looser regulatory environment.
Consumers might wonder if they’ve been played.
“There’s no way this latest merger can be good for consumers,” said Sally Greenberg, executive director of the National Consumers League. “This places a lot of power in the hands of only a few companies.”
That’s not how AT&T’s chief executive, Randall Stephenson, sees it. He said the $39-billion deal with T-Mobile will create “significant customer, shareowner and public benefits” that will “better meet our customers’ current demands.”
The reality, however, is that the most competitive segment of the telecom market – wireless service – will now have one fewer player, and we are a big step closer to a marketplace controlled by only two companies, AT&T and Verizon.
Not knowing the future, we look to the past. What is this thing called the Great Recession and what can we expect from a recovery? Unfortunately, as much as economists and others try to find comparisons, they’re ultimately unsatisfying. As Mark Twain would put it, history doesn’t repeat itself but it rhymes. Let’s look at a few.
Recent history: The 2001 downturn shared a burst bubble, in that case the dot-com, as well as corporate criminality with the likes of Enron. But it was short-lived and saw nowhere near the damage of the Great Recession. It did see a “jobless” recovery, however — an ominous portent. Only 1 million net new jobs would be created in the expansion that followed. And the big money moved out of dot-coms and into real estate, beginning the mania that would help being on our current calamity.
The S&L downturn: Like the Great Recession, this 1991 event grew out of a financial collapse and one where regulators were forced to look the other way by politicians and ideology. It was also the first sign of the increasing financialization of the economy that had begun in the 1980s. But it’s small potatoes compared with today’s mess and was contained to a small portion of the economy. It was followed by the most robust rebound of the post-World War II era. Today’s globalization and China’s entry as a major economic competitor were years away.
The 1980-82 recessions. These are often compared in severity with the Great Recession, but the differences are important. They began with high interest rates and high inflation and ended with the worst post-World War II downturn to date as Paul Volcker’s Federal Reserve vanquished inflation. It was a Fed-induced recession, rather than the result of a financial or housing bubble. The American industrial base was largely intact and the middle class still strong. The U.S. trade balance was healthy. None of this is the case in the Great Recession. Most significantly, our latest downturn saw far faster job losses and has yet to even begin to see the rebound in employment chalked up after the end of the ’82 recession.
The Great Depression. This is the most similar modern event we have to the Great Recession. A decade of wild speculation, laissez-faire policies and rising income inequality ended in the near collapse of the world economic system. Still, the contrasts are critical. America was much poorer then, more rural, with a small federal government. The financial system was more decentralized. Policymakers were confounded by the crash and tried to fight it by tightening credit and focusing on balancing the budget. This helped turn a severe recession into a depression.
Two other interesting differences: In 1929, when the crash hit, America was the world’s largest creditor nation. Through the Depression, it had a large, state-of-the-art productive base and skilled workers waiting for a rebound. That began in the mid-1930s — until FDR, an instinctive budget hawk who didn’t like John Maynard Keynes (who returned the sentiment) cut back the New Deal in 1937, causing a severe recession. Full recovery came with the ramp-up to World War II. Even so, the stock market didn’t recover its old highs until the 1950s and Depression survivors were always suspicious of it.
Finally, in the Depression, this mysterious thing called “the market,” meaning the collection of powerful bankers, investors and the shadow banking industry, didn’t hold the fate of nations hostage. That era’s version of this group had been swept away by the crash. Not so this time.
One common denominator is unemployment. Both the Great Depression and Great Recession mowed down jobs at levels not seen in other downturns of the past century. Depression joblessness was much worse, perhaps 25 percent in 1932. Contrary to the dreams of revisionists, the rate did improve through the New Deal. But it never fully recovered until the early 1940s.
Again, we’re a more affluent nation now and have a tattered but real social safety net. But it looks as if we face years of unemployment for millions of Americans. And that fact in the Depression led to political instability, particularly before 1932. Fascism, socialism and communism were all considered more viable than failed capitalism. To the real left’s eternal dismay, Franklin Roosevelt saved capitalism, even as he battled the “economic royalists.”
thank you Jon
Heads-up folks just a predicition but you have been forwarn. I’ve been telling folks since January by the end of Summer or September we will experience another crash. This time it could involve “Bonds”, and Commerical Real estate.
Dates to watch for – June 26 and August 15 around then or a few days later.
Mutal funds might be shakey, and CD’s go laddering.
“A change in leadership brings uncertainty because you don’t know exactly what you’re getting into,” said Ryan Detrick, senior technical strategist at Schaeffer’s Investment Research.
“It won’t be a be-all end-all sell signal, but new leadership in France could cause investor jitters that reverberate throughout global financial markets,” said Detrick.
Hollande campaigned on the need to focus more on economic growth to reduce public debt, as opposed to austerity, which has been the main policy prescription for the three year-old European debt crisis.
While it remains to be seen to what extent Hollande will push his growth agenda, his countering approach causes concerns about how he might work with German Chancellor Angela Merkel, the key proponent of austerity.
Even so, many economists and market strategists say Hollande is likely to pursue policies that maintain fiscal discipline and will also make efforts to keep good relations with Germany.
While there could be some “initial friction with Merkel,” Hollande will eventually form his own bond with the German leader, said Antonio Barroso, an analyst at political research firm Eurasia Group.
“Hollande is very pragmatic.” said Barroso. “He knows that Germany is his most important partner. They will have to agree on a solution for the crisis.”