The General Motors (GM) did and had to do separations and layoffs to survive in this economic crisis.
I write this article for some people from Europe or from a different culture that envy us the Americans for more opportunities and more material advantages.
The truth is in the capitalist world most companies work for profit and in the due process the capital and resources are reassigned continuously.
The destruction and corporate layoffs are part of reconstruction. I learned that from school and experience and now this is part of my business thinking.
I wrote this article about layoffs for me too. I have my ego problem being separated the American style."I don't care if it's a white cat or a black cat. It's a good cat so long as it catches mice."
So many ideas are coming from all directions including Great Britain with Tony Blair's "Centrist way" or even The United States democratic social programs to name a few.
Before going even further I suggest to take a deep breath and start reading my pages about "What is Socialism?" or better "What is the Communism?", "Romania at Historic Crossroads", or "The Escape - Confession of a Refugee"
The Federal Reserve considers transparency about the goals, conduct, and stance of monetary policy to be fundamental to the effectiveness of monetary policy. The Federal Reserve Act sets forth the goals of monetary policy, specifically "to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates." Financial stability is an important prerequisite for achieving those goals.
In January 2009 during an interview on C-SPAN, Rep. Paul Kanjorski (D-PA) paraphrased information provided to Congress in September 2008 by Federal Reserve Chair Ben Bernanke with then-Treasury Secretary Hank Paulson.
According to Kanjorski, the Federal Reserve at about 11 AM on Thursday, September 18, 2008 detected that $550 billion had been withdrawn from money market funds in the preceding 1-2 hours. In response, the Fed started to provide liquidity to try to stem this electronic bank run. After spending $105 billion, Fed officials realized that they were unable to stop the run.
Kanjorski did not say who was behind these massive money market withdrawals. There are several central banks and some of the world's ultra-wealthy private individuals who could have started this process. Much of global financial investments are managed by computer programs set up to react quickly to unusual trends.
A single party could have started the whole process by withdrawing enough money market funds to cause other investors' programs to spring into action to withdraw their funds, leading the whole process to snowball.
They stopped further spending, temporarily closed down money market accounts, and then announced that the federal government would guarantee such accounts up to $250,000 per account as a means to halt the panic.
According to the Fed, if they had not made the moves that they did then, a total of $5.5 trillion of money market funds would likely have been withdrawn by 2 PM. If that had occurred, the entire US economy would have collapsed.
Then-US president Bush quickly called for a $700 billion bailout package that grew to $875 billion by the time Congress got through adding projects. These events and response to them created an impact on presidential elections. Currently the President Barak Obama and the executives fight the global financial crisis to avoid further economic deterioration in the USA.
The Federal Reserve has implemented new policy tools to address the global current financial crisis.
The reduction in the target federal funds rate from 5-1/4 percent to effectively zero was an extraordinarily rapid easing in the stance of monetary policy. In addition, the Federal Reserve has implemented a number of programs designed to support the liquidity of financial institutions and foster improved conditions in financial markets.
Transparency about monetary policy also helps promote the accountability of the Federal Reserve to the Congress and the public. Such accountability is especially critical when nontraditional policy tools--which are less familiar to the public than traditional policy tools--are employed.
A study made by University of Iowa in 2007 concluded that companies servicing mortgages are often negligent when it comes to producing the documentation to support foreclosures. The study of 1700 bankruptcy cases stemming from home foreclosures found that 40% of the time the original mortgage note was missing along with other required documents.
Asking a judge to compel production of hard-to-find or non existent documents can delay foreclosure. Using this tip the homeowner buys some time and renegotiate the mortgage.
Way this is happening?
The past decade of real estate business frenzy generated by low interest rates and easy to lend procedure produced new security instruments. Mortgages were sold and resold, bundled into new financial instruments named securities and sold to investors around the world.
Today lawyers, homeowners and advocates advice for produce-the-note strategy.Financial crisis, recession, unemployment is deepening or on the rise. What a mess! My today enthusiasm gauge for blogging is close to zero, but I do not give up. I have some ideas to share with you.
From 2001 - 2003 recession I learned that economic recovery is starting about one to two years before the unemployment numbers get smaller.
Since 1854, the US economy has gone through 32 business cycles (recessions and recoveries). In other words, the direction of economic activity eventually changed. Many times in these past cycles, the economy started to recover well before employment turned up.
The companies can use layoffs to increase efficiency, laying the groundwork for future increases in profits and wages for their remaining workers. What that means is that a 1% loss in jobs results in a smaller than 1% loss of production. And using assets more productively frees up resources to do "new" things. We have lost millions of farming jobs over the decades and centuries, but
The nation as a whole is more prosperous as a result, not less.
Right now some economists scrutinize home sale and manufacturing orders for more positive signs. They know that the media and everybody else will be aware of economic recovery when this process has already got momentum.
So what is the good news right now?
The spring is coming in few days or weeks.
The days get longer and we will spend more time outside or in day light. Getting out of winter depression, building more endorphins and a new optimism will add to more energy for job search or more enthusiasm for current work. What about starting a new business?
Every spring smart employers start considering if it is the time for a new economic cycle. Overtime for workers first and new hiring later will translate in new/repackaged products. What products?
What goods sell well in down market?
- Entertainment, games, movies, and the like will continue to sell.
- More food for less money - five foot long, two burritos for pennies, etc.
- Cell phones and internet communication will sell well;
Everything is getting negotiable: houses, mortgages, cars, luxury items, trips and cruises. Not necessarily all are bargains or a must have items but it is worth a tray if you have the time, disposable cash or credit.
I think the automotive industry will shade more jobs and the leaner companies with financial support from government will compete better in current environment. Many drivers will give up or the winter will kill the old unsafe cars. The need for decent transportation will propel the demand at General Motors and Ford car dealers. This is happening every spring regardless of economic cycle.
Obviously I am the guy that is looking to a bottle and sees it half full not half empty. Therefore, I remain optimistic that we still live in the greatest country in the world and that one day soon we will look back on these times as just another bump in the road on our life' journey.
Until full spring and more signs for economic recovery I wish you the best of luck and good health.
