Mike PouraryanThe Cont'd Ecnoomic Tsunami (10/22/2009 Update)
October 22nd 2009 07:03
I have been writing about our Economic Tsunami for quite some time in KP's sister site, Outsider Views. I had been hoping to see some "green shots" in reality. We are yet to see the light at the end of the tunnel, though.
What is clear is that the rate of bleeding is slowing. I have been reviewing company earnings report noting that they have all been making money. Apple shattered records. Others have shown solid profit numbers. The problem is that the reason they are showing profits is because they have been slashing costs like crazy. They are not hiring. And it is showing in the staggering and scary numbers that Governments at all levels are reporting. For instance, in Orange County, California, the Orange County Sheriff's Department's estimated deficit is forecast to be 70 Milllon Dollars now. According to the Sheriff, it is because some one time funding is drying up plus there will be shortfalls in expected revenues from a number of California State Propositions. There is of course the Federal Government Deficit. I was shocked when I saw the 1.4 TRILLION (that is trillion with a T) deficit that the Federal Government reported for the fiscal year that ended three weeks ago.
Although the companies are to be congratulated, they have a profound challenge to find business right now. They know it. International Paper just announced that it is laying off 1600 workers. My eyes nearly popped out when I saw a front page story in this morning New York Times about one opening in India attracting 500 applicants for a job that paid $ 12/hr. This is what reality is right now.
This uncertainity has in turn caused folks to be afraid and therefore, very cautious. The Fed's Beige Book very much confirms this. What is clear is that this Tsunami is yet to play itself out. I wish it was otherwise.
What is clear is that the rate of bleeding is slowing. I have been reviewing company earnings report noting that they have all been making money. Apple shattered records. Others have shown solid profit numbers. The problem is that the reason they are showing profits is because they have been slashing costs like crazy. They are not hiring. And it is showing in the staggering and scary numbers that Governments at all levels are reporting. For instance, in Orange County, California, the Orange County Sheriff's Department's estimated deficit is forecast to be 70 Milllon Dollars now. According to the Sheriff, it is because some one time funding is drying up plus there will be shortfalls in expected revenues from a number of California State Propositions. There is of course the Federal Government Deficit. I was shocked when I saw the 1.4 TRILLION (that is trillion with a T) deficit that the Federal Government reported for the fiscal year that ended three weeks ago.
Although the companies are to be congratulated, they have a profound challenge to find business right now. They know it. International Paper just announced that it is laying off 1600 workers. My eyes nearly popped out when I saw a front page story in this morning New York Times about one opening in India attracting 500 applicants for a job that paid $ 12/hr. This is what reality is right now.
This uncertainity has in turn caused folks to be afraid and therefore, very cautious. The Fed's Beige Book very much confirms this. What is clear is that this Tsunami is yet to play itself out. I wish it was otherwise.
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