CISCO & BORDERS TO CUT UP TO 21,000 JOBS
“Networking equipment company Cisco Systems could eliminate as many as 10,000 jobs, or about 14 percent of its workforce, to revive profit growth, Bloomberg said, citing two people familiar with the matter. Cisco is also providing early-retirement packages to about 3,000 workers who took buyouts, according to Bloomberg.”
“Borders Group, the second-largest U.S. bookstore chain, said it has canceled an upcoming bankruptcy auction and will close its doors for good. The company said in a statement Monday that it was unable to find a buyer willing to keep the company in operation and will sell itself to a group of liquidators led by Hilco Merchant Resources. Borders’ roughly 400 remaining stores will close, and nearly 11,000 jobs will be lost, according to the company.“
Here is the very definition of the problem that I have been talking about for the past 18 months. You can not have a jobless recovery. Jobs are what produces the income needed by the consumer to consume which provides the final demand to businesses. Without the final demand businesses can’t grow. This is why the mantra of the current administration has been “jobs…jobs…jobs…” but the weakenss in the economy is pervasive.
Employment trends have been declining on a year-over-year basis as productivity has increased requiring less labor to produce the same amount of goods and services. Furthermore, the outsourcing of manpower intensive jobs in manufacturing have been outsourced to other countries in an effort to reduce costs and increase profit margins. This shift from a manufacturing base to a service based economy has reduced the trend of employment in the United States. Now that the end game of 30 years of failed monetary and fiscal policy have come home to roost; we carry the lowest level of employment to the total population since 1984, which coincidentally was the beginning of the grand economic experiment that has since failed.
The importance of this fact should not go unnoticed as it is the consequence of the seeds that were sowed since 1980 in the quest for economic growth the financial manipulation. The rise of leverage in the system coupled with excessive monetary and fiscal policies which were an attempt to alter the normal business cycle have now clearly ended in what Austrian economists referred to as a “credit induced boom that leads to malinvestments.”
The jobs reports should continue to reflect weakness over the coming months as the effects of the stimulus led boosts to GDP, which were primarily fueled by inventory rebuilding, have come to an end and the diminishing effects of further programs will continue to surpress the average American’s ability to survive as commodity prices combined with a weakening dollar consume more and more of their average wages and salaries.
Look for more layoffs ahead…I just hope the next jobs that are lost aren’t yours.