Lies & Layoffs

[Zeitgeist]

At the very same Caterpillar plant Obama swore jobs would be saved with the passing of the stimulus bill some 800+ people are being laid off, 2400+ in all by the company.

This, along with the bailout/bank/AIG mess, along with the amateurish reception of our closest ally in Britain, Gordon Brown - I have to say, this Obama, thus far has been a complete flop. He's not the least bit impressive, and hardly even competent. Sure, he puts on a good speech, but thats about all he can do it seems.

And the argument that this all just the previous administration's fault and Obama was just handed a mess, well that's a weak argument and only hold some water for a short time. After all, can't we just Move On?

http://www.realclearpolitics.com/politics_nation/2009/02/obama_on_stimulus_deal_undoing.html

February 11, 2008

"I want to thank the Democrats and Republicans in Congress who came together around a hard-fought compromise that will save or create more than 3.5 million jobs and get our economy back on track. Just today, the CEO of Caterpillar said that if this American Recovery and Reinvestment Plan is passed, his company would be able to rehire some of the employees they've been forced to lay off. It's also a plan that will provide immediate tax relief to families and businesses, while investing in priorities like health care, education, energy, and infrastructure that will grow our economy once more. I'm grateful to the House Democrats for starting this process, and for members in the House and Senate for moving it along with the urgency that this moment demands," said President Obama.

March, 18th 2009
http://www.suntimes.com/business/1482629,CST-FIN-cat18.article

Caterpillar Inc. on Tuesday announced plans to lay off 2,400 employees at five plants, including 815 workers at its hydraulic excavators plant in Aurora and 911 at a plant in East Peoria that makes track-type tractors and pipelayers.

[Nessy]

Obama has been in the office for 2 months, and despite how much blame and credit we give presidencies for their role in the economy, their roles are overhyped. The economic mess the world is dealing with now has been years in the making and isn't going to be fixed in a matter of months even if the adminstration did everything right, and there has yet to be an administration that did everything right.

[Zeitgeist]

Right, just like the recent up-tick in the stock market has little to nothing to do with anything the Obama administration is doing or plans on doing. I'm fine with the idea, but it should be applied both ways. If the economy continues to improve over the next two months, I think you'd have to apply the same logic.

Personally, I think the economic mess is somewhat over blown myself. Yes, there are some issues to be dealt with. Our company laid off about 15% of our work force, merely under the auspice of 'tightening the belt' for the coming year. Since then our work load and increased and looks to only continue to do so.

[Nessy]

That is why I said its overhyped. Presidents take too much credit for economic good times and get placed too much blame for the bad times. Since most political parties loose power when a economic recession occurs, it would be feasible that no president wants to see a recession but clearly they can't prevent them or they would.

They have some control over fiscal policy but no control over monetary policy or the private sector or foreign trade (stocks and money not actual goods). I mean they can push it and make it worse, or push it another direction and help things recover and temporarily improve things with large spending in the hopes that the private sector will get the breathing room it needs to recover but they can't do a sustainable recovery without the private sector providing real growth.

I think its a mistake to think that any kind of recovery was going to happen now because 2 months worth of changes in fiscal policy. Economic recovery takes time, and unfortunately, people are impatient. Not only that, but the market tends to recover before the economy does because of speculators. And don't forget things like unemployment are lagging indicators, not leading which means companies are responding to events that are already taking place. You want to watch things like application for housing permits and indications that companies are willing to spend on capital (expand) for economic recovery. Even when the economy does pick up, there is plenty of inventory to burn through before things pick up. Its going to be a slow, slow process, and if it's done right, it should be slow.

[Zeitgeist]

All very true, I agree with both of you that things will take time to turn around.

And while Obama has probably said this same thing more than once, it does not change what he said about Caterpillar, in my opening post here. This is one example, but there are many examples of him and the administration being wrong or on the wrong side of a particular issue; in a frighteningly short amount of time (2 months).

Anyhow, I probably should give him more time before passing too harsh of a judgment, but still, its looking nothing like the 'Change and Hope' that was so eloquently promised.

[Nessy]

All very true, I agree with both of you that things will take time to turn around.

And while Obama has probably said this same thing more than once, it does not change what he said about Caterpillar, in my opening post here. This is one example, but there are many examples of him and the administration being wrong or on the wrong side of a particular issue; in a frighteningly short amount of time (2 months).

Anyhow, I probably should give him more time before passing too harsh of a judgment, but still, its looking nothing like the 'Change and Hope' that was so eloquently promised.

Well in this case, I think there is plenty of blame to pass around to lack of oversight, and broken promises, unrealistic promsies (though I've yet to see any political campaign run on realistic expectations), but primarily i think the blame falls on the short-term and short-sighted nature of management teams across the country across various industries and all over the globe in trying to earn a quick buck and a big bonus and fatten the pockets of stockholders (and I am speaking as a person who owns stock) at the expense of the health of companies themselves, plus this strange idea that housing was a magic investment that could only ever go up and consumers should spend, spend, spend.

As I have said in other threads, I don't think credit, unsecured or secured, is a bad thing. I think it got out of control for some (specifically ninja loans). I don't think all companies that are in trouble are in that situation because of bad management. I don't think all this adminstrations decisions were good or bad, or the previous one (in regards to the economy here). But I think why this recession is going to have a significant place in the history books is we aren't dealing with one cause but several pretty nasty events hitting at about the same time for different reasons and a couple of them are still spiralling downward behind the scenes. So the government is trying to stop the spiral, which I agree with, but I think its pretty clear they are not 100% sure how to do it. I am confident they will figure it out in the end, but the mistakes will be made on the way, and it will be costly. In the meantime, I just hope the layoffs these companies are necessary to survival and not to hold up their stock because lay-offs can be a spiral themselves. You lay someone else from the widget factory, they can't buy anymore wadgets so the wadget factory has to layoff and so forth.

I am also disappointed that the world seems to be looking to the USA to bring us out the recession which, at this point, shouldn't be the case. Our economies are entertwined enough where it should be a big push worldwide. Besides that, just because USA companies are involved, doesn't mean we are the only ones to blame. ING got a nice dose of government aid as have several banks in other countries. It's not a contained situation, and these brainaics with their calculators (speaking as someone who works in finance but not the financial industry persay), would have sold these toxic products outside the USA borders if we had actually regulated them out.

Anyway, I digress. I think the layoffs are awful. They are felt across all skill levels (highly skilled, professionals, etc) and industries. I think this adminstration might be a little more sympathetic for those hit hardest at least than maybe another one would be, they already increased unemployment payments by 25.00 (but didn't raise the max which seems silly to me since it means you could burn through it faster), they have two extensions available, and the first $2400 of unemployment insurance collected is not subject to federal tax this year.

[MHaji]

I'd suggest rereading what Obama said:

Just today, the CEO of Caterpillar said that if this American Recovery and Reinvestment Plan is passed, his company would be able to rehire some of the employees they've been forced to lay off.

He quoted what the CEO told him. And while he shouldn't have taken it at face value, he repeated it. Perhaps he should've realized that some people will tell him anything in order to get stimulus money?

Lied? He was lied to.

[RubySlippers]

I know States should do more in Florida we could find those that issued fraudulant loans, rip up their licenses and lock them up for fraud from the mortgage brokers on the low end to executives on the high end. In fact why we are not doing this is insulting to those that were taken advantage of.

As for Obama he is on record for being a liar. He said no earmarks and then signs a bill that ,hello, had thousands of them. A real man who kept his word of honor would have Vetoed that and said why, tell Congress no earmmarks or no bills will get passed his desk. Then DARE THEM to override his Vetos in this political climate. He has ample power and can use it if he had the will to do so. I would love for once a president stand up to Congress and take the high ground. He would have gained immediate credibility and respect from many sides.

Anyway come on the government doesn't create jobs its the businesses and people that create jobs, they just take our money at gunpoint like thieves to run a far larger government than is needed. I mean really needed not taking up space.

[Nessy]

I know States should do more in Florida we could find those that issued fraudulant loans, rip up their licenses and lock them up for fraud from the mortgage brokers on the low end to executives on the high end. In fact why we are not doing this is insulting to those that were taken advantage of.

As for Obama he is on record for being a liar. He said no earmarks and then signs a bill that ,hello, had thousands of them. A real man who kept his word of honor would have Vetoed that and said why, tell Congress no earmmarks or no bills will get passed his desk. Then DARE THEM to override his Vetos in this political climate. He has ample power and can use it if he had the will to do so. I would love for once a president stand up to Congress and take the high ground. He would have gained immediate credibility and respect from many sides.

Anyway come on the government doesn't create jobs its the businesses and people that create jobs, they just take our money at gunpoint like thieves to run a far larger government than is needed. I mean really needed not taking up space.

There is the election and then there is political reality. Earmarks are a fact of life in Congress, and it would take more than one President to change that. I for one am glad he doesn't spend the next four years vetoing every single bill and causing the government to be stagnant while doing so. It is unrealistic to think that in 2 months there is going to be a drastric change in how the government has been running for decades. This is not a dictaorship. He doesn't have that kind of power. I think realistically, he has kept as much of the promises he gave during his campaign as can be expected.

And I have heard the rheoteric about governments not creating jobs... despite the fact that millions of people work for the government, and grants and loans and contracts issued by the governments to private business creates jobs as well so I think the hard right talking point has no ground to stand on.

[RubySlippers]

Government can make jobs in the government picking my pocket to fund it, that is not the same as the free market creating jobs though. And government contracts and grants is again picking my pocket to give jobs to companies as opposed to a company meeting a need in the private sector.

As for Obama he lied, and the bill was not a few earmarks but over 8,000 earmarks and he should have vetoed it and demanded a bill with no earmarks. And what dictatorship the Congress with a supermajority can override a veto, then have to say why they did so in this political climate over a presidential veto wasting their tax dollars.

I never understood the fairness in this scenario. The government takes one of my dollars in taxes, takes it and sends it through a layered red tape nightmare then decides to give me back maybe a few cents to my area.

Wouldn't it be better to get rid of the red tape and let us keep more of our money?

As for the arguement everyone gets something so it evens out that is a lie. Giving farmers money not to plant raises food prices instead of lowering them which hurts me twice, the steal my money to give to the corporate farmers then I pay more for a loaf of bread. And even if the point was it all ends up equal I feel cheated if after taking my dollar, slicing large portions off for the government paperwork I end up with a few cents. When with low taxes and a small Federal government I could perhaps keeo lets say 80 cents and give them 20% at the Federal and more local levels total.

I will end by quoting one of my favorite Founding Fathers:
"It would be thought a hard government
that should tax its people one tenth part."
- Benjamin Franklin

[Nessy]

Well since I am not rich enough to pour cement and maintain the bridge and roads I use every day to go to and from work, I can safely say that the government provides a service that is valuable, and those jobs are valuable. And before you tell me that a private company can do it just as well... private companies running without regulation is part of the problem of the mess are in today. There is efficiency lost when money is transfered from one person to another, but unless you are bill gates and can buy your own bodyguards in place of cops, build your own schools (and i am not talking about in the middle of cities where private institutions loves to show up and claim sucess and profits), unless you are willing to run a dogsled out to the middle of nowhere in alaska, or ride a mule down the cliff in arizona to deliver a letter for 47 cents... the government serves a purpose. It's not all waste. There are valid arguments about how large or how small governments are but I do not buy the government services are the same as stealing.

As for politicians, people are too stupid and unwilling to hear the the realistic truth and none of them run on a platform of 100% honesty. I don't care which party, or person, you vote for (assuming you vote).

[MHaji]

Earmarks are, incidentally, a tiny fraction of the total budget; they will not make or break the economy right now. At the moment, Obama has a limited time to fight his battles before the swarm of detractors descend like piranha; it's already happening, in fact. Therefore, earmarks are not a priority.

Might it not be possible that Obama intends to slowly eliminate earmarks, gradually reducing them over the next four years, rather than try to instantly abolish a long-time fact of life in Congress in the middle of an economic crisis?

If a president says that he's against something, it does not obligate him to veto every bill that contains it. That is not how change happens; change requires the luxury of time.

[OldSchoolGamer]

Right now, the economy is in a death-spiral, disguised by the injection of huge amounts of fiat money.  Even a corpse can be made to move if you run enough volts into it, but it isn't alive...

[RubySlippers]

The economy will recover if left alone you know why I'm holding back investing my IRA funds this year its not the stock market its the government. I want to invest in stocks but I can't be sure about the market corrections due to taxpayer money being thrown around to keep companies afloat. If they let these companies act naturally I would have good feel for where to invest in. I think banks would good this year in fact that is where my plan is to invest in one bank and add money to existing stocks. But which bank all the Fed funding is making me wary of all of them even if a good one took money for a good reason its cloaked but doubt.

If I'm not investing my hard earned money this year huge investors are likely not. Its a problem. If AIG and all the banks in trouble were failing others would surely rise to take the place of them I could look at to invest in. That is the power of the free market the weak fall and the strong rise, its economic evolution. And by falling I mean they enter bankruptcy and the Federal Court then handles the case reorganizing if possible and liquidation of the company if not possible. At that point the government might be able to help and not freak out investors.

[Trieste]

Ehm.

What do IRA funds have to do with Caterpillar layoffs? Keep it on topic, please.

[RubySlippers]

How much did Caterpiller Employees get paid? If it was relatively high then couldn't they put more full time workers on part-time say drop them from 40 hours to 25 hours a week to maintain full employment. I would think even if incomes using steel workers as an example dropped yearly for $50K to say $30k a year some one could live on that modestly. So I see no needs for layoffs just cutting all employees that are hourly work hours as a better idea.

[Zakharra]

 From what I understand, there has been a drop in sales for Caterpillar. That means their production doesn't need to be high. They sell heavy equipment and with the drop in demand, there's little need to make as much, and there is little reason for a company to keep on unneeded workers if the production lines are not working.

[RubySlippers]

A company in my area had the same problem even though they have usually robust regular sales they just cut the hours of workers by half to maintain full employment, or let people leave if they wished. Its better than having to retrain new workers when the economy gets better they figure they can add more hours later.

[Nessy]

A company in my area had the same problem even though they have usually robust regular sales they just cut the hours of workers by half to maintain full employment, or let people leave if they wished. Its better than having to retrain new workers when the economy gets better they figure they can add more hours later.

I agree with you but there is a large section managers in the school of that that it is better to layoff employees and keep the remaining employees at their same wages maybe even with a raise. Again, it's not something I personally agree with but its a school of thought of management that seems to be the leading school of though which is why you might see layoffs and raises done around the same time.

[Sugarman (hal)]

Don't bail out banks... bail out workers, they hurt far more then some greedy banker who offered false hopes like candy to people for a quick buck.

[OldSchoolGamer]

Don't bail out banks... bail out workers, they hurt far more then some greedy banker who offered false hopes like candy to people for a quick buck.

After all is said and done, they're going to wish they had spent the money bailing out workers.  Because the government is going to be broke, the currency debased, the economy in the crapper...oh, and guess what?  We'll STILL have all the unprofitable zombie banks and finance companies that will still produce nothing but bogus "securities."

Japan learned the hard way back in the Nineties that it's better to just let unprofitable companies fold.  They spent ten years being the kid who's mortally afraid to pull off the Band-Aid, carefully protecting all these "too-big-to-fail" banks and other companies, with their economy sucking wind the whole time.

Bear in mind that we've dumped two trillion dollars in fiat money into the economy in less than a year.  That amount would have been unthinkable a couple years ago.  And all we have to show for it are some signs that the recession "might" be "nearing a bottom."  Jobs are dying like flies.  We've moved mortgage rates down to rock-bottom levels, shamelessly plowing in ungodly amounts of fiat money, and the housing market is showing flickers of life even as valuations keep plunging.

This isn't a recovery.  It's a dead cat bounce.

[Nessy]

Japan learned the hard way back in the Nineties that it's better to just let unprofitable companies fold.  They spent ten years being the kid who's mortally afraid to pull off the Band-Aid, carefully protecting all these "too-big-to-fail" banks and other companies, with their economy sucking wind the whole time.

Have you looked at Japan's economy lately and the value of the yen to the dollar? They're doing worse than the USA. In fact, there a lot of countries' whose economies are performing worse than the USA at the moment. I am 100% sure everytime we've hit a recession, there is doom and gloom sayers all over the place and the cry of the end of capitalism as we know it. It's the worse economic downfall in recent memory, but it's not the first one and it's not even the worst.

[Zakharra]

Don't bail out banks... bail out workers, they hurt far more then some greedy banker who offered false hopes like candy to people for a quick buck.

Bailing out the workers will only help for a very short time.  When the money runs out, they'll be right back where they were. The workers need jobs, ie companies/businesses to work for. Money just for workers is doomed to fail if there's nothing for them to do afterwards.