The stock market was off 372 points in the last 12 minutes of trading today, after the half point Fed rate cut, because Wall Street finally knows that Bernanke cannot force banks to lend, compel consumers to borrow or make people spend in a barely disguised deepening Bush recession. As such, treat any near term rallies as selling opportunities: Allen L Roland
To keep up appearances, particularly in an election year, the Paulson "Plunge Protection Team" has been authorized by presidential order to use U.S. taxpayer money to manipulate markets to make them appear healthier than they are, and lately it has been working overtime. But official assurances of a "soft landing" are mere window dressing, aimed at preventing another worldwide depression as home buyers and stock market investors continue to stampede for the exits.
Here's the bottom line on Paulson's $ 700 billion blank check according to John Dunbar, The Associated Press: "First, the $700 billion rescue for the economy was about buying devalued mortgage-backed securities from tottering banks to unclog frozen credit markets. Then it was about using $250 billion of it to buy stakes in banks. The idea was that banks would use the money to start making loans again. But reports surfaced that bankers might instead use the money to buy other banks, pay dividends, give employees a raise and executives a bonus, or just sit on it." http://www.truthout.org/102908A
Meanwhile layoffs are spreading and unemployment is soaring as the impact of the economic downturn has begun to spread well beyond the imploding financial sector and into other depressed industries such as automobiles ~ and the economy as a whole.
According to statistics collated by outplacement firm Challenger, Gray & Christmas, the top five sectors for layoffs in the nine months through September this year are: financial, with 111,200 job cuts; automotive, 94,900 layoffs; government/non-profit, 66,800 layoffs; transportation, 62,000 layoffs; and retail, with 51,300 jobs lost ~ and that's just the tip of the iceberg.
Here are the top nine jobs targeted for layoffs
1. Autos: Tens of thousands of jobs have already been slashed as downsizing started two years ago.
2. Airlines: Like the auto industry, this is another early victim. Flights have been cut by about 10 percent or more and thousands have already been laid off.
3. Financial: A large number of companies are either going out of business or merging. Either way, it's the worker bees who get the ax. Between Citigroup, Wachovia and Merrill Lynch alone, some 50,000 could be laid off. Job losses will be far higher if medium and small banks are taken over by the FDIC in increasing numbers.
4. Supermarkets: With soaring food prices, many people will cut back on buying anything but the essentials. Stores most likely to be affected are Supervalu, Kroger and Safeway. As many as 50,000 could be laid off as stores close.
5. Fast Food: When money is tight, people stop eating out. Problems are already surfacing at Starbucks and Dominos.
6. Internet Content and E-Commerce: While people may prefer shopping online, when they cut back their buying, online ads take a hit. The recession is hurting display ad sales. Even Google has lost about half its market value in a year. Yahoo!, eBay and Amazon are all expected to have major layoffs numbering in the thousands.
7. Software: There have been very few job cuts in the last five years in the software industry, but the early warning signal is from SAP's lowered earnings. Call it the canary in the coal mine.
8. Oil: Prices are dropping, while refining costs continue to climb. The number of workers could contract as quickly as they expanded and with several million employees in the oil industry, even a 5 percent cut would be painful.
9. Media: Granted, it's been stable for a few years with strong advertising, but that's changing quickly. CBS and Viacom have already warned about earnings. The six large media companies employ almost 400,000 people. Add this to the weakening newspaper, local radio and TV businesses, and some 100,000 to 200,000 people could be out of work by the end of 2009.
Expect the stock market to go much lower ~ the obvious priority of the Bush/Cheney/Paulson administration is to ensure that the financial oligarchy which is responsible for this economic crisis escapes unscathed and remains unaffected by its impact ~ leaving the full burden of this economic disaster on the backs of the working class and tax payers.
In an unusually frank article published in Saturday's New York Times, the newspaper's economic columnist, Joe Nocera, reveals what he calls "the dirty little secret of the banking industry" ~ namely, that "it has no intention of using the [government bailout] money to make new loans." http://www.informationclearinghouse.info/article21116.htm
If you're not outraged, you're on life support !
Allen L Roland
Freelance Online columnist and psychotherapist Allen L Roland is available for comments, interviews, speaking engagements and private consultations ( allen@allenroland.com ) Allen L Roland is a practicing psychotherapist, author and lecturer who also shares a daily political and social commentary on his weblog and website allenroland.com He also guest hosts a monthly national radio show TRUTHTALK on www.conscioustalk.net
Cartoon courtesy of Tom Toles / Washington Post
Allen L Roland is a practicing psychotherapist, author and lecturer who also shares a daily political and social commentary on his
weblog and website
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