Mass Layoffs To Return With A Vengeance

Tyler Durden's picture

Submitted by Adam Taggart via PeakProsperity.com,

Remember the mass layoffs of 2008-2009? The US economy shed millions of jobs quickly and relentlessly, as companies died and the rest fought for survival.

Then the Fed and the US government flooded the banks and the corporate sector with bailouts and handouts. With those giga-tons of liquidity sloshing around, as well as taking on massive amounts of new cheap debt, companies were able to finance their working capital needs, hire workers back, and even buy-back their shares en mass to make themselves look deceptively profitable. The nightmare of 2008 soon became a golden era of 'recovery'.

Well, 2016 is showing us that that era is over. And as stock prices cease to rise, and in fact fall within many industries, layoffs are beginning to make a return as companies jettison costs in attempt to reduce losses.

Since January 1st, here is a but of subset of the headlines we've seen:

Note that nearly all of these companies are in the Energy, Finance and Tech sectors -- the three biggest engines of growth, profits and market value appreciation within the economy over the past 7 years.

What will the repercussions be if those three industries go into contraction mode at the same time?

Whatever the specifics may be, the general answer is easy to predict: Nothing good.

This topic has particular relevance to me today, as my former employer Yahoo! just announced that it's cutting 15% of its workforce (1,700 jobs) and considering putting itself up for sale. This is no shock to me, as I've long publicly predicted Yahoo!'s inexorable swirl into irrelevance, but it's timing is indicative of the new era the economy is now entering.

With its stake in Alibaba, Yahoo! participated in the mania that drove Chinese and other emerging market shares in 2014 through mid-2015. The capital that flooded into the Tech sector in general didn't hurt, either. Both of these helped mask the business' broken fundamentals and kept the day of reckoning for its lack of demonstrable progress at bay. But no longer.

As Warren Buffet famously quipped: Only when the tide goes out do you discover who's been swimming naked. Well, with the collapse of the Asian stock markets last year and the entire global market so far this year, the tide is fast receding and the rot at Yahoo! is now plainly visible to all. How much rot? During its earnings call yesterday, the company announced it's taking a write-down of $4.5 billion. That's nearly as much as it made in top-line revenue for all of 2015!

Yahoo! is one of the weaker players in Tech these days, and it's now stumbling hard. Here at Peak Prosperity, we predict that collapse happens 'from the outside in', where the weaker parties fall first, followed by the demise stronger and stronger players. We've been seeing that happen internationally over the past year as smaller poorer countries succumbed first to slowing global economic growth, and we're now seeing larger and more developed countries become desperate (Japan, anyone? How about Italy?). Yahoo! is a similar harbinger for the Tech sector, and is being fast joined by the many Tech companies in the list of headlines above (by the way, there are *many* more Tech companies I could easily add to that list -- like HP who announced job cuts of 85,000 last fall).

And there's good argument to be made that mass layoffs in Tech will be worse today than back in 2008/9. Back then, there were fast-expanding private future behemoths one could jump to: Facebook, Palantir, Uber and the like. Even Google, Netflix and Amazon held up well and were still investing for growth during that period. Today, there is no ready stable of up-and-comers with similar potential to power through a recession.

The ability for those laid-off to find open positions elsewhere will likely be more similar to the 2000 Tech bubble burst. Working in Silicon Valley back then, I was amazed at how fast 101 changed from a crawling bumper-to-bumper experience to an uncrowded freeway. The number of jobs (and thus commuters) that vaporized quickly was astonishing.

And that's just Tech. As Chris has been warning us loudly, something is deeply amiss in the Financial sector. It's mind-boggling that the biggest of the "too-big-to-fail" banks, like Citibank and Bank of America, have lost 25% of their market value in a little over 1 month(!). Deutsche Bank has lost over 33% over the same short period. All while the general market is down about 8%.

What these prices are telling us is that something big, ugly and damaging is happening within the banking sector. We just don't know exactly what yet. And if you remember your history, this is eerily similar to how things went south so quickly in 2008. The banks started catching the sniffles, and soon after, Hank Paulson was on his knees begging Congress for the authority to stave off a full meltdown of the banking system.

And then there's Energy. Can it be that the price of a barrel of oil was over $70 just 10 months ago? And over $100 five short months before that? Yesterday it was below $30. As we've been warning about here at Peak Prosperity, the carnage that collapse in price is going to wreak across the highly-leveraged companies in the Energy sector is going to be biblical. Not to mention the many other sectors that service the energy industry (trucking, housing, retail, infrastructure development, etc). We are just beginning to see the very early-stage ramifications, but in the words of Bachman Turner Overdrive: You ain't seen nothin' yet.

Conclusion

My point here is that the worm has turned.

All the stimulus and intervention undertaken by the Fed at all gave us five pleasant years (2010-2104) of rising stock, bond and home prices that allowed us to pretend that the 2008 credit crisis was a one-time event.

2015 proved to be the year that reality intervened. The rocket ride we were on hit its zenith, and things hung precariously there.

2016 is fast proving to be the year that the laws of physics are starting to matter again, and our rocket is now beginning its descent back to Planet Earth. How far we fall this year vs next is still unknown, but the direction of the trajectory is becoming increasingly hard to dispute. And as we lose altitude, we're going to start losing jobs along with it.

So, for anyone reading this who is a salaried employee, a very important question to ask yourself is: Do I have a Plan B in place if I get unexpectedly laid off this year or next?

I'm not trying to frighten anyone unnecessarily. But I do see the probability of wide-scale jobs losses as materially higher this year than it was just a few short months ago. And with the headlines in the news today, things can easily accelerate further from here.

If you do not have a confidence-inspiring Plan B lined up yet, remember that the best time to plan for crisis is before it arrives. Spend time asking yourself what you would do in the aftermath of a pink slip. Save a greater percentage of your income, line up professional contacts, conduct informational interviews, and develop any needed new skills now -- so that if you ever do need to turn to them, they're already there to support you. A lot of the process for doing this is detailed in our book on career transition, and our related podcasts with career coach Jennifer Winn and the Johnson O'Connor Foundation are helpful resources, too.

Investing in the other Forms of Capital (besides money) that we detail in Prosper! will only help add to your resilience, as well. Especially Emotional Capital. Dealing with job loss is stressful by itself, but potentially doing so in the midst of another punishing Great Recession would place challenging strain on any of us. Working to improve our emotional ability to deal with setback, as well as perhaps doing the same with Social Capital -- ensuring you have a community to support you through any tough times, just makes good sense.

 

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
wildbad's picture

well that escalated quickly

Dutti's picture

As far as I have learned, more layoffs means higher stock prices for most companies..

Wow72's picture

Oh ya YOU ARE THE PROBLEM.  MORE PEOPLE LAID OFF MEANS MORE MONEY IN COMPANIES POCKETS AND LESS MONEY IN CONSUMERS HANDS.... A REAL BLUE PRINT FOR SUCCESS.  ZERO SUM WORKS GREAT IF YOUR THE LAST ONE STANDING.

Dutti's picture

I did not state what is right or just, I just stated the facts I learned. Keep smoking that weed!

Wow72's picture

Its not a market or philosophy I would go LONG on.  Or support.  Companies are long on greed and short on ideas.  Sounds like a great future.

IF YOUR IN THE TOP ONE HUNDRED WEALTHIEST I WOULD SAY YOU COULD CONSIDER THIS GOOD.  THESE COMPANIES ARE EATING THEIR TAILS TO MAKE THE NUMBERS.

DownWithYogaPants's picture

Mr Wow72:  

You seem a bit slow to be on ZH.  Perhaps you would be better off at HuffingtonPuffington Post with that lady from Green Acres.  You're letting your emotions run wild and not even picking up on the guys sarcasm.

Wow72's picture

ITS JUST GONE BEYOND... THATS WHAT PEOPLE "THINK" LAYOFFS ARE GOOD BECAUSE I COULD MAKE A FEW BUCKS ITS SO FUCKING SHORT TERM...SORRY IF THATS TOO SLOW FOR HERE? FUCK?

 

TPP SHOULD HELP!  ITS ME IM SURE.. THE ONLY WAY COMPANIES CAN MAKE MONEY THESE DAYS ARE LAYOFFS? NOT IDEAS?

IT AMAZES ME HOW NO ONE SEE THE FRIEGHT TRAIN COMING. THATS ALL.  YOU ALL DEPEND ON JANET BABY!

Skiprrrdog's picture

Whats this about Janet and her Depends?

AldousHuxley's picture

Depends is a growing recession proof business as boomers get older....wouldn't make fun of it with .combust2.0 already here.

 

back to basics

pilager's picture

Pffffffffft......Bfffooooooooo.....

Pass it man.... No bogging dude

.... What

.... Hahahahha. Green acres man.

Wow72's picture

Whats your excuse? I like GREEN ACRES! I HAVE A FEW GREEN ACRES.

Skiprrrdog's picture

Then STFU and BTFD...we quadruple dog dare you...

Donald J. Trump's picture

Slumberger cutting 10,000.

Wow72's picture

STICK SOME MONEY IN THERE QUICK. ITS A WINNER.  A REAL NO BRAINER?  Markets in GREAT SHAPE.

Donald J. Trump's picture

Could you please stop wit the caps.

Wow72's picture

Ya Ill do that... I keep putting the lock on.  Irate you know.

Havoc Squad's picture

we saved the company by shooting all the executives and replacing them with mannequins that play a recording of yakkity sax on loop

Consuelo's picture

Oh Gawd... My old man loved Boots Randolph...

 

 

Golden Showers's picture

I'm what ya call "self employeed". I lay myself off every day. Good news is that I get hired back every day. God knows why. I'm the worst boss / employee ever.

When I hear about these companies laying people off, honestly, I couldn't care fucking less. Does that make me bad?

Wow72's picture

ITs less income in circulation and more consolidation... ITS NOT GOOD FOR ANYONE.  I do lots of work on my own but if people dont have work or a job they dont have money?

REAL ECONOMICS GENIUSES ON HERE??  THIS MEANS MORE CONSOLIDATION AND LESS CIRCULATION.  ITS KILLING THIS ECONOMY.

FUCKING GREEDY EVIL IDIOTS RUN THE SHOW.  THE FUNNY THING IS MOST WILL GET EXACTLY WHAT THEY DESERVE BECAUSE ITS ZERO SUM? DUH? RUN RIGHT OFF THE CLIFF.

THEY SIMPLE POCKET THESE INCOMES NEVER TO SUPPORT A HEALTHY ECONOMY AGAIN, ITS NOT GOOD.

THINK ABOUT IT WALMART NOW HAS 3000 Less Customers because J&J just laid off? I know occasionally you have to purge but to do it like this is very destructive. What a waste.

Wow72's picture

ITS an AUTO CONSOLIDATING ECONOMY, its the WORST KIND WE COULD HAVE.. ITS A SLOW PAINFUL ECONOMIC DEATH.

Quasi's picture

Wal Mart doesn't have 3000 fewer customers. Their business model is to get the sheeple to spent their EBT cards on 3 buggies filled to the brim with soda and chips. If anything they now have 3000 new customers and Target now has 3000 fewer.

Wow72's picture

Right you get my point about the consumer, its 3000 less consumers for everyone really and the fact that the government smooths everything over is the WORST part about it?  Plus the benefits some of them where already collecting.. Believe me Im an equal opportunity Hater of this system.  THE GOV Benefits are a HUGE problem that enables all this B.S.  Its WELFARE FOR CORPORATIONS and LOSERS WHO DONT WORK and I understand sometimes it takes longer to find work when there is a vacuum of jobs and loads of illegal immigrants? Most who hustle dont have too hard of a time, but who hustles when UNCLE SHAMY BRINGS HOME THE BACON.

TheDanimal's picture

You need to stop rehiring yourself so soon, kick back and relax on unemployment once in a while.

Sweet Cheeks's picture

Payback is bitch, Golden. Don't break your arm patting yourself on the back.

Skiprrrdog's picture

Hold that thought, which should not be a problem, as it is probably one of several...

Consuelo's picture

YEAH BABY...!!!!

 

Now that's what I'm talkin' bout.    Pink Slip Friday at Twatter and the rest of the 'new economy' of app writing, ad-revenue Bullshit-Generators...   Gawd it's gonna be a sight for those 30 & younger in the ('recession-proof') tech industry...  Remember that term from the late 70's/early 80's...?    

$4500/mo. for that Mountain View 2 bdr. apt., across the street from Schnoogle - and never looking back, right...?

 

Fuck me.

 

 

Bernanke'sDaddy's picture

Ah! You're a fellow Mountain View resident? I think the only city worse is fucking Sunnyvale. What a shithole.

knukles's picture

Salinas.  Chock full of New American Talent. 
Or Oakland if you want a bit more big city metropolitan atmosphere.  Both are multi-cultural.

Hey, I got an idea.  Hows about we send all the illegals to Portland?

Consuelo's picture

Haven't they just about gentrified Oakland like they did East Palo Alto...?   Over to Stockton...? 

knukles's picture

Actually, some of it is become rather hipster upscale.
I cannot stand the techie Red Wing shoes with no socks styles.  They should be sacrificed at the altar of the Georgia Guidestones

Bernanke'sDaddy's picture

Ah! You're a fellow Mountain View resident? I think the only city worse is fucking Sunnyvale. What a shithole.

MASTER OF UNIVERSE's picture

Kind of looks like Military Grade Nano-Thermite has imploded the Western World economy in one BIG Controlled Demolition, eh, Mr. Council On Foreign Relations?

El's picture

I wonder if Pud will bring back fuckedcompany.com. That site was epic in its day.

Infield_Fly's picture
Infield_Fly (not verified) Feb 4, 2016 6:38 PM

No biggie.

 

GOOBERMINT JAWBS FOR ALL UV YAZ!!!!

rbg81's picture

No surprise that the "recession" is coming back just in time for the election of a new POTUS.  [In reality, we never got over the Depression of 2008--we just papered it over with massive Government spending.] Of course, the MSM meme will be that only Hillary's "intelligence and experience" can restore prosperity.  That and....she has a vagina.

If the American people are dumb enough to elect her, all that old Harpe will do is suck this country drier than Mugabe did Zimbabwe.  The primary beneficiary will be Chelsea -- who I've heard doesn't actually care about money.

ajkreider's picture

Yup.  And first time claims are still at historically low numbers, below 300k.  The the private sector is still adding jobs at 200k a month.  The market has already discounted US banks to value their energy backing at $0.  That's why JPM/BoA ad Citi are way below book value.  Their assests have been de facto marked to market already.

So no, I don't think we'll be shedding 600k jobs a month, unless there's a bubble out there yet to burst that's tied to employment.

Winston Churchill's picture

You may want to re-learn a few things: Credit freeze-counterparty risk.CDS and derivatives.

The market has discounter only what they think the risk is, which is just the tip of

the iceberg IMO.Lots of offf balance sheet liabilities are NOT included.

All those non GAAP earnings statements and general fraud across the whole market are also

about to be revealed.The tide is going out and will beach a lot of sharks..

Sweet Cheeks's picture

Those booming new job openings in retail or burger joints don't pay nearly as well as the oil field or manufacturing and you can't get many hours.
Just saying

Jstanley011's picture

It's a hard time, losing your job. When I have a friend or loved one who has lost theirs, I like to encourage them with a greeting card...

http://www.archelaus-cards.com/archives/20090205.php

Iknowstuff's picture

I have been a small engine mechanic, repaired floor care equipment, worked on semi trucks, and have a crazy skill set to boot. Right now I am facilities maintenance and hvac. I get calls once a month from recruiters trying to hire me for 20-30 frns an hour. And if not me do I know anybody. Talking on the ham radio and a guy tells me if I know any machinists he will hier them on the spot @ 25/hr with 30/hr after 30 days. The local commumity college opened a small engines course and asked if I would help set it up. I laughed and told the instructor that no one wanted to work in that industry but thanks for asking. Two years later they closed the course due to lack of interest. There are definitely jobs out there but everyone wants ponies and unicorns. Or to be the boss. Good luck with that. Better to get a skill that will last.

Seek_Truth's picture

You are correct.

I’ve been a Paperboy, Landscaper, Textile mill worker, Pool manufacturer, Shoe factory worker, Furniture factory worker, Retail sales, Vintner, Lumberjack, Farmer, Mushroom picker, Sprinkler system installer, Mechanic, Demolition, Drywall hanger, Deck builder, Fence installer,  Heavy equipment operator, Electrician, Carpenter, Framer, Concrete laborer, Mason, Roofer, Plumber, Arborist, Engineer, Consultant, Salesman, Writer, Speaker, Teacher, Preacher, Manager, Director, President, CEO- and I’m sure I missed quite a few other things I have done.

Sometimes, you might have to move to get the job you’re looking for.

But if you really want to work, there’s always work available.

Consuelo's picture

I've been everywhere man, crossed the deserts bare man, traveled I've done my share man...

Sweet Cheeks's picture

I know stuff,
Which PhD Eco or other academic major voted you down. You are spot on.

AR 15's picture

Well 5 percent unemployment ! Lmao... Wait til the bank failures start happening and they take deposits from customers ..... Dodd Frank says derivatives are priority to be paid first ...  The biggest heist in history will be bank Bail ins  Trillions of bets will go bad  winners will be the bet makers  oh the elite 

Youri Carma's picture

My January Layoffs List http://forum.prisonplanet.com/index.php?topic=100571.msg1586383#msg1586383

WEF: Five Mln Jobs Likely To Be Erased In 5 Years
Homelessness Surges Across The US
The labor force participation rate remained low, at 62.5%
Record 95 Million Americans NOT In Labor Force

AIG to spin off mortgage unit, cut jobs in sweeping overhaul
At least 26,000 U.S. coal mining jobs have been lost in slump
Barclays to slash about 1,000 investment bank jobs worldwide
BP Fires 4,000 As Oil Slump Deepens
DuPont 10% reduction in its workforce of about 54,000 employees
GE Plans to Cut 6,500 Jobs in Europe After Alstom Purchase
GoPro plans to lay off 7% of its workforce
J&J to Cut 3,000 Jobs Amid Medical-Device Sales Slump
Norfolk Southern to cut jobs, rail lines
Pearson to Eliminate 4,000 Jobs in Bid to Revive Earnings
Sprint Fires 2500: 8% Of Its Entire Workforce
Tata Steel confirms 1,050 job cuts
Tiffany cuts jobs as sales lose sparkle
U.S wireless carrier Sprint slashes 2,500 jobs to cut costs
VMware cuts 800 jobs
WalMart To Fire 16,000 As It Closes 269 Stores Globally
Yahoo to Pursue Asset Sales, Cut 15% of Staff
Yahoo looking to slash 10% or more of its workforce

Finland Jobless Rate At 6-Month High
Malaysia Jobless Rate Climbs In November
Poland Jobless Rate Climbs More Than Expected In December
South Africa Sees 32,000 Possible Mining Job Cuts, Minister Says
Sweden Jobless Rate Rises Unexpectedly In December
Taiwan Dec Jobless Rate Rises More Than Expected

http://www.dailyjobcuts.com