Friday, August 01, 2014 03:49am
North Adams, MA now: 57 °   
Send news, tips, press releases and questions to info@iBerkshires.com
The Berkshires online guide to events, news and Berkshire County community information.
SIGN IN | REGISTER NOW   

Home About Archives RSS Feed
The Independent Investor: Another Round of Layoffs Looming
By: Bill Schmick On: 04:58PM / Thursday June 09, 2011
Important
0
Interesting
1
Funny
0
Awesome
1
Infuriating
1
Ridiculous
0

Last week's uninspiring gain in employment disappointed Wall Street and sent the markets into the doldrums. As July approaches and the start of most state and local government's new fiscal year begins, expect a lot of pink slips in the mail.

Unfortunately, the continued slow economy and the end of federally-sponsored stimulus programs are delivering a one-two punch to most state budgets. Since states are required to balance their budgets each year, cutting spending is a necessity. Most economists are forecasting at least a loss of 110,000 jobs in local government sectors in the third quarter.

Negotiations with state employee unions have been largely one sided. Either the unions accept large wage and benefit concessions or the axe will fall. Most unions are digging in their feet, arguing that there are other areas of the budget more deserving of cuts or that taxes should be raised on those best able to afford it in order to balance budgets. Their arguments are falling on deaf ears.

In Hartford, Conn., for example, Gov. Daniel Malloy has given the unions a choice of massive layoffs or $1.6 billion in concessions. In New York, Gov. Andrew Cuomo is demanding $450 million in give backs or unions should prepare for 9,800 state employee layoffs. Vermont's state unions, on the other hand, have decided to pre-empt the layoff threat by agreeing to take furloughs amounting to 40 hours a week over the next year. Massachusetts is still negotiating its budget but you can bet legislators will be going down the same road as neighboring states.

At the same time, tax revenues, although rising, are still anemic at best. In states such as New York, Connecticut and Massachusetts, where a large slug of tax revenues is dependent on Wall Street jobs and bonuses, the news is less than positive.

Banks and brokers are considering a new round of layoffs. Some banks are already laying off, like First Niagara Financial Group in Connecticut. Morgan Stanley said it will be reducing headcount while Wells Fargo and Bank of America/Merrill Lynch have been shutting offices across the country. Others are planning the same thing.

The entire banking sector continues to struggle with the de-leveraging process of bad loans, foreclosures, new regulations and volatile financial markets. Stock markets are not what they used to be, nor are the IPO markets. Readers are probably aware that volume on the exchanges has plummeted, despite an 80 percent rebound in the averages.

The disappearance of retail investors after the financial crash, the advent of exchange traded funds, which are quickly replacing individual equities as the investment of choice, and the massive increase in electronic trading have conspired to gut the profitability of what was once a huge profit center for the financial community.

When you combine the state and local layoffs and new layoffs in the private sector, the total will make further gains in employment problematic in the short term. It may very well take until next year before we see unemployment fall by much more than a half percent.

It isn't the end of the world, unless of course you are one of the unemployed or soon to be. The plus side of the layoffs and other spending cuts that will shortly confront us is that it will put our local and state governments on a firmer financial footing. That is extremely important down the road since municipalities will need to continue to borrow money through bond offerings in the municipal markets. Without balancing budgets, that would become extremely difficult. It appears to me that layoffs, no matter how painful, are better than bankruptcy. 

Bill Schmick is an independent investor with Berkshire Money Management. (See "About" for more information.) None of the information presented in any of these articles is intended to be and should not be construed as an endorsement of BMM or a solicitation to become a client of BMM. The reader should not assume that any strategies, or specific investments discussed are employed, bought, sold or held by BMM. Direct your inquiries to Bill at (toll free) or e-mail him at wschmick@fairpoint.net. Visit www.afewdollarsmore.com for more of Bill's insights.



Write a comment - 1 Comment       Tags: layoffs, budgets, unions      
News Headlines
40th Annual Adams Agricultural Fair Runs This Weekend
North Adams Auto Parts Store Sets Grand Opening Sunday
Berkshire Force Runs to Second Win in World Series Play
Clark Opens Galleries With Abstract 'Make It New'
Magic Treehouse Author Invokes Invokes Joy of Learning
Bankruptcy Court OKs BMC Bid for Northern Berkshire Healthcare Assets
North Adams Implements Higher Parking Fines
North Adams Cemetery Commission Advises Rates, Rules
National Grid Meets With Local Officials Over Power Outages
Action Continues at YMCA Long Course Nationals
Bill Schmick is registered as an investment advisor representative and portfolio manager with Berkshire Money Management (BMM), managing over $200 million for investors in the Berkshires. Bill’s forecasts and opinions are purely his own and do not necessarily represent the views of BMM. None of his commentary is or should be considered investment advice. Anyone seeking individualized investment advice should contact a qualified investment adviser. None of the information presented in this article is intended to be and should not be construed as an endorsement of BMM or a solicitation to become a client of BMM. The reader should not assume that any strategies, or specific investments discussed are employed, bought, sold or held by BMM. Direct your inquiries to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com Visit www.afewdollarsmore.com for more of Bill’s insights.

 

 

 



Categories:
@theMarket (140)
Independent Investor (190)
Archives:
July 2014 (2)
June 2014 (6)
May 2014 (9)
April 2014 (8)
March 2014 (6)
February 2014 (6)
January 2014 (7)
December 2013 (8)
November 2013 (7)
October 2013 (6)
September 2013 (6)
August 2013 (8)
Tags:
Debt Fiscal Cliff Recession Stimulus Federal Reserve Deficit Selloff Japan Election Commodities Interest Rates Europe Retirement Euro Oil Currency Jobs Banks Stocks Rally Debt Ceiling Markets Fed Metals Europe Economy Taxes Pullback Crisis Greece Stock Market Housing Congress Bailout Energy
Popular Entries:
The Independent Investor: Understanding the Foreclosure Scandal
The Independent Investor: Don't Fight the Fed
The Independent Investor: Does Cash Mean Currencies?
@theMarket: QE II Supports the Markets
@theMarket: Markets Are Going Higher
The Independent Investor: General Motors — Back to the Future
The Independent Investor: How Will Wall Street II Play on Main Street?
The Independent Investor: Will the Municipal Bond Massacre Continue?
@theMarket: Economy Sputters, Stocks Stutter
The Independent Investor: Why Are Interest Rates Rising?
Recent Entries:
The Independent Investor: How Much Is Too Much to Spend in Retirement?
The Independent Investor: The Fed Turns Off the Spigot
The Independent Investor: Should You Pay Off Mortgage Before Retiring?
The Independent Investor: Retirement should be a part-time job
The Independent Investor: Unhappily Ever After
@theMarket: June Swoon
@theMarket: Europe Is a Good Bet
The Independent Investor: A Road to the Future
The Independent Investor: Holy Cow
@theMarket: Flirting With Record Highs Again


View All
Reading of The Gettysburg...
The Adams Historical Society held a mass reading of the...
Adams Cruz Night 2014
Classic and custom cars lined Center St. Thursday night for...
Williamstown Chamber @MadMacs
Attendees at Wednesday's Williamstown Chamber Nite at Mad...
Pittsfield Ethnic Fair 2014
North Street in Pittsfield had a double-dose of block...
LaFesta Baseball 2014
The LaFesta Baseball Exchange, celebrating 24 years, pits...
Adams Polish Picnic 2014
Adams residents enjoyed traditional Polish food and music...
Mingo's Sports Bar & Grill...
Over 50 cars packed into the Mingo's Sports Bar & Grill...
BYP Networking at Naumkeag
The Berkshire Young Professionals met at the historic...
Pittsfield Shakespeare...
Pittsfield's Shakespeare in the Park free performances at...
Lanesborough Kids Fire Camp...
Lanesborough Fire Department held its annual Kids Fire Camp...
Lanesborough Fire Drill
The Lanesborough Fire Department trains on basement fires...
Pittsfield Polish Picnic
Crowds lined up for golabki and kapusta at the annual...
North Adams Kids Emergency...
The North Adams 21st Century Community Learning Center...
Gather-in Festival 2014
The 42nd annual Gather-In festival was held at Pitt Park in...
BFAIR Mini-Golf Fundraiser
Berkshire Family and Individual Resources held its annual...
Lanesborough Seeds of Harmony...
Bradly Farm in...
Reading of The Gettysburg...
The Adams Historical Society held a mass reading of the...
Adams Cruz Night 2014
Classic and custom cars lined Center St. Thursday night for...
Williamstown Chamber @MadMacs
Attendees at Wednesday's Williamstown Chamber Nite at Mad...
Pittsfield Ethnic Fair 2014
North Street in Pittsfield had a double-dose of block...
LaFesta Baseball 2014
The LaFesta Baseball Exchange, celebrating 24 years, pits...
| Home | A & E | Business | Community News | Dining | Real Estate | Schools | Sports & Outdoors | Berkshires Weather | Weddings
Advertise | Recommend This Page | Help Contact Us | Privacy Policy| User Agreement
iBerkshires.com is owned and operated by: Boxcar Media 102 Main Street, North Adams, MA 01247 -- T. 413-663-3384 F.413-664-4251
© 2000 Boxcar Media LLC - All rights reserved