Wednesday, April 23, 2014 07:11pm
North Adams, MA now: 46 °   
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
Pine Cobble Forest Project, Dinner Celebrates Utility of Goats
Reception Set for Retiring Williams Inn Owners
North Adams Approves Taxi Rate Hikes
Waldorf High School Students Make Historic Trip to Cuba
St. Luke's Nursing Scholarships Available
Mount Greylock Announces Honor Roll
MCLA honors Three Berkshire County Educators
Bianchi Replaces Key City Administrator
Tully: Why I Changed My Vote
North Adams Hospital Closure Stretching Medical Services
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 (133)
Independent Investor (179)
Archives:
April 2014 (6)
April 2013 (2)
March 2014 (6)
February 2014 (6)
January 2014 (7)
December 2013 (8)
November 2013 (7)
October 2013 (6)
September 2013 (6)
August 2013 (8)
July 2013 (3)
June 2013 (5)
May 2013 (7)
Tags:
Debt Employment Stocks Federal Reserve Markets Commodities Rally Debt Ceiling Stock Market Deficit Japan Greece Currency Crisis Interest Rates Election Jobs Qeii Recession Pullback Fiscal Cliff Congress Selloff Economy Stimulus Banking Taxes Oil Retirement Euro Energy Metals Europe Banks Bailout
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?
@theMarket: Economy Sputters, Stocks Stutter
The Independent Investor: Will the Municipal Bond Massacre Continue?
The Independent Investor: Why Are Interest Rates Rising?
Recent Entries:
@theMarket: Easter Bunny Bounce
The Independent Investor: Good Friday and the Stock Market
@theMarket: No Spring in the Stock Market
The Independent Investor: Banks Face Tougher Regulations
@theMarket: A Crowded Trade
The Independent Investor: Obamacare Confounds Critics
@theMarket: The Faint of Heart
The Independent Investor: Do Women Have a Choice?
The Independent Investor: What's Wrong With This Flight Plan?
@theMarket: Hanging In There


View All
Softball: MG vs Drury
4-22-14 Cat Record allowed just two hits and an unearned...
Touch A Truck
Child Care of the Berkshires held its annual Touch A Truck...
Lacrosse: Hoosac vs. Taconic
Baseball: Pittsfield vs Lee
Chad Shade went 2-for-4 with a run scored, and Sam Fick...
Clarksburg Egg Scramble 2014
The annual Easter egg hunt, sponsored by the VFW, was held...
Pittsfield Egg Scramble 2014
The annual Egg Scramble at Morningside Community School saw...
Track: Monument @Hoosac...
Monument Mountain bested Hoosac Valley on its home turf...
Girls and Boys Tennis: PHS vs...
4-17-14 Girls and Boys tennis match between PHS vs Mt....
Softball: Lee vs Hoosac
4-14-14 Kassandra Kazimierczak went 2-for-4 with a double...
Baseball: MG vs Hoosac
4-11-14 Dan Flynn's suicide squeeze with the bases loaded...
Softball: MG vs McCann
4-11-14 Mount Greylock and McCann Tech played an atypical...
Sullivan School CPR Class
Seventh-graders at Sullivan School in North Adams learned...
Lacrosse: Mounties vs. Hoosac
Mounties overwhelmed Hoosac Valley on Wednesday 14-1....
North Adams Furnace St. Fire
Firefighters contained a top floor apartment blaze on...
Berkshire Chamber Career Fair...
More than 50 employers connected with job seekers at...
Lacrosse: MG vs St. Joe
Mount Greylock boys lacrosse team won 17-4 St. Joseph at...
Softball: MG vs Drury
4-22-14 Cat Record allowed just two hits and an unearned...
Touch A Truck
Child Care of the Berkshires held its annual Touch A Truck...
Lacrosse: Hoosac vs. Taconic
Baseball: Pittsfield vs Lee
Chad Shade went 2-for-4 with a run scored, and Sam Fick...
Clarksburg Egg Scramble 2014
The annual Easter egg hunt, sponsored by the VFW, was held...
| 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