| There is one overriding message from the jobs | | | | battered US housing sector with the National |
| bloodbath of this week. | | | | Association of Realtors reporting a 6.5% rise in |
| That is: this slowdown is going to be long, hard | | | | the number of pre-owned houses sold in |
| and tough and things are going to worsen. | | | | December: 4.74 million unit annual rate. Economists |
| Indeed US brokers Merrill Lynch now says it | | | | had expected a 4.40 million unit pace. |
| thinks estimates for 2009 profits for US | | | | The US Conference Board said its index of leading |
| companies are still too generous, that earnings are | | | | economic indicators rose 0.3%: economists had |
| going to be lower. | | | | expected a fall of the same size. |
| Brokers already believe that December 2008 | | | | However, the realtors' report also had the now |
| quarter earnings will be down 28%, so Merrill | | | | familiar bad news with the median national home |
| Lynch's warning should be seen as a pointer to | | | | price in the US down 15.3% in December from |
| the future. | | | | the same month of 2007, the largest fall on |
| Anyone thinking it's going to be a quick exit | | | | record. |
| rebound later this year, or even in 2010, had | | | | The financial crisis claimed Iceland's Prime Minister |
| better think again. | | | | Geir Haarde who announced the resignation of his |
| The 100,000 job cuts that echoed around the | | | | government after months of protests over |
| world on Monday came from retailing, cars, heavy | | | | economic policies that brought the country close |
| manufacturing, light manufacturing, technology, | | | | to bankruptcy. |
| finance, insurance, technology and more. | | | | A coalition of Green and leftwing parties is |
| On top of the cuts from the likes of BHP Billiton | | | | expected to win the election later this year, which |
| the week before, Intel and Microsoft, the trail of | | | | could provoke tensions between the country, the |
| losses is mounting rapidly, day by day as | | | | banks and the IMF. The Social Democrats will |
| employers, who have tried to keep staff on for | | | | form a new Government in the meantime. |
| as long as possible, are forced by plunging profits, | | | | But Canada will spend $US5.7 billion on |
| to chop and chop deeply. | | | | infrastructure over the next two years and |
| Companies reported badly damaged 4th quarter | | | | officials said Canada will run budget deficits totalling |
| earnings in the US and Europe and used these | | | | $US53 billion over the next two years. |
| profit slumps as the basis for the jobs cuts: | | | | And the Norwegian government presented a |
| Texas Instruments, Caterpillar and ING for | | | | $US2.87 billion fiscal stimulus package to prevent a |
| example (it was bailed out by the Dutch | | | | surge in unemployment. It is dipping into its |
| government for a second time with a deal to | | | | state-owned wealth fund to help bolster spending, |
| takeover dodgy real estate assets and keep | | | | as is Singapore. |
| lending to the economy). | | | | But it was the toll of job losses that staggered |
| The IMF saw the US economy contracting 1.6% | | | | observers: construction equipment giant Caterpillar |
| this year, with the euro zone shrinking 2% and | | | | axed 20,000 places worldwide to cope with |
| Japan 2.6%. Media reports said the Fund, later this | | | | plunging sales. Its big Japanese rival, Komatsu |
| week, would reveal world growth for this year | | | | warned of a 15% drop in sales and a 42% plunge |
| 0.5% at best. Next year an optimistic 3%. | | | | in profit in the year to March 31. |
| Overnight the Japanese economy okayed a | | | | New York-based drug maker Pfizer announced it |
| modest stimulus package of about $US75 billion | | | | would acquire its rival Wyeth for $US68 billion |
| and the German Cabinet signed off on a 50 billion | | | | ($A104 billion), and then announced it would chop |
| euro package. The UK Government revealed a | | | | the combined workforces of the two companies |
| $US4 billion-plus assistance package for its car | | | | by 19,000, or 15%, and its own global workforce |
| industry. | | | | by 10%, or 8,000 jobs. It's halving dividend to help |
| The aim of these packages is to try and slow the | | | | finance this big deal. Investment banks will carve |
| downturn and keep as many people as possible in | | | | up $US207 million from this mega-merger. |
| jobs. | | | | Texas Instruments reported a big fall in 4th |
| Companies in the US and Europe chopped more | | | | quarter profits, and plans to shed up to 3,400 |
| than 90,000 jobs Monday that also saw the | | | | jobs. And still in technology, an American union |
| Iceland government collapse, General Motors chop | | | | reckons IBM, which last week reported better |
| more factories as sales slump, and America's | | | | than expected 4th quarter profits, is readying |
| second biggest cardboard processor collapse with | | | | itself to chop at least 2500 jobs soon. . |
| $US5.6 billion in debts. | | | | General Motors dropped an extra 2000 jobs at |
| Around 80 000 jobs were cut in the US, the rest | | | | two US plants as it continues restructuring. US |
| in Europe. | | | | telecom operator Sprint Nextel said it would cut |
| A survey of private sector economists in the US | | | | 8000 jobs, or 14% of its staff, and top US home |
| had bad news: they see the slump as worsening. | | | | improvement retailer Home Depot is culling 7000 |
| (Source) | | | | employees across America. |
| The survey found that companies will lay off | | | | The big Dutch financial services group, ING, has |
| more workers and hoard more cash in the next | | | | obtained more help from its government to stay |
| 12 months. A large majority of the 105 | | | | alive and is sacking thousands of people, as is the |
| economists polled believe the country's gross | | | | huge Philips lighting and technology group. |
| domestic product will continue to sink in 2009. | | | | All up, ING and Philips are shedding around 13,000 |
| Respondents to the survey were getting more | | | | people from their businesses worldwide to try and |
| pessimistic about the macroeconomic outlook. | | | | cut costs as sales and demand slump faster than |
| "78% of respondents expect U.S. real GDP to be | | | | expected. |
| lower in 2009 than in 2008." | | | | And Corus, the big Anglo-Dutch steelmaker is |
| "NABE's January 2009 Industry Survey depicts | | | | cutting 3,500 jobs around the world, some 2,000 |
| the worst business conditions since the survey | | | | of them in Britain, due to a sharp fall in demand |
| began in 1982, confirming that the U.S. recession | | | | for steel. |
| deepened in the fourth quarter of 2008," said | | | | The company is Europe's second-largest |
| Sara Johnson, a NABE economist. | | | | steelmaker now owned by the Indian company, |
| Nearly half (47%) of surveyed economists said | | | | Tata which is struggling to keep Jaguar Landrover |
| overall industry demand was falling, compared | | | | alive in Britain.. |
| with 35% who said so in the October survey. | | | | Another major US company has collapsed: the |
| "Just 10% of respondents said profit margins | | | | Smufit-Stone Container Corp, a cardboard |
| were rising, compared with 52% who believe they | | | | packaging giant and one of the world’s largest |
| are falling. And 38% of economists said capital | | | | paper recyclers, has gone bust in the US with |
| expenses are falling, up from just 15% in October. | | | | $US5.6 billion in debt. It was unable to service |
| "Over half expect real GDP to fall by more than | | | | amid a slumping economy and demand for its |
| one percent this year, and only three percent | | | | products. |
| project growth of over one percent. | | | | The company, which is based in the US but was |
| "Falling profit margins outnumbered rising margins | | | | founded in Ireland, filed for Chapter 11 protection |
| five-to-one among respondents’ firms—the | | | | in the US: besides the $US5.6 billion in debt the |
| worst reading since 1982. | | | | company had $US7.5 billion in assets. 24 |
| "Job losses accelerated in the fourth quarter, and | | | | subsidiaries or affiliates also sought protection. It |
| the employment outlook for the next six months | | | | had net sales of $US7.4 billion in 2007.(Source) |
| has weakened further. | | | | Smurfit-Stone, based in Chicago is North |
| "With market prospects deteriorating, firms | | | | America’s second- largest maker of |
| slammed the brakes on capital spending in the | | | | corrugated packaging, and has 22,000 employees |
| fourth quarter of 2008; the percentage of firms | | | | in the US, Canada, Mexico and Asia. |
| reducing capital expenditures (38%) was the | | | | In Britain two retail chains selling shoes went bust |
| highest in the history of the survey." | | | | overnight and their listed owner, Stylo, was |
| The survey found that a majority of those | | | | suspended from trading. |
| replying said credit conditions hurt businesses, as | | | | Barratts Shoes and PriceLess became the latest |
| customers had less leverage to buy discretionary | | | | British chains to go into administration, putting the |
| products. 78% of respondents said tightening | | | | jobs of around 5,00 people at risk. The 400 |
| credit conditions affected customers, and 52% | | | | stores in the two chains will remain open for now. |
| said the credit crunch directly hurt businesses in | | | | They join fashion chains, Dolcis, Stead & |
| their industries. | | | | Simpson and Faith which have all gone into |
| Rapidly deteriorating global market conditions are | | | | administration. Woolworths has closed, at a loss of |
| hammering business profits. | | | | 30,000 jobs and the home improvement group, |
| "For the fourth consecutive quarter, reports of | | | | MFI has failed. The UK children's retailer, Adams |
| falling profit margins (52% of respondents) | | | | has shut, while furniture retailer, Land of Leather |
| outnumbered reports of rising margins (10%). This | | | | is a failure. |
| was the worst result since the spring of 1982. | | | | And a sure sign of the damage the credit crunch |
| Job losses accelerated in the fourth quarter, | | | | is doing to business can be seen from the 72% |
| producing the worst survey result in 17 years. | | | | plunge in 4th quarter operating earnings for |
| Some 44% of firms cut payrolls, while only 14% | | | | American Express. |
| added workers. | | | | The credit card giant said quarterly profit from |
| | | | | continuing operations hit $US238 million, down |
| "Looking ahead, 39% of companies plan to reduce | | | | from $US858 million in the same quarter of 2007 |
| payrolls over the next six months, while 17% plan | | | | (Source). |
| to increase employment. Only the services sector | | | | American Express received a $US3.4 billion from |
| continues to create jobs." | | | | the US Treasury's bank bailout fund earlier this |
| If anything, that explains why so many big and | | | | month as surging consumer defaults forced it to |
| small companies are now cutting jobs, more than | | | | set aside more reserves and the market for |
| a year after the US economy officially slipped into | | | | bonds backed by credit-card debt froze. |
| this recession. Business conditions have become | | | | The company has chopped 7,000 jobs, frozen |
| so fraught, thanks to the credit crunch and | | | | management salaries and cut other costs to try |
| drought, that they have no alternative. | | | | and save $US1.8 billion a year. For the year |
| With US first time jobless claims running at more | | | | earnings fell 32% to $US2.8 billion. |
| than half a million a week for the past two | | | | IMPORTANT: AIR reports about financial markets |
| months, there's no let up in the flow of bad news | | | | and investment products in the widest sense |
| for US workers, and increasingly employees in | | | | possible. The AIR website and all its contents is |
| Europe and Japan. | | | | prepared for general information only, and as |
| US unemployment looks certain to surge from | | | | such, the specific needs, investment objectives or |
| the December level of 7.2%, even as thousands | | | | financial situation of any particular user have not |
| of workers stop actively searching for the few | | | | been taken into consideration. Individuals should |
| jobs that are there. | | | | therefore talk with their financial planner or |
| But there was some rare good news from the | | | | advisor before making any investment decisions. |