A Workable Solution
Bloomberg News doesn’t pull any punches.
ITEM — “SOUTHFIELD, Mich. – General Motors Corp. and Ford Motor Co., the biggest U.S. automakers, dragged the domestic industry to its 10th straight monthly sales decline in August as consumers continued to snub trucks because of gasoline prices.
“GM dropped 20 percent and Ford was down 27 percent. Each further pared production plans for the rest of the year …
“A weak U.S. economy, falling home values, and gasoline prices near $ 4 a gallon combined to drop industry wide sales 16 percent, and analysts said they saw little prospect for relief …
“‘I don’t think we’ve seen the worst,’ said John Casesa, managing partner of Casesa Shapiro Group in New York. ‘This has been a long, dismal story, and macro conditions are as bad as they get for the auto industry…’”
According to Chrysler president Jim Press, “consumers’ inability to get access to credit is a bigger threat to sales than gasoline prices.”
ITEM — “CHARLOTTE, N.C. – GMAC LLC and its Residential Capital LLC home loan unit plan to dismiss 5,000 employees, or 60 percent of the unit’s staff, and close all 200 GMAC Mortgage retail offices because of weak real estate markets …
“‘This company is in really tough shape,’ said Sean Egan, president of Egan-Jones Ratings Co., of Haverford, Penn. ‘There are no obvious revenues for support. The amount of support they need is quite substantial’…
“GM last month reported the third biggest loss in its 100-year history on plunging sales of pickups and sport-utility vehicles. GMAC remains the primary source of funds for the automaker’s dealers.”
ITEM — “YRC trims more jobs – YRC Worldwide, whose combined companies control the largest share of the U.S. less-than-truckload market, has axed 200 non-union jobs amid continuing recession in the trucking industry, according to wire service reports.
“Chairman and Chief Executive Bill Zollars told Bloomberg News that the cuts were necessary to keep the company’s size ‘commensurate with business volumes.’
“Early this year., YRC Worldwide eliminated 1,100 jobs and shut 27 service centers at two of its underperforming regional subsidiaries. It also eliminated about 100 non-union and salaried jobs. Restructuring costs and write-downs of its value contributed to $ 780 million in losses during the six-month period from last October …
“Zollars this spring repeatedly said he was encouraged that the economy was poised to improve in the second half, but now is taking a less than upbeat stance …
“‘We thought the economy was beginning to stabilize, but since July it has fallen to a lower level again,’ he said. ‘We think the economy will continue to struggle for the next few months. It may be that all of the headwinds out there have had a cumulative on the American consumer.’”
And then The Boston Globe posted this ITEM:
“Staples profit falls 16% as corporate clients tighten belts”
“Corporations slashing orders for office supplies amidst a weakening economy sliced into Staples Inc.’s business as the Framingham chain yesterday reported a 16 percent drop in profits.
“‘The small businesses started cutting back a few quarters ago, and now we’re seeing the cutbacks bleed into the larger corporate businesses,’ said Daniel Binder, an analyst with Jeffries & Co. in new York …
“One of Staples’ largest customers, which typically made monthly purchases totaling $ 700,000, only placed about $ 60,000 in orders over the past two months, according to Staples chief financial officer John Mahoney.”
The News Tribune out in Washington had some similar distressing news.
“Port of Tacoma sees less traffic as companies react to economy”, Rob Carson’s story began. “High fuel prices, tight money and rising unemployment rates are making for a rough year at the Port of Tacoma. Cargo volumes are down because Americans are buying less. High fuel prices are reducing cargo ship traffic and driving up rail prices. So far this year the number of automobiles shipped through the port is down is down 5.6 percent from last year, container traffic is down 3.6 percent and containers hauled away by train are down 11.5 percent.
“Commercial specialists at the port conveyed this sobering news to port commissioners Thursday at a special study session …”
But this “sobering news” and the nationwide gloom didn’t faze the port’s Director of Commercial Strategy in the least. He predicted a long-term upward trend and 60 percent growth in trans-Pacific trade over the next few years. He didn’t say how this would happen, but like so many other port officials it was surely an attempt to secure his own future salary by fibbing to the taxpayers.
Why can’t port officials, politicians, TV newsreaders, and business executives recognize the simple fact that the underlying problem in this nation’s economic woes is unemployment? No jobs means no buying power — no buying power means economic stagnation — economic stagnation means no jobs — no jobs means no buying power — no buying power means economic stagnation — and so on and on and on. What’s so complicated about that? We need to create jobs, and we need to create them by the hundreds of thousands. By the millions, in fact. Is that so hard to understand?