Category: Business

  • Layoffs on Wall Street?

    After adding thousands bankers in the past two years, financial firms again appear to be on the verge of cutting that many positions and then some. Consultants and Wall Street recruiters say banks could eliminate nearly 21,000 jobs from their securities divisions in New York alone. Worldwide cuts could be even larger. Recruiters say big banks are in the process of finalizing their downsizing plans, and that layoffs could start soon.

    The latest round of job cuts could rival those that happened during the financial crisis. Back then, which was less than four years ago, Wall Street eliminated 28,000 positions. But that round of downsizing included the collapse of Bear Stearns and Lehman Brothers, and the biggest crisis in the financial markets since the Great Depression. By comparison, the stock market is up this year, and just last week banks reported better than expected earnings for the first quarter. What’s more, at the same time large firms are firing, many smaller investment banks have been staffing up. As a result, overall employment on Wall Street might not drop as much as it did after the financial crisis.

    via Fortune Mag.

    Two thoughts:

    First, just so everyone knows, the crisis in not over; we’re not out of the woods yet.  It’s sad whenever anybody loses their job and there may be a lot more of this coming.  Bankers, especially investment bankers, are especially susceptible.  A story this week about how JP Morgan Chase lost $2 billion in their “synthetic credit portfolio” shows with what relative ease the wheels can fall off the bankers bus.  Everyone who works in that industry is on the edge everyday.

    Second, this is a fine example of the private sector doing something the public sector cannot — getting rid of unnecessary people.  We know from the 2010 U.S. Census that Illinois while Illinois is growing its 3% rate over a decade is enemic compared to other states; we lost a U.S. House seat.  Yet Illinois government continues to grow and grow and grow.  We need to right-size Illinois government.  Some agencies are actually understaffed; leaving taxpayers waiting for basis services.  Others are bloated with staff getting paid to attend baseball games.

  • Scientists plan $1b Ghost Town

    A scientific ghost town in the heart of southeastern New Mexico oil and gas country will hum with the latest next-generation technology — but no people.

    A $1 billion city without residents will be developed in Lea County near Hobbs, officials said Tuesday, to help researchers test everything from intelligent traffic systems and next-generation wireless networks to automated washing machines and self-flushing toilets.

    via Fox News.

    I can’t help but think of the good we could do in this town with one billion dollars.  Google’s testing self driving cars on public streets.  Self-flushing toilets can be tested anywhere.  I’m skeptical as to why someone — maybe taxpayers — would spend a billion on what is nothing more than a big toy for a few scientists.

  • China Enters U.S. Banking Market

    The United States on Wednesday opened its banking market to ICBC, China’s biggest bank, for the first time clearing a takeover of a US bank by a Chinese state-controlled company.

    Just days after high-level US-China economic talks in Beijing, the Federal Reserve approved an application from Industrial and Commercial Bank of China to buy a majority stake in the US subsidiary of Bank of East Asia.

    The transaction will make ICBC the first Chinese state-controlled bank to acquire retail bank branches in the United States.

    via Yahoo! News Canada.

    An interesting development.  Curious why so little coverage of this in the U.S. MSM.

     

     

  • Labor Force Participation Rate Messes with Unemployment Rate

    Exactly a month ago I wrote about the bogus employment numbers claimed for the Chicago area.  I claimed that there were no actual jobs “created” and that the only reason the employment rate went down was because people simply left the job market.

    Didn’t have this at the time… but my theory has real support.

    Changes in population and the participation rate can significantly impact the unemployment rate. If the Civilian noninstitutional population (over 16 years old) grows by about 2 million per year – and the participation rate stays flat – the economy will need to add about 94 thousand jobs per month to keep the unemployment rate steady at 8.2%.

    However if the population grows faster (say 2.5 million per year), and/or the participation rate rises, it could take significantly more jobs per month to hold the unemployment rate steady. As an example, if the working age population grows 2.5 million per year and the participation rate rises to 65% (from 63.8%) over the next two years, the economy will need to add 227 thousand jobs per month to hold the unemployment rate steady.

    via Calculated Risk.

    Wanna see a chart of the Labor Force Participation Rate?

    US Labor Force Participation Rate Chart

    US Labor Force Participation Rate data by YCharts

    Pretty wild?  That fall off represents millions and millions of people who are simply no longer working, looking for work, claiming unemployment benefits, or are new grads who can’t find work.

    It’s no wonder that more and more people are eating at McDonald’s.

  • IL, 3rd Worst for Business …again

    Let’s first get some background on the winners:

    In Chief Executive’s eighth annual survey of CEO opinion of Best and Worst States in which to do business, Texas easily clinched the No. 1 rank, the eighth successive time it has done so. California earns the dubious honor of being ranked dead last for the eighth consecutive year.  …

    Florida moved up from number three last year to number two. Last year, Florida Gov. Rick Scott penned a tongue-in-cheek letter to Texas Gov. Rick Perry, warning him that Florida is coming after the Lone Star State’s top ranking. Since Scott took office, his administration has enacted business tax and regulatory reforms that have contributed to the creation of more than 140,000 private sector jobs and an unemployment drop of 2.1 percentage points last year—one of the biggest decreases in the nation.It is perhaps no coincidence that Texas and Florida have the highest net migration of people to their states from 2001 to 2009. (By contrast, New York and California lost over 1.6 million and 1.5 million in net migration out of the states, respectively, over the same period.) People migrate in search of employment, but this can cut both ways. Texas is justly proud of adding to its employment numbers, something Gov. Perry cited numerous times during his brief campaign for the Republican Presidential nomination. Between June 2009—which marked the official end of the recession—and July 2011, the number of jobs increased in the state by 328,000. Nationally, the job growth in that time period was 697,000 according to figures from the Bureau of Labor Statistics. This translates to Texas jobs making up 47 percent of the national net job creation. However, neither Texas, nor the nation, is adding jobs at a pace fast enough to bring down unemployment to historically normal levels. And Texas’ unemployment rate—while still below the national average—is now higher than that of 26 states

    via Chief Executive Magazine.

    Wow!!  Congratulations to Florida and Texas for being massive job creators.

    Illinois?  You rank 47th.

    One CEO commented that “Illinois is in a race to the bottom.”

    Congrats Gov. Quinn, Michael Madigan, Mayor Daley, and the rest of the cabal for driving businesses and job out of Illinois.  We’re shrinking while other states are growing.  You’ve forced millions of people to suffer while you’ve enriched yourselves.

    Pathetic.

  • Another Foreclosure Wave Arrives

    Half a decade into the deepest U.S. housing crisis since the 1930s, many Americans are hoping the crisis is finally nearing its end. House sales are picking up across most of the country, the plunge in prices is slowing and attempts by lenders to claim back properties from struggling borrowers dropped by more than a third in 2011, hitting a four-year low.

    But a painful part two of the slump looks set to unfold: Many more U.S. homeowners face the prospect of losing their homes this year as banks pick up the pace of foreclosures.

    “We are right back where we were two years ago. I would put money on 2012 being a bigger year for foreclosures than 2010,” said Mark Seifert, executive director of Empowering & Strengthening Ohio’s People (ESOP), a counseling group with 10 offices in Ohio.

    “Last year was an anomaly, and not in a good way,” he said.

    In 2011, the “robo-signing” scandal, in which foreclosure documents were signed without properly reviewing individual cases, prompted banks to hold back on new foreclosures pending a settlement.

    Five major banks eventually struck that settlement with 49 U.S. states in February. Signs are growing the pace of foreclosures is picking up again, something housing experts predict will again weigh on home prices before any sustained recovery can occur.

    Mortgage servicing provider Lender Processing Services reported in early March that U.S. foreclosure starts jumped 28 percent in January.

    via Reuters.

    The main stream media is telling us it’s all getting better.  Get out there and buy something.  But that story’s actually a few weeks old.  The latest news is now:

    Falling Home Prices Drag New Buyers Under Water

    More than 1 million Americans who have taken out mortgages in the past two years now owe more on their loans than their homes are worth, and Federal Housing Administration loans that require only a tiny down payment are partly to blame.

    via Reuters.

    Doh!!  For those that don’t understand let’s be clear; the “solution” to the problem is making the problem worse.

    Governments intrusion into every sector of our lives has been an abysmal failure.  The people are being taken advantage of and the banks — who are supposed to be the ones the government’s to control — get keep getting richer an richer.  The too big to fail are now even bigger.

    It’s a joke.

  • Governments’ CCTV System Knows You

    It’s 1984 all over again:

    A new camera technology from Hitachi Hokusai Electric can scan days of camera footage instantly, and find any face which has EVER walked past it.

    Its makers boast that it can scan 36 million faces per second.

    The technology raises the spectre of governments – or other organisations – being able to ‘find’ anyone instantly simply using a passport photo or a Facebook profile.

    The software from Hitachi Hokusai electric can scan through 36 million faces a second looking for its ‘target’. The software can scan through days of CCTV footage almost instantly

    The ‘trick’ is that the camera ‘processes’ faces as it records, so that all faces which pass in front of it are recorded and stored instantly.

    Faces are stored as a searchable ‘biometric’ record, storing the unique

    When the police – or anyone else – want to search for a particular individual, they’re searching through a gallery of pre-indexed faces, rather than a messy library of footage.

    ‘We think this system is suitable for customers that have a relatively large-scale surveillance system, such as railways, power companies, law enforcement, and large stores,’ says the company.

    via Daily Mail.

    This is more than a little troubling.  Someone get the ACLU on the phone.

  • How Retirement Benefits May Sink Illinois

    We’re national news again.

    …  Indiana’s debt for unfunded retiree health-care benefits, for example, amounts to just $81 per person. Neighboring Illinois’s accumulated obligations for the same benefit average $3,399 per person.

    Illinois is an object lesson in why firms are starting to pay more attention to the long-term fiscal prospects of communities. Early last year, the state imposed $7 billion in new taxes on residents and business, pledging to use the money to eliminate its deficit and pay down a backlog of unpaid bills (to Medicaid providers, state vendors and delayed tax refunds to businesses). But more than a year later, the state is in worse fiscal shape, with its total deficit expected to increase to $5 billion from $4.6 billion, according to an estimate by the Civic Federation of Chicago.

    Rising pension costs will eat up much of the tax increase. Illinois borrowed money in the last two years to make contributions to its public pension funds. This year, under pressure to stop adding to its debt, the legislature must make its pension contributions out of tax money. That will cost $4.1 billion plus an additional $1.6 billion in interest payments on previous pension borrowings.

    Business leaders are now speaking openly about Illinois’ fiscal failures. Jim Farrell, the former CEO of Illinois Toolworks who is heading a budget reform effort called Illinois Is Broke, said last year that the state is squandering its inherent advantages as a business location because “all the other good stuff doesn’t make up for the [fiscal] calamity that’s on the way.” Caterpillar, the giant Peoria-based maker of heavy construction machinery, made the same point more vividly when it declined in February to locate a new factory in Illinois, specifically citing concern about the state’s “business climate and overall fiscal health.”

    via WSJ.

    How bad is it going to be?

    Back in Illinois, Dana Levenson, Chicago’s former chief financial officer, has projected that the average city homeowner paying $3,000 in annual property taxes could see his tax bill rise within five years as much as $1,400. The reason: A 2010 Illinois law requires municipalities to raise the funding levels in their pension systems using property tax revenues but no additional contributions from government employees. The legislation prompted former Chicago Mayor Richard Daley in December to warn residents that the increases might be so high, “you won’t be able to sell your house.”

    We’re in trouble.

    Local media is still ignoring.  National media starting to ring the bell.

  • IL’s ‘Amazon-tax law’ Unconstitutional – 9K Jobs Lost for Nothing

    An Illinois law aimed at leveling competition between online and offline retailers while collecting more state sales taxes owed from Internet purchases is unconstitutional a Cook County judge said Wednesday. …

    In March 2011, Illinois passed the Main Street Fairness Act, informally dubbed the Amazon-tax law.Before the law, online retailers were forced to collect and remit sales taxes on purchases made by Illinois residents only if the online retailer had a “physical presence” in the state. For example, Sears must collect sales tax on virtual checkout at Sears.com because it has a headquarters and retail stores in Illinois. But Amazon.com does not have a physical presence and did not have to collect tax on checkout.

    But the new law expanded the meaning of physical presence beyond a warehouse, factory or office to include affiliate companies, typically deal and coupon website operators that earn commissions for directing shopping traffic to an online store. Affiliates are essentially third-party advertisers for online stores.

    To avoid having to collect sales tax upon virtual checkout, some large Internet retailers including Amazon.com, responded by cutting ties with affiliates in Illinois. That eliminated revenue streams for affiliate marketers. There were an estimated 9,000 affiliate marketers in Illinois, according to the Performance Marketing Association, a trade group that was the plaintiff in the case.

    After the new law passed, some prominent Illinois-based Internet businesses, such as CouponCabin.com and FatWallet.com, fled to nearby Indiana and Wisconsin rather than be cut off from commissions from Amazon.com,Overstock.comand others.

    Cook County Circuit Court Judge Robert Lopez Cepero said in court Wednesday that the Illinois law violated the commerce clause of the U.S. Constitution, which limits who a state can tax, and that the law conflicted with the federal Internet Tax Freedom Act, which prohibits some types of Internet-related taxes. He directed parties to draft an order reflecting his opinion.  …

    “We are relieved that the 9,000 affiliates that were based in Illinoismay now have the opportunity to operate in Illinois without jeopardizing their business relationships with online retailers. This ruling places the responsibility for a solution back where it belongs: in Congress. CouponCabin continues to strongly support a federal solution to the taxation of all online transactions.”via Chicago Tribune.

    Unbelievable!

    I got news for the mopes that voted for this thing — THESE JOBS AIN’T COMING BACK!!

    Worse, the companies that left took the talent base with them.  So now there’s some talent in Indiana or Wisconsin which will attract other tech businesses.  Companies locate to where there is talent.  The “if you built it they will come” only works in movies.

    Chicago was establishing itself as an affiliate marketing empire, sort-of a Midwest silicon valley of online marketing.  But 9,000 high paying tech jobs left.

    What we need is a law that says anytime a legislature votes for some law later found to be unconstitutional that they get docked what it cost the taxpayers to defend in court and the estimated loss to the state treasury.

  • lllinois Moves Toward Insolvency

    We’re now making national news:

    After trying to tax Illinois to governmental solvency and economic dynamism, Pat Quinn, a Democrat who has been governor since 2009, now says “our rendezvous with reality has arrived.”  …

    Illinois was more heavily taxed than the five contiguous states (Indiana, Kentucky, Missouri, Iowa, Wisconsin) even before January 2011, when Quinn got a lame duck Legislature (its successor has fewer Democrats) to raise corporate taxes 30 percent (from 7.3 percent to 9.5 percent), giving Illinois one of the highest state corporate taxes, and the fourth highest combination of national and local corporate taxation in the industrialized world. Since 2009, Quinn has spent more than $500 million in corporate welfare to bribe companies not to flee the tax environment he has created.

    Quinn raised personal income taxes 67 percent (from 3 percent to 5 percent), adding about $1,040 to the tax burden of a family of four earning $60,000. Illinois’ unemployment rate increased faster than any other state’s in 2011. Its pension system is the nation’s most underfunded, and the state has floated bond issues to finance pension contributions. Quinn’s recent flirtation with realism — a plan to raise the retirement age to 67 and cap pension cost-of-living adjustments — is less significant than the continuing unrealistic expectation that some Illinois’ pension investments will grow 8.5 percent annually. Although the state Constitution mandates balancing the budget, this is almost meaningless while the state sells bonds to pay for operating expenses (in just 10 years the state’s bonded debt has increased from $9.4 billion to $30 billion), underfunds pensions and other liabilities, and makes vendors wait (they are owed $5.6 billion).

    Peterson, a professor of government at Harvard, and Nadler, a doctoral candidate also at Harvard, say collective bargaining rights for government employees pose “a dramatically new challenge to the viability” of American federalism. They cite studies demonstrating that investors’ perceptions of risk of default are correlated with the rate of unionization among government employees. Higher percentages of government employees who are unionized, and larger Democratic shares of state legislative seats, correlate with increases in state borrowing costs.At least 12 percent of Americans change their residences each year, often moving to more hospitable economic environments. In a system of competitive federalism, Peterson and Nadler write, “If states and localities attempt in a serious way to tax the rich and give to the poor, the rich will depart while the poor will be attracted.” And government revenues and expenditures vary inversely.

    via Boston Herald.

    Illinois may fail before California.  Businesses are fleeing.  Residents are fleeing.  Illinois is shrinking, dying.

    For all of the Democrats efforts to “help” the poor, how will the poor be helped when Illinois becomes nothing more than one big Detroit?  The rich will all leave — they have the means to do so.  Those left I guess will feed on each other.

    I need to make sure history get written correctly.  The suffering of the poor that is coming is blood on the hands of Richie Daley, Michael Madigan, Lisa Madigan, Rod Blagojevich, George Ryan, Pat Quinn, Rahm Emanual, Jesse White, Danny Davis, Jesse Jackson, Todd Stroger, John Daley, and the rest of the Illinois combine… the Machine.