A pair of scales

AP reported that Fujitsu of Japan cut 4,600 more employees after posting a first half loss and predicting an even greater loss for the second half of the year. The giant electronics firm posted a loss of one and half billion dollars for the first half of the year as opposed to a profit of one and a half billion for the first half of 2000. Fujitsu already announced cuts of 16,400 jobs, most of them in North American divisions, in August of this year. Sears Roebuck also announced that it was cutting 4,900 positions, or 22% of its corporate staff. Kodak also announcerd that it is cutting 4,000 jobs, or 5 per cent of its work force. Kodak had earlier cut 3,500 jobs in April. As well orders for durable goods plunged by 8.5 per cent in September, the fourth monthly decline, while unemployment claims rose to the second highest level in ten years. (One should keep in mind that unemployment statistics only reflect those making claims, not those whose claims have been exhausted and are still unemployed or those who have given up on the job market- the actual unemployment rate is always considered greater than the 'officially reported unemployment rate' for these very reasons.)

Both CNN and AP reported on November 2nd that the United States saw a rise in unemployment claims of almost half a million in the month of October, the largest single month rise in the unemployment claims rate in 21 years.

U.S. GDP showed the sharpest decline in 10 years in the third quarter ... it now seems unlikely the U.S. will be able to escape a recession this year. ... If fourth-quarter numbers show the economy contracting further (and just about everyone thinks that will be the case), then the classic definition for a technical recession will have been met – two consecutive quarters of negative real GDP growth. The Dow Jones Industrial Average, the Nasdaq Composite Index, and the TSE 300 Composite Index all rose in early trading. But the Dow slipped back into negative territory by the noon hour. Canadian GDP rose marginally in August ... Manufacturing, which has been in a steady spiral downward for a year, managed to eke out a 0.1 per cent rise in August. A commentary from TD Economics said the rise in manufacturing was likely "a one-month wonder". "It is almost inevitable that Canada's economic fortunes will get even worse in the fourth quarter of this year, as falling corporate profits, mounting layoffs, and deteriorating confidence batter consumer and business spending," TD senior analyst said.

Less than two weeks ago, Ford posted a $692-million US third quarter loss. Coupled with a $752 million US loss in Q2, it marked the first back-to-back quarterly losses at Ford since 1992. (Ford also announced the first layoffs of 5,000 workers)>

CIBC (TSE:CM) on Tuesday announced it will cut 2,000 jobs and increase its loan-loss provision for the current quarter by 58 per cent, citing a deteriorating economy.

Economic indicators show deep pull-back Thu Nov 1

WASHINGTON Economists on both sides of the border were especially interested in the U.S. data. and it wasn't good. Data from the National Association of Purchasing Management (NAPM) showed its monthly gauge of factory activity fell from 47.0 in September to 39.8 in October. A reading below 50 means that manufacturing activity is declining. and while that number has been below 50 more more than a year, its decline in October was one of the sharpest ever. Only 9 per cent said they expected to hire more workers in the next three months, while almost a quarter said they expected to shed workers.

Canadian dollar continues to slide; closes at new record low Analysts are blaming several factors for the loonie's recent decline, including the international perception that the Canadian currency is more vulnerable to weak commodity prices because our export economy is more dependent on commodity earnings.

New York Times Headlines in the days
just before and after the Crash of 29

Sunday, October 13, 1929

STOCK PRICES WILL STAY AT HIGH LEVEL FOR YEARS TO COME, SAYS OHIO ECONOMIST

Wednesday, October 16, 1929

FISHER SEES STOCKS PERMANENTLY HIGH
Yale Economist Tells Purchasing Agents Increased Earnings Justify Rise
---------- SAYS TRUSTS AID SALES

DECLINE IN AUTUMN USUAL
MITCHELL ASSERTS STOCKS ARE SOUND
Banker, Sailing From Europe, Says He Sees No Signs of Wall Street Slump

Tuesday, October 22, 1929

FISHER SAYS PRICES OF STOCKS ARE LOW
Qoutations Have Not Caught Up With Real Values As Yet, He Declares
SEES NO CAUSE FOR SLUMP

Wednesday, October 23, 1929

STOCKS GAIN SHARPLY BUT SLIP NEAR CLOSE
Vigorous Recovery Marks Most of Day and Many Issues Show Net Advances
MARKET GLOOM LESSENED
Banking Support, Ease of Money and Mitchell's Optimistic Statement Help Rally

Thursday, October 24, 1929

PRICES OF STOCKS CRASH IN HEAVY LIQUIDATION, TOTAL DROP OF BILLIONS

SAYS STOCK SLUMP IS ONLY TEMPORARY
Professor Fisher Tells Capital Bankers Market Rise Since War Has Been Justified.

Friday, October 24, 1929

WORST STOCK CRASH STEMMED BY BANKS; 12,894,650-SHARE DAY SWAMPS MARKET; LEADERS CONFER, FIND CONDITIONS SOUND

Saturday, October 26, 1929

CAUTION ADVISED BY STOCK BROKERS
Letters to Clients Warn Against Hysterical Selling and Favor Some Buying
TONE IS OPTIMISTIC

Tuesday, October 29, 1929

STOCK PRICES SLUMP $14,000,000,000 IN NATION-WIDE STAMPEDE TO UNLOAD; BANKERS TO SUPPORT MARKET TODAY

Wednesday, October 30, 1929

STOCKS COLLAPSE IN 16,410,030-SHARE DAY, BUT RALLY AT CLOSE CHEERS BROKERS; BANKERS OPTIMISTIC, TO CONTINUE AID
240 Issues Lose $15,894,818,894 in Month; Slump in Full Exchange List Vastly Larger

"When he opened the third seal, I heard the third living creature say, "Come!" And I saw, and behold, a black horse, and its rider had a balance in his hand; and I heard what seemed to be a voice in the midst of the four living creatures saying, "A quart of wheat for a denarius, and three quarts of barley for a denarius; but do not harm oil and wine!"" Revelations 6:5

Albert Einstein - Why socialism : a few quotes from Einstein's essay - "I shall call "workers" all those who do not share in the ownership of the means of production ... the worker produces new goods which become the property of the capitalist ... Private capital tends to become concentrated in few hands ... The result of these developments is an oligarchy of private capital the enormous power of which cannot be effectively checked even by a democratically organized political society. This is true since the members of legislative bodies are selected by political parties, largely financed or otherwise influenced by private capitalists ... an "army of unemployed" almost always exists. The worker is constantly in fear of losing his job ... unemployed and poorly paid workers do not provide a profitable market ... The profit motive, in conjunction with competition among capitalists, is responsible for an instability in the accumulation and utilization of capital which leads to increasingly severe depressions ... This crippling of individuals I consider the worst evil of capitalism. Our whole educational system suffers from this evil. An exaggerated competitive attitude is inculcated into the student, who is trained to worship acquisitive success as a preparation for his future career ... "

In other news Excite Internet went belly up suffering the dominoe effect of job whacking and exporting high paying jobs to overseas low wage sweat shops finally does in the high speed internet service provider. Also Exodus web hosting service filed for bankruptcy..."Exodus provides Web-hosting and related services to some of the most heavily trafficked sites on the Web, including Yahoo, eBay, CBS SportsLine, Google and Compaq Computer."

Job picture grim before Sept 11th

Reuters

WASHINGTON (Reuters) - The U.S. economy shed nearly 200,000 jobs in September, the government said on Friday in a report that showed a sharp erosion in the job market even before the full impact of the Sept. 11 attacks was felt. The Labor Department said the number of workers on U.S. payrolls plunged by 199,000 in September. That marked the fourth jobs loss in the last six months and, as has been the pattern for months, job cuts were especially hefty in the ailing manufacturing sector.

OECD slashes growth forecast WSWS
The Organisation for Economic Co-operation and Development, comprising the world’s 30 largest economies, has added its voice to the predictions of a far-reaching global economic slowdown ... Just a year ago, the OECD was saying that “world economic prospects remain relatively bright.”

Japan has already tried that reduce the interest rates thing with no luck, and presently has what is probably the worst economy of the major economies. On August 27th it was reported that there were mass layoffs taking place in Japan (before September 11th). http://www.wsws.org/articles/2001/aug2001/jap-a27.shtml ... The Japanese economy is also the first one to be referred to using the word 'depression' rather than 'recession' (and coincidentally, the Japanese parliament just recently cancelled the bit in the constitution about no military involvement for Japan, so that Japan could join in on the 'war on terrorism' and no doubt, spend a fortune on defense and building back up their army).

Japan moving from recession to depression

WSWS
In another survey of 200 corporate executives conducted by the Asahi Shimbun newspaper, more than 90 percent said the nation’s economy was deteriorating. Sixty one percent of respondents said the economy was crumbling ... job destruction is continuing as the process of corporate restructuring intensifies ... The Japanese Ministry of Health, Labour and Welfare announced that people claiming unemployment benefits reached a record 1.167 million in August ... Warning that the slowdown could become a meltdown, the article cited remarks by James Malcolm, senior economist at JP Morgan Securities (Asia). “We’re in a very bad way at the moment and things are getting worse,” he said. “Japan is no longer in recession—it’s a depression."


More discussion of the same theme introduced by Einstein above can be found on the page The Cause of the Great Depression

The depression began in late 1929 and lasted for about a decade. Many factors played a role in bringing about the depression; however, the main cause for the Great Depression was the combination of the greatly unequal distribution of wealth throughout the 1920's, and the extensive stock market speculation that took place during the latter part that same decade. The maldistribution of wealth in the 1920's existed on many levels. Money was distributed disparately between the rich and the middle-class, between industry and agriculture within the United States, and between the U.S. and Europe. This imbalance of wealth created an unstable economy. The excessive speculation in the late 1920's kept the stock market artificially high, but eventually lead to large market crashes. These market crashes, combined with the maldistribution of wealth, caused the American economy to capsize ... the rewards of the "Coolidge Prosperity" of the 1920's were not shared evenly among all Americans. According to a study done by the Brookings Institute, in 1929 the top 0.1% of Americans had a combined income equal to the bottom 42%. That same top 0.1% of Americans in 1929 controlled 34% of all savings, while 80% of Americans had no savings at all...In the 1923 case Adkins v. Children's Hospital, the Supreme Court ruled minimum-wage legislation unconstitutional ...

Essentially what happened in the 1920's was that there was an oversupply of goods. It was not that the surplus products of industrialized society were not wanted, but rather that those whose needs were not satiated could not afford more, whereas the wealthy were satiated by spending only a small portion of their income. A 1932 article in Current History articulates the problems of this maldistribution of wealth ... One obvious solution to the problem of the vast majority of the population not having enough money to satisfy all their needs was to let those who wanted goods buy products on credit. The concept of buying now and paying later caught on quickly. By the end of the 1920's 60% of cars and 80% of radios were bought on installment credit. Between 1925 and 1929 the total amount of outstanding installment credit more than doubled from $1.38 billion to around $3 billion. Installment credit allowed one to "telescope the future into the present", as the President's Committee on Social Trends noted. This strategy created artificial demand for products which people could not ordinarily afford. It put off the day of reckoning, but it made the downfall worse when it came.

Mass speculation went on throughout the late 1920's. In 1929 alone, a record volume of 1,124,800,410 shares were traded on the New York Stock Exchange. From early 1928 to September 1929 the Dow Jones Industrial Average rose from 191 to 381. This sort of profit was irresistible to investors. Company earnings became of little interest; as long as stock prices continued to rise huge profits could be made.

Prices had been drifting downward since September 3, but generally people where optimistic. Speculators continued to flock to the market ... Once enough investors had decided the boom was over, it was over. Partial recovery was achieved on Friday and Saturday when a group of leading bankers stepped in to try to stop the crash. But then on Monday the 28th prices started dropping again. By the end of the day the market had fallen 13%. The next day, Black Tuesday an unprecedented 16.4 million shares changed hands. Stocks fell so much, that at many times during the day no buyers were available at any price.

More jobs were lost, more stores were closed, more banks went under, and more factories closed. Unemployment grew to five million in 1930, and up to thirteen million in 1932. The country spiraled quickly into catastrophe. The Great Depression had begun.