United States Postal Service to cut 40000 jobs in first layoff in history

"We lost 2 billion dollars and like any other business we have to stay afloat." And to keep from sinking, the United States Postal Service is considering cutting thousands of jobs nationwide. Lavelle Pepper with the post office in Shreveport says they too are feeling the affects of the same disease hitting the country ... a struggling economy. "We employ about 685,000 people. If we do layoffs it would include clerks, carriers, mail handlers across all crafts." Pepper says the postal service is looking to eliminate 40,000 jobs nationwide.

- If they are talking about the first layoff in the entire history of the US Postal Service, you'll probably have to go back to the 18th century. Horse riding and stuff. The employees of this organization have collectively survived the Civil War, the Great Depression, two World Wars, the 1970's oil crisis, the 1980's recessions, the 2000's tech bubble burst, and now they are finally defeated by the 2008 credit crisis?

This is serious stuff. This means that this could be worse than all of the above. These are early warning signs that this wave of mass layoffs is reaching out way beyond Wall Street, way beyond corporate America, and making a deep strike into government territory. Complete obliteration. Heads up. We are going straight into the Second Great Depression.

NYMEX crude oil drops below $60 on demand destruction concerns

bloomberg.com :

Crude oil fell as equities dropped because of a worsening outlook for company earnings, renewing concerns the global credit crisis and financial meltdown will curtail energy demand. NYMEX crude oil prices have tumbled 58% since reaching a record $147.27 on July 11. Crude oil for Dec 2008 delivery rose yesterday [10 Nov 2008] on a $586 billion Chinese economic stimulus plan, but then dropped to $59.10, the lowest since March 20, 2007.

Oil slumped 10% last week as equities dropped, US fuel stockpiles rose more than expected and the US unemployment rate climbed to a 14-year high of 6.5%. The G20 called for lower interest rates. OPEC agreed on Oct. 24 to a production cut of 1.5 million barrels a day after global demand fell.

- So we're back on the "free crude oil" track. That's the ongoing joke nowadays anyway, but I'd suppose it's really un-funny considering the global economic collapse that is underway. Looking back, here's what I said earlier :

* at $105 oil on 4 Sep 2008 : the $100 level should hold, but if this support level fails, we could probably get ready to declare an imminent global economic collapse.
* at $92 oil on 16 Sep 2008 : There is no longer any point in being long oil, wheat, or any other commodities if indeed this is a global economic collapse which will completely wipe out demand, shrink economies ...

And here we are bouncing around and dipping below $60. At this price level, the tar sands should be shutting down as they are no longer cost-effective, requiring at least $70-$80 oil to break even - some say $90. Higher-cost producers such as Iran and Venezuela are also yelling for further OPEC production cuts, as their cost also happens to be around the $80 to $90 level.

Since we are in a period of hyper-deleveraging leading to hyperdeflation, one wonders what the situation would be like when the trend finally reverses itself. I suspect that the result would not be pretty.

GM share price target cut to zero by Deutsche Bank

This article belongs to the GM, Ford and Chrysler bankruptcy watch story arc.

bloomberg.com :

General Motors was downgraded to "sell" at Deutsche Bank, which set a share-price estimate of zero, and was cut to "underweight" at Barclays Capital. The biggest US automaker said Nov. 8 it may not have enough cash to keep operating this year unless the auto market improves or it adds capital. "Even if GM succeeds in averting a bankruptcy, we believe that the company's future path is likely to be bankruptcy-like," Deutsche Bank analyst Rod Lache wrote in a research note.

- Zero would be too kind. How about negative? Looking at prior figures from Google Finance, with GM's outstanding shares of 566.16 million, total shareholder equity of -$56.97 million, the target share price is more like -$0.10. And these are figures from Jun 2008, so it should be much worse by now.

Now I'm watching yet another big-company share collapse in real-time, to become a much smaller company, market-cap-wise. The previous one was Las Vegas Sands. Not with a bang but with a whimper, as formerly big blue chips go quietly into the night. Economic collapse in progress.

(2008-11-11 00:06:44 SGT) [Biz] Permalink

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