Layoffs and the Economy Archives

How The Glass Steagal Act Affected Jobs

Thursday, January 12th, 2012 at 5:40 pm  
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The Glass Steagal Act was passed in 1933 after the stock market crashed in American. The Wall Street Crash led to the world entering into what we now call the Great Depression. Banks had failed throughout the States in wake of the crash as investors tried to cash in their stocks in the hope of salvaging some of their money. The act which was endorsed by two members of Congress Glass and Steagal, was set in place to separate investment from commercial banking in an attempt to prevent this kind of situation from ever happening again.

The Stock Market Crash of the late twenties was widely blamed on the way the banks operated at the time. Their methods of being overzealous with investors money, which today would be seen as an improper banking activity, meant that they had taken far too many risks and this resulted in them not being able to honour their depositors investments. It led to their coffers being empty and as such many of the banks closed their doors as they failed to support their commitments to their customers.

The Glass Steagal Act became known as GSA and many financial experts over the years have argued that after the act was implemented it hindered many financial services from equally competing with each other. However, at the time and especially during the period leading up to the crash, banks were proving that their methods of earning income were to say the least greedy. Banks at the time were taking massive risks in order to gain more rewards from the investments they held for customers. Loans were offered to companies that the banks had interests in. These banks would then often encouraged their own banking customers to invest in these same stocks. The whole situation was out of control with no set objectives in place and no governing body to regulate how the banks were behaving.

Once the Act was passed in Congress, an amendment was added to it which permitted bank deposit insurance for the first time in banking history. As a result of the Act being passed, this effectively set up a firewall between commercial and investment bank activities and both of these were then regulated and controlled. The banks at the time were given 12 months to decide which way they would choose to run their banking businesses. They had to the choice to go down the commercial route or the investment one. Rules set out that only 10% of a commercials’ bank total income could be earned through holding securities but they were allowed to underwrite government issued bonds.

The bigger banks like J P Morgan were the ones held the most culpable for much of problem that led up to the Wall Street Crash. It was these large banks that were targeted and they were made to cut their services which meant they lost an important slice of their income. The whole idea behind the Act was to prevent banks from using deposits to support any failed underwriting jobs they took on. The banking institutions of the day believed that the measures the Act set in place were too harsh and even Glass himself thought at one time that it was a knee jerk reaction that was out of proportion believing the Act was an overreaction to the banking crisis of the thirties.

In 1956 Congress attempted to try to stop financial conglomerates from accumulating too much power and passed a new Act that focused on banks who were involved in the insurance sector. It was agreed in Congress that the high risks taken by banks in underwriting insurance was indeed not good banking practice. It was decided that an extension be added to the Glass Steagal Act, this is known as the Bank Holding Company Act. This separated even further the financial activities of banks by creating a divide between insurance and banking activities. Banks could sell insurance but they could not underwrite it after the Act was amended and set in place by Congress.

Looking back on the events of the thirties, many financial gurus today ask the question of whether the walls set up to divide banking institutions and they operations into definite categories was really necessary. At the time it was debated to a great extent just how much restriction would be healthy for the industry. There were those who believed that allowing banks to diversify but only to a certain extent would offer them the potential to reduce risk which meant that in effect the GSA could have an adverse effect. In short the Act could make the banking industry an even riskier business. It was deemed that big banks had to be more transparent which in short meant investments they made could be seen and therefore monitored. This led to the opinion that a banks’ reputation has to be seen as something of importance in today’s market. It was felt that this transparency and reputation alone could be reason enough to motivate banks into regulating themselves.

In November 1999, Congress repealed the Glass Steagal Act and instead set in place the Gramm-Leach-Bliley Act. This Act eliminated the restrictions of the GSA against affiliations between both commercial and investment banks for the first time in over sixty years. Under the new Act banks were also permitted to provide more services which included underwriting as well as other dealing activities for the first time in decades.

At the end of the day the events that led up to the Glass Steagal Act being passed through Congress in 1933 and what followed in the years right up until it was repealed in 1999, shows that even regulatory attempts to protect investments and to isolate the roles that banks play, whether it is the commercial or investment sector can have adverse effects instead of the positive ones that many governments may hope for.

 

Current Economic problems in the Eurozone Causing Thousands of Layoffs

Thursday, January 12th, 2012 at 5:37 pm  
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The current Eurozone problems appear to get even murkier when they are looked at closely. With countries like Ireland and Portugal already under the austerity measures that have been set in place in an attempt to rescue them financially, Greece has also fallen and will soon be followed by Italy whose sovereign debt is at a staggering level. Layoffs have been happening all over Europe on a massive scale. Spain is likely to be the next on the list of countries under scrutiny. But the question one needs to ask is whose list is it anyway? This Eurozone Crisis is out of control but it is under the control of countries like Germany who look to Japan and other emerging countries for financial support.

Ireland had a confidential budget plan set in place that even the electorate were not privy to. Yet details of this plan are being scrutinised by German finance committees. Italy has a new Prime Minister who was a former International advisor for Goldman Sachs. He is an unelected technocrat who makes all the right promises of sacrifices to the right people who are ultimately answering to the markets.

In Greece the plot thickens as a former head of the Central Bank in Greece is made the new Prime Minister again at the request of the markets and the English PM travels to Berlin to sit down with Germany’s chancellor to discuss the Eurozone crisis when her own countrymen do not consider her able to handle it. The whole situation of the Eurozone crisis does also bring into question just what democracy stands for these days.

With 17 countries forming the Eurozone all using the same currency and with Portugal, Ireland, Greece needing financial assistance from Europe and the International Monetary Fund with Italy together as well as Spain on the verge of needing it, the crisis is just getting worse by the minute. The problem does not stop at just threatening the 17 nations who use the Euro as their currency, but the whole of the European Union which is made up of 27 member countries.

The strongest nations in the Eurozone being Germany and France have been there to bail out Ireland, Portugal and Greece but with the banks facing massive losses on the debts that these three countries cannot repay, the question is how long can bail outs been sustained by the financial institutions that are there. Ultimately this state of financial unrest in Europe may spread to other countries such as the United States and this is what is causing the heads of these countries to meet and discuss a way to solve the potentially devastating global financial melt down that is on the horizon.

The fact that the austerity measures set in place in countries like Portugal, Ireland and now Greece by other member states who are working on the bail outs for these countries, are being met with so much resistance by the people, just how much the banks have got to answer for what these people think were bad banking practices of lending out money too riskily. The general public opinion is that the banks should bear the brunt of these losses because it was their mistake in the first place. There are many who think that it is time to pull out of the Euro currency altogether and see this as the only real solution for each individual country that has massive sovereign debts.

Summit after summit is held to deal with the crisis, one in London in April 2009 which was the ‘crisis management event’ and then another G20 summit in Cannes, but the situation does not appear to be getting any better. The summit in London was to discuss and attempt to stop the downward spiral in global growth which was triggered by the bankruptcy of the investment bank Lehman Brothers and the US sub-prime crisis. The G20 summit was to try to stop Europe’s sovereign debt crisis from tipping the scales of the transatlantic economies which would send them into a double dip recession and maybe an eventual global slump.

The G20 summit was a success to a certain degree in so far as a bail out was agreed for Greece, but it all depends on the generosity of countries like China and other nations to agree to supply even more cash to the bail out funds. The European Central Bank has already made it quite clear that they will be pulling away from offering any further financial assistance in Europe’s debt crisis stating that they expect the governments to be responsible for restoring their own financial stability.

The individual coffers of each of the financial institutions concerned whether the European Central Bank, the International Monetary Fund or the European Financial Stability Facility it would appear are running dry. This leaves only one solution to the debt crisis in Europe, and this would be for these financial institutions to join forces in an attempt to rescue the sovereign debt crisis of the countries that are in trouble both now and in the near future.

If this were not to be agreed and negotiated then it looks more and more likely that emerging countries such as China and the Middle East oil producers, all of whom are in a strong position with abundant foreign exchange reserves behind them, are going to be the ones to give financial support to the Eurozone, along with Japan that is. But on what terms with this financial support actually be?

The Worker Adjustment and Retraining Notification Act-What You Must Know

Thursday, January 12th, 2012 at 5:32 pm  
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Are you familiar with the Worker Adjustment and Retraining Notification Act? This legislation was created back in 1988 for the protection of workers, their families and communities. With this act, employers must give notice a minimum of 60 days before layoffs or closings occur. The layoff or closing notice must be given to a number of people: the employee or his labor representative, the local chief elected official and the state unit for dislocated workers. President George H.W. Bush signed this bill on August 4, 1988 and it went into effect the following year on February 4. If you have been laid off without receiving this notice, your employer may be in violation of the act.

Only employers who have at least 100 employees must provide notice of impending layoffs under the Worker Adjustment and Retraining Notification Act. When determining which employees must be counted for this purpose, the employer must look at hourly employees as well as those who are on salary. If an employee works less than 20 hours each week or has not worked for six of the past twelve months, he or she doesn’t have to be counted. The same is true of business partners and freelance contractors. Public, semi-private and private companies must follow this act although governmental bodies at any level do not have to report impending layoffs.

The same conditions concerning layoffs apply if a plant will be closing. The definition of a plant closing is any work site which shuts down completely leading to layoffs for a minimum of 50 workers over a 30 day period. Retirement, voluntary or mandatory, and dismissal along with a 50% reduction of hours during a six month period all must be reported under this act. The same is true of layoffs which will last more than six months. Mass layoffs are also governed by WARN.

There are some exceptions that you must be aware of if you have been notified of impending layoffs or if you have already been laid off. Temporary workers are not covered under this legislation nor are those who are working on an finite project. Workers must have been informed that these positions were temporary though. Layoffs which result from a lockout during labor negotiations do not require this notice nor do layoffs resulting from a natural disaster or other emergency. If you feel your employer has laid you off without providing the proper notice, contact your local labor board. They can advise you as to your next step.

 

Downsizing and What This Entails

Thursday, January 12th, 2012 at 5:30 pm  
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Have you been informed that your company will be downsizing? This is just another way of saying that workers will be laid off. Downsizing can mean many other things also. It may mean that the company is looking to reduce their operating costs and overall size, but it most cases it means layoffs are about to happen. When the economy begins to falter, many companies choose to downsize in an effort to stay competitive. For the workers who are laid off, this can be a very stressful time.

Downsizing is often required for companies to stay in business. When layoffs occur, the company is able to increase efficiency. This may be done by replacing humans with machines which can complete the work more rapidly without the fear of human error. Profits increase which means that the workers who remain have more job stability as there is more money to pay them. Another reason that a company may choose to downsize is to eliminate an entire department that is no longer necessary. No matter why this is occurring though, the entire staff will be affected, not just those who are laid off.

Layoffs may also occur when there is a decrease in the need for the product or service offered by the company. When this is the case, the layoffs may be of short duration or they may last months or years. The company may determine that certain departments are redundant and choose to eliminate one or more which will lead to layoffs. Another reason for downsizing is the outsourcing of certain tasks. When these tasks are handled elsewhere, fewer employees are needed. When any of these situations arise, workers must be prepared.

Layoffs are stressful for all involved. Employers may feel bad because they have to let people go. Employees may be worried about the future and what it holds for them. Not knowing where the next paycheck is coming from is scary. When employees must be laid off, employers need to take this into consideration. They need to ensure the layoffs run smoothly while employees who will be retaining their jobs are informed of this. Th

Living Through Layoffs

Thursday, January 12th, 2012 at 5:28 pm  
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The economic downturn of the recent past has seen more and more people with the sudden loss of their full time employment, and the repercussions of a job loss during corporate Layoffs have been tremendous.

When large numbers of working people are suddenly out of work, the economy feels the ripple effects in very short order. The amount of disposable income that the recently laid off people have drops, and that means much less money being spent on the local businesses, which can then have the effect of causing more Layoffs in even more industries.

The fact that many businesses have had to begin Layoffs is something that economists have seen coming for quite some time. The tendency of most businesses is to run much as many private households run, on credit. The lesson for us all in this time of dire job situations and corporate downsizings is to learn a more realistic and practical way of conducting our lives. The dependence we seem to have on our credit cards needs to end and we all need to learn how to live within our means.

For most people who have experienced corporate Layoffs, the future can seem bleak. There is the sudden loss of that income which was steady and always keeping them afloat, and there is the uncertainty of what the future holds. Is it possible to find another job? Is the company that laid them off going to recall them? If so, how long before they could expect to see their job offered to them again?

Waiting for the company who has laid you off to call you back to work can be one strategy, but for most people, the need to have a steady income and the benefits that can be part of a full time job are more pressing. If the state is offering some kind of unemployment benefit, that will be much less than the income was, and that will generally be just a short term income that will depend on the job search being active and ongoing.

Being intelligent with your income and your savings while you are employed can ease the stress of being downsized if it ever happens to you.

You need to be prepared just in case you get Laid off

Thursday, January 12th, 2012 at 5:20 pm  
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There are many people who worked at the same job for many years and who thought they had complete job security. Unfortunately, these same people got Laid off and had to start a new phase of their life. Getting Laid off is often very unexpected and can lead to many complications in someone’s life.

If you work for a business that is laying people off it should raise a red flag for you. Being Laid off can leave you without a job and without a pay check. Do you have enough money saved up to be able to take care of your bills for the next three months? After someone is Laid off it typically takes at least three months before they are able to find another job. The economy is horrible right now and finding a new job could take even longer because there are so many people who are looking for a job. There are professors who are currently working at gas stations because there are no jobs available to them.

If you do get Laid off the first thing you need to do is to call your insurance company. You need to find out if your insurance is going to be cut off immediately or if you will still have coverage for thirty days. There are many companies who allow your coverage to extend for thirty days after you are let go. The next thing you need to do is get letters of recommendation from your previous employer. When you go to get a new job the letters of recommendation will show potential employers that you were let go due to economic conditions rather than poor work.

When you are ready to interview for other jobs it is important to let them know that your last employer laid you off and that you have letters of recommendation from them. Be sure to inform the employer of everything you are trained to do and any specializations you possess. Getting employment after being Laid off can be difficult so it is important to prepare yourself and save money just in case lay offs were to happen at your work.

The Doom and Gloom of the Job Market

Thursday, January 12th, 2012 at 5:18 pm  
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There is a lot of debate out there when it comes to the economy and whether we are beginning to recover from the worst economic downturn since the Great Depression. While unemployment numbers are creeping down and the job market is starting to open up a bit, there are still a whole lot of people out there without job’s. In addition, layoffs are continuing to occur in a wide variety of different sectors, with more and more jobs going by the way side. There is a lot of doom and gloom out there, and none of the “good news” on the unemployment numbers out there is making any of the long-term unemployed happy about their prospects.

The thing is, one of the biggest issues when it comes to unemployment out there isn’t just the fact that corporations still aren’t hiring back a big number of employees, it’s that they aren’t hiring people back for a lot of positions that were vacated during layoffs. It’s something that you actually see quite regularly during economic downturns: corporations like to combine jobs when they do end up rehiring some people. If they let go of two people in a division, one that wrote content for a website and another that maintained the website, there is a good chance they are going to only hire one person back whose job is to both maintain and write the content for the website.

This “combining” of positions is bad news for those who are looking to get back into their former positions after layoffs. The problem stems from the fact that with the combining of positions, some employees who are specialists in a certain field are now not qualified for the new jobs that are out there. While someone may be an expert at writing content for a website, they may not know anything about maintaining said sight, and visa-versa.

This is one of the reasons why so many people who were victims of layoffs are going back to school. Not only are they looking to break into new fields, they are also looking to keep up in the fields that they are in. The bright side of all of this doom or gloom is that for all of the heartache out there, people are actually becoming more apt for the job market when it comes back in force.

Why Economic Issues Affect You

Tuesday, January 10th, 2012 at 3:56 pm  
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Every day you hear about some economic issue affecting some part of the world. Whether it’s Europe or Asia, there is always some country where bonds are not being repaid or their stock market falling to near record lows. And what is your reaction to this? You change the channel. Yes, these issues don’t interest you because, well, you don’t understand how they affect you in the long run. This isn’t your fault, it’s just the way that the world is to you. While the idea of some country thousands of miles away losing money may seem abstract to you, the truth is that it can affect you in a matter of months. Part of the reasons why there are so many layoffs out there isn’t just because the economic is weak in the United States, but because of the condition around the world.

This isn’t to bum you out, or to make you paranoid or anything, it’s just the truth. As we’ve seen with economic collapses in Greece and Japan, what happens there will eventually make its way to our shores. Furthermore, since a lot of companies have holdings and business ventures in a variety of different countries, economic issues halfway around the world can affect you directly, especially if you work in close conjunction with these ventures.

To make matters worse, there is nothing that you can do about these issues but plan. While many people out there will claim that layoffs just happened out of the blue in their company, there are typically a lot of red flags that can happen in the lead-up, such as big cost cutting measures and layoff rumors. Since most companies will try and cut costs in resources before jobs, if you are finding that there is a lot of across the board cuts going on, a layoff notices may not be too far behind.

So what can you do when you feel like layoffs are near? The best thing is to do is stay calm and start saving money. Start putting a little bit of money away from each paycheck so that you have a little saved up if the worse case scenario were to happen. In addition, start sprucing up your resume so that you can hit the ground running.