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Mass Layoffs To Return With A Vengeance

How safe is your job?
Wednesday, February 3, 2016, 4:58 PM
, ,

Remember the mass layoffs of 2008-2009? The US economy shed millions of jobs quickly and relentlessly, as companies died and the rest fought for survival.

Then the Fed and the US government flooded the banks and the corporate sector with bailouts and handouts. With those giga-tons of liquidity sloshing around, as well as taking on massive amounts of new cheap debt, companies were able to finance their working capital needs, hire workers back, and even buy-back their shares en mass to make themselves look deceptively profitable. The nightmare of 2008 soon became a golden era of 'recovery'.

Well, 2016 is showing us that that era is over. And as stock prices cease to rise, and in fact fall within many industries, layoffs are beginning to make a return as companies jettison costs in attempt to reduce losses.

Since January 1st, here is but a subset of the headlines we've seen:

Note that nearly all of these companies are in the Energy, Finance and Tech sectors -- the three biggest engines of growth, profits and market value appreciation within the economy over the past 7 years.

What will the repercussions be if those three industries go into contraction mode at the same time?

Whatever the specifics may be, the general answer is easy to predict: Nothing good.

This topic has particular relevance to me today, as my former employer Yahoo! just announced that it's cutting 15% of its workforce (1,700 jobs) and considering putting itself up for sale. This is no shock to me, as I've long publicly predicted Yahoo!'s inexorable swirl into irrelevance, but its timing is indicative of the new era the economy is now entering.

With its stake in Alibaba, Yahoo! participated in the mania that drove Chinese and other emerging market shares in 2014 through mid-2015. The capital that flooded into the Tech sector in general didn't hurt, either. Both of these helped mask the business' broken fundamentals and kept the day of reckoning for its lack of demonstrable progress at bay. But no longer.

As Warren Buffet famously quipped: Only when the tide goes out do you discover who's been swimming naked. Well, with the collapse of the Asian stock markets last year and the entire global market so far this year, the tide is fast receding and the rot at Yahoo! is now plainly visible to all. How much rot? During its earnings call yesterday, the company announced it's taking a write-down of $4.5 billion. That's nearly as much as it made in top-line revenue for all of 2015!

Yahoo! is one of the weaker players in Tech these days, and it's now stumbling hard. Here at Peak Prosperity, we predict that collapse happens 'from the outside in', where the weaker parties fall first, followed by the demise of stronger and stronger players. We've been seeing that happen internationally over the past year as smaller poorer countries succumbed first to slowing global economic growth, and we're now seeing larger and more developed countries become desperate (Japan, anyone? How about Italy?). Yahoo! is a similar harbinger for the Tech sector, and is being fast joined by the many Tech companies in the list of headlines above (by the way, there are *many* more Tech companies I could easily add to that list -- like HP who announced job cuts of 85,000 last fall).

And there's good argument to be made that mass layoffs in Tech will be worse today than back in 2008/9. Back then, there were fast-expanding private future behemoths one could jump to: Facebook, Palantir, Uber and the like. Even Google, Netflix and Amazon held up well and were still investing for growth during that period. Today, there is no ready stable of up-and-comers with similar potential to power through a recession.

The ability for those laid-off to find open positions elsewhere will likely be more similar to the 2000 Tech bubble burst. Working in Silicon Valley back then, I was amazed at how fast 101 changed from a crawling bumper-to-bumper experience to an uncrowded freeway. The number of jobs (and thus commuters) that vaporized quickly was astonishing.

And that's just Tech. As Chris has been warning us loudly, something is deeply amiss in the Financial sector. It's mind-boggling that the biggest of the "too-big-to-fail" banks, like Citibank and Bank of America, have lost 25% of their market value in a little over 1 month(!). Deutsche Bank has lost over 33% over the same short period. All while the general market is down about 8%.

What these prices are telling us is that something big, ugly and damaging is happening within the banking sector. We just don't know exactly what yet. And if you remember your history, this is eerily similar to how things went south so quickly in 2008. The banks started catching the sniffles, and soon after, Hank Paulson was on his knees begging Congress for the authority to stave off a full meltdown of the banking system.

And then there's Energy. Can it be that the price of a barrel of oil was over $70 just 10 months ago? And over $100 five short months before that? Yesterday it was below $30. As we've been warning about here at Peak Prosperity, the carnage that collapse in price is going to wreak across the highly-leveraged companies in the Energy sector is going to be biblical. Not to mention the many other sectors that service the energy industry (trucking, housing, retail, infrastructure development, etc). We are just beginning to see the very early-stage ramifications, but in the words of Bachman Turner Overdrive: You ain't seen nothin' yet.

Conclusion

My point here is that the worm has turned.

All the stimulus and intervention undertaken by the Fed et al gave us five pleasant years (2010-2014) of rising stock, bond and home prices that allowed us to pretend that the 2008 credit crisis was a one-time event.

2015 proved to be the year that reality intervened. The rocket ride we were on hit its zenith, and things hung precariously there.

2016 is fast proving to be the year that the laws of physics are starting to matter again, and our rocket is now beginning its descent back to Planet Earth. How far we fall this year vs next is still unknown, but the direction of the trajectory is becoming increasingly hard to dispute. And as we lose altitude, we're going to start losing jobs along with it.

So, for anyone reading this who is a salaried employee, a very important question to ask yourself is: Do I have a Plan B in place if I get unexpectedly laid off this year or next?

I'm not trying to frighten anyone unnecessarily. But I do see the probability of wide-scale jobs losses as materially higher this year than it was just a few short months ago. And with the headlines in the news today, things can easily accelerate further from here.

If you do not have a confidence-inspiring Plan B lined up yet, remember that the best time to plan for crisis is before it arrives. Spend time asking yourself what you would do in the aftermath of a pink slip. Save a greater percentage of your income, line up professional contacts, conduct informational interviews, and develop any needed new skills now -- so that if you ever do need to turn to them, they're already there to support you. A lot of the process for doing this is detailed in our book on career transition, and our related podcasts with career coach Jennifer Winn and the Johnson O'Connor Foundation are helpful resources, too.

Investing in the other Forms of Capital (besides money) that we detail in Prosper! will only help add to your resilience, as well. Especially Emotional Capital. Dealing with job loss is stressful by itself, but potentially doing so in the midst of another punishing Great Recession would place challenging strain on any of us. Working to improve our emotional ability to deal with setback, as well as perhaps doing the same with Social Capital -- ensuring you have a community to support you through any tough times -- just makes good sense.

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65 Comments

Mark Cochrane's picture
Mark Cochrane
Status: Diamond Member (Offline)
Joined: May 24 2011
Posts: 1075
Dominoes of job losses?

Adam,

Nice if depressing piece. Is there any prognostication on how job losses tend to ripple through the economy? Obviously, as an industry like energy slows down all of the feeder industries you mentioned "(trucking, housing, retail, infrastructure development, etc)" fall too, but is there a multiplier for restaurants, hotels, home construction and the service economy in general? All those bankers and tech people will be spending a lot less. White collar jobs lost mean how many other jobs become threatened? I see two ways of looking at the forthcoming layoffs. Since the people who have been hired back after the 2008 crash now have much lower salaries on average, the bang for the buck in layoffs could follow an out with the old  (higher paid peaople) to maybe someday be followed with an in with the new (lower wage) strategy. My brother's company where he works has done this over and over. The alternative is a need to lay off even more people to get the same cost cutting effect this time around since average incomes are lower. It takes more lay offs to reduce costs by a million or billion dollars. Obviously there are a lot of considerations in choosing how to proceed unless whole factories or stores are being shut down, benefits probably are a big part of the costs but since they are dropping year after year too....

Thoughts?

Mark Cochrane's picture
Mark Cochrane
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Case in point

From a 2014 report on the 'recovery' the shifting of people down the wage ladder is evident. These are the people who ate most of the losses last time (together with those who dropped out entirely)

Lower-wage ($9.48-$13.33) industries accounted for only 22 percent of job losses during the downturn, but 44 percent of jobs gained over the past four years.  (Today, lower-wage industries employ 1.85 million more workers than at the start of the recession.)

§

Mid-wage ($13.73-$20.00) industries accounted for 37 percent of job losses, but only 26percent of job gains. (There are now 958,000 fewer jobs in mid-wage industries than at the start of the recession)

§

Higher-wage ($20.03-$32.62) industries accounted for 41 percent of job losses, but only 30 percent of job gains. (There are now 976,000 fewer jobs in higher-wage industries than at the start of the recession)

Time2help's picture
Time2help
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Job safety

Oxymoron

str8flexed's picture
str8flexed
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Been seeing this over the past 6 months

I work in the trucking industry (manufacturing commercial truck parts) and since August, sales have fallen each month after and continue.  I do not see this getting any better any time soon and a shutdown is a real concern.

MAV's picture
MAV
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According to The Onion, Yahoo! will be fine

Older article, but still funny.

http://www.theonion.com/article/yahoo-back-on-top-after-purchasing-millions-of-13--32497

Mark_BC's picture
Mark_BC
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I don't see this ending well,

I don't see this ending well, I see a very difficult period coming. Economists simply have no idea how to deal with excess labour and how to keep those people alive. So far all they've been able to pull out of their hats as a "solution" is to foster economic growth to provide jobs, which is now ending, and the free handouts are now maintaining order. When the currency gets reset and those handouts can't be maintained, who knows what will happen.

I find it a tad revealing that the most fundamental economic measure of the whole "productive" workforce gets a grand total of ZERO discussion amongst economists and virtually everyone else thinking about economics -- the number of hours the average person works per week.

Why is it that we have arrived at a standard work week of 40 out of 168 hours, or 24% of your life? Who has determined that this is the optimum ratio of work to leisure/sleep time that correctly balances demand for and availability of workers, and the flow of wealth through the economy to support the masses? Why has that number not changed in, what, a century? I don't know exactly when it changed from 6 to 5 days, it was so long ago.

Have the job-place conditions not changed enough since then that a 40 hour work week deserves reassessment? Why is absolutely no one talking about this, except for myself and Jeff Neilsen on Bullion Bulls Canada?

Is the fact that so many employers are cutting full time jobs and hiring part time telling us something about the appropriateness of a 40 hour work week?

We all know why there is a 7 day week, because that's how long it took God to create the world according to Christians and Jews and the 7th was the rest day. According to the Babylonians a week corresponds with lunar phases. This left 6 days to work and one to rest. Sometime after this some bright people noticed that machines were doing a lot of our work in the fields so the work day and work week were shortened. How long ago was that?

Time2help's picture
Time2help
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Posts: 1962
Re: I don't see this ending well...

Mark_BC wrote:

I don't see this ending well, I see a very difficult period coming. 

*sigh*

S&P 500 doesn't look like much next to The Thing...

                                                

Edit: If anyone has the LTG baseline curve in Excel format, please let me know. Thanks.

mememonkey's picture
mememonkey
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Posts: 144
Redefinition of work needed as well

Mark_BC wrote:

I don't see this ending well, I see a very difficult period coming. Economists simply have no idea how to deal with excess labour and how to keep those people alive. So far all they've been able to pull out of their hats as a "solution" is to foster economic growth to provide jobs, which is now ending, and the free handouts are now maintaining order. When the currency gets reset and those handouts can't be maintained, who knows what will happen.

I find it a tad revealing that the most fundamental economic measure of the whole "productive" workforce gets a grand total of ZERO discussion amongst economists and virtually everyone else thinking about economics -- the number of hours the average person works per week.

I agree that changing the work week, is a notion that is worth considering, especially if done in the broader context of redefining work, career, life balance.  

As automation, deflation and wage arbitrage continue to attrit full time job opportunities,  I suspect we will see some interesting worker adaptations. such as  micro entrepreneurship and reinvigoration of  home economics, which was once the foundation of both a healthy household and a more self reliant one.  It is real work to run a' productive' household one that provides for many of the needs we now purchase. The sooner our culture can rediscover the value in that the better off we will be.

I don't think we will see any sort of top down encouragement to a cultural shift away from the the 'modern' normal of specialized outsourcing of functions that used to be performed at home,  and I'm sure we won't see any enlightened government policy that could encourage better allocation of jobs and work. 

Those types changes will need to come from the bottom up and will probably accelerate as safety nets and transfer payments decrease.

I certainly wouldn't look to traditional economists to figure out anything relevant in this regard either, they are working from such an abstracted and artificial view of reality, they offer only marginal utility.

With regards to the trend towards part time work vs full time is I suspect this is more likely a function of the perverse incentives of regulatory overreach, prime example being  the Affordable Care Act.

Mememonkey

Yoxa's picture
Yoxa
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Part time trend

Quote:
 Is the fact that so many employers are cutting full time jobs and hiring part time telling us something about the appropriateness of a 40 hour work week?

One factor in the shift in my part of the world is that part time jobs tend to come with fewer benefits.

If two staffers working X hours each cost a business less than one staffer working 2X hours, that's going to push a trend.

Quote:
 how long it took God to create the world

Q: How was God able was able to create the world in 6 days?

A: Because there was no paperwork back then.

 

Mark Cochrane's picture
Mark Cochrane
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Posts: 1075
Shell confirms 10,000 job cuts and a steep profits fall

More of the same....

Shell confirms 10,000 job cuts and a steep profits fall

Royal Dutch Shell has confirmed it is cutting 10,000 jobs amid its steepest fall in annual profits for 13 years.

It made $1.8bn (£1.23bn) for the fourth quarter of the year, compared with a $4.2bn profit for the same period the year before.

Full-year 2015 earnings, excluding identified items, were $10.7bn, compared with $22.6 billion in 2014.

davefairtex's picture
davefairtex
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CLF full & part time jobs

Where do jobs get hit first?  This is what it looked like in 2007.  Note this is a rate-of-change y/y chart, so job losses are only happening once it crosses the 0% line, but the growth trend changes a year before that.

The Nonfarm Payrolls report due out on Friday should provide us some more information.  Market's reaction should also be instructive.  I don't think "bad news" will end up being good news in this case, though of course I've been thinking that for the past few reports now.

climber99's picture
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LtG didn't make exact date predictions.

The standard run model in Limits to Growth book did not put exact dates on the x-axis as you have shown in your post.  It was felt very important by the authors not to fall into the trap of making exact date predictions but instead model general behavior of the system over time.  I urge you to remove them Time2Help or to clearly state that the dates you put on the x-axis are purely your predictions and not the book's.  

Please don't take this the wrong way, Time2Help.  I'm not attacking or disagreeing with your comment in any way. I'm just passionate in making sure this seminal book is not misrepresented. 

stevejermy's picture
stevejermy
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ONE BRIGHT SPOT - RENEWABLE ENERGY

We're hearing a very similar story in key area on this side of the Atlantic, starting with North Sea oil, where the lays offs are gathering pace.

But there is a bright spot, which is renewable energy. Having worked in the sector for the last 5 years, its gathering pace. Offshore renewable energy, my sector, is particularly exciting as a frontier industry, with so much potential energy to tap into, just as long as we ensure that we don't squander the oil that we need to exploit the opportunities on frivolous consumption for the discretionary industries profiteers.

Wendy S. Delmater's picture
Wendy S. Delmater
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Posts: 1863
update your resume

Adam, I saw the same alarming drop-off in traffic in the NYC area in 2008-9. And I've been following the misadventures of Yahoo's pathetic excuse of a CEO while thinking how glad I am you are no longer there. The proverbial tide is out and the company is not only swimming naked, it's visibly sick.

Note to all: If there is even a slim chance of a layoff, being ready with an updated resume helps. Even though my husband has a NICET certification, which is so rare he's pretty secure in getting a job, and brings is half a million in annual maintenance contracts so he is in no danger of layoff, we're updating his resume. I can help with that if people PM me.

Also, multiple income streams are good. See if you can make some money on the side! I make a little in royalties and increasing amounts editing, but maybe you could fix cars or computers or watch a child while a parent works.

Combining households saves money. Parents are moving back in with children,; children are moving back in with parents, brothers and sisters are living together. I hope everyone who wanted to sell and move has done so, because this is downturn is going to hurt, if not decimate, real estate.

Arthur Robey's picture
Arthur Robey
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The X axis.

I thought that Jorgen Randers was way too nice a person to rub our noses in the inevitably of  the prediction and that caveat was put in to try to soften the blow.

The CSIRO compared the LTG prediction with real world data here (PDF) and the x axis looks accurate. 

https://www.google.com.au/url?sa=t&source=web&rct=j&url=http://www.manic...

Time2help's picture
Time2help
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No

climber99 wrote:

The standard run model in Limits to Growth book did not put exact dates on the x-axis as you have shown in your post.  It was felt very important by the authors not to fall into the trap of making exact date predictions but instead model general behavior of the system over time.  I urge you to remove them Time2Help or to clearly state that the dates you put on the x-axis are purely your predictions and not the book's.  

Your opinion is duly noted, and ignored.

charleshughsmith's picture
charleshughsmith
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fragility of high-income households

RE: Mark C's low-wage recovery: who do you downsize first? the people making $10/hour or the ones making $60/hr? If the $60/hr person is generating huge revenue, you keep him/her, but if they're in HR, admin, etc., they start looking like redundant fixed costs once losses start piling up. Closing entire divisions starts looking attractive, too. Slash and burn...

Let's also not forget that local govt has gorged on higher property, income and sales taxes for 7 years, and once revenues crater, slashing  payrolls (70% of local govt costs) will be Plan A, B and C because local govt cannot borrow money to fund general fund daily operations. 

We know that the top 10% of households earn about 50% of the income and their spending has propped up a lot of the "recovery" sales in discretionary spending--clothing, tourism, eating out, etc. The top 10% includes many people with wealth, but it also includes many people who have saved very little, and what they do have is in IRAs and 401Ks trapped in the market. Their slide to insolvency can be very quick once one high-earner loses their job and can't find another equally lucrative position in a few months.

Many of these people are vulnerable to a downturn because they own/operate small businesses in discretionary spending sectors--the ones that will get creamed as people cut discretionary spending. Others are sandwiched between kids in college and elderly parents--their seemingly big incomes are fully allotted every month, and one job loss will crumble the entire house of cards.

My point is that the upper middle class that's supported the 'recovery" with discretionary big spending is far more vulnerable to implosion/insolvency than is generally appreciated.

Vilbas's picture
Vilbas
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I managed to quit my

I managed to quit my unsustainable nonprofit job last year only to end up landing at a state agency that could get axed every 2 years when our state legislature meets.  I didn't take this job with the intention of working here forever but it's looking like making a career move anytime soon will be dicey to say the least.  I have no debt other than student loans and a little bit of money saved - unfortunately I will have to capitalize on those getting washed out in the job losses front when they need to cut loose of land/property.

I keep telling my family and friends to get ready but nobody wants to listen and nobody really understands my constant anxiety over where things are heading and what I'm not really able to do about it right now.  

Living in Texas everyone likes to think we are immune to recession but when this trend combines with the delayed oil and gas fallout, this state is going to get HURT reallll bad.

Uncletommy's picture
Uncletommy
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Fragility vs. resiliency? Take your pick.

Location, location, location! If you wish to profile a coming trend, just pick a relative industry and geographic area and do the analysis. I've chosen the Canadian oil patch, as it is something I know. Oil sector jobs -  down, house sales in head office cities - down, service sector jobs - down, pickup truck sales - down, should I go on? As with any economy entering a deflationary cycle, the middle class will feel the pinch, first. As their spending is cut back, lower class folks get hit hard and anybody carrying a pile of debt will, most likely, be headed for the cliff.

I think CHS has identified the key elements, only I don't think any of us have an idea of how severe and long ranging this situation may be. Many of you PP contributors are bang on in your observations. Well done. Where are you in the fragility/resiliency continuum? DIY may be the new acronym going forward.

01fig04_alt.jpg

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Waterdog14
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Keep talkin' Vilbas

Vilbas wrote:

I keep telling my family and friends to get ready but nobody wants to listen and nobody really understands my constant anxiety over where things are heading and what I'm not really able to do about it right now.  

We need to keep talking about it.  Even though it appears that our friends, family, colleagues, and acquaintances are not listening - some of it is sinking in.

Only a handful of people are taking the university courses I'm teaching this semester ("Resilience 101" and "Depletion and Abundance") but those who are taking it need to know.  Another handful of SMART people who came to the first class knowing almost nothing of our current predicament.  So I just keep teaching & talking.

When I first went to the City building inspector for a building permit for the greenhouse last fall, I explained that I'm not building this to grow marijuana.  It's to grow vegetables when the trucks cannot deliver to our grocery stores.  On the second visit, I said, "I'm building this to grow vegetables..."  and the building inspector said, "...when the trucks can't come."  He may think I'm crazy, but knows what its about.

Vilbas, when the stress gets too great, I recommend a copy of "Collapsing Consciously - Transformative Truths for Turbulent Times" by Carolyn Baker.  And as others on this site have mentioned:  yoga, mediation, and taking a deep breath before facing the future feeling grounded, connected, and capable.

Mark Cochrane's picture
Mark Cochrane
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The economy is fine....

Just as the guys at Credit Suisse.

Credit Suisse announces 4,000 job cuts

Credit Suisse has announced that it is going to cut 4,000 jobs.

The announcement came with the release of results for 2015. The bank made a pre-tax loss for the year of 2.4bn Swiss francs ($2.4bn; £1.6bn), which was its first annual loss since 2008.

It said that included "substantial charges which are not reflective of our underlying business performance".

It has written off 3.8bn Swiss francs linked to its acquisition of Donaldson, Lufkin & Jenrette in 2000.

Credit Suisse said it planned to save 900m Swiss francs "from workforce strategy and the rightsizing of the bank's London presence".

The bank said that the job losses announced with the results were an acceleration of cuts that were already planned.

Its shares fell 10% in Zurich to their lowest level since 1992, because of a gloomy outlook for the current year.

Vilbas's picture
Vilbas
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To be fair

My mother is actually starting to get it since she has house she is considering selling right now. Otherwise I'm the wacko collapse guy.  It's all well and fine, I actually deal with it pretty well.  I'd say I'm best prepared emotionally more than anything else.  Most of my anxiety comes from living in a rented duplex in a city that is so wildly inflated it deserves a mighty fall (Austin).  I would go ahead and buy some land but much better deals should be available sooner than later.  My significant other is all on board with checking out as well, so we are positioned better than most, just not as well as I'd like us to be.  

I'd rather be building greenhouses and teaching about resiliency but I have to accept that's just not where I'm at right now.  I'm rereading Overshoot currently and I'll the Baker book to my list.   The hardest thing for me to accept is that you can't do everything at once and even if you could, that might not be good enough anyway!  Hopefully over the next year I can find a way to help lead and teach others how to fall forward into our strange new future.

ScubaRoo's picture
ScubaRoo
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Scottish Oil crisis

charleshughsmith wrote:

RE: Mark C's low-wage recovery: who do you downsize first? the people making $10/hour or the ones making $60/hr? If the $60/hr person is generating huge revenue, you keep him/her, but if they're in HR, admin, etc., they start looking like redundant fixed costs once losses start piling up. Closing entire divisions starts looking attractive, too. Slash and burn...

Let's also not forget that local govt has gorged on higher property, income and sales taxes for 7 years, and once revenues crater, slashing  payrolls (70% of local govt costs) will be Plan A, B and C because local govt cannot borrow money to fund general fund daily operations. 

We know that the top 10% of households earn about 50% of the income and their spending has propped up a lot of the "recovery" sales in discretionary spending--clothing, tourism, eating out, etc. The top 10% includes many people with wealth, but it also includes many people who have saved very little, and what they do have is in IRAs and 401Ks trapped in the market. Their slide to insolvency can be very quick once one high-earner loses their job and can't find another equally lucrative position in a few months.

Many of these people are vulnerable to a downturn because they own/operate small businesses in discretionary spending sectors--the ones that will get creamed as people cut discretionary spending. Others are sandwiched between kids in college and elderly parents--their seemingly big incomes are fully allotted every month, and one job loss will crumble the entire house of cards.

My point is that the upper middle class that's supported the 'recovery" with discretionary big spending is far more vulnerable to implosion/insolvency than is generally appreciated.

Good point on the highly leveraged (previously) well paid earners.  Oil workers in Aberdeen now using food banks, see the quote about the Porsche driver....

http://www.theguardian.com/uk-news/2016/jan/23/aberdeen-once-rich-oil-ci...

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killerhertz
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Just not the government ...

... Or those in government contracting.

I've been in the DC area for 10 years doing contract R&D for DoD and I assure you the job market isn't hurting here. It's another one of those insane bubbles. Like Mises said, money creation benefits those closest to the source.

As Charles mentioned, the local governments that have grown fat over the past couple of decades with tax revenues and unbridled growth will be in for a rude awakening when that money dries up. That said, I think the fed and local DC governments will be one of the last employers standing given the absolute necessity to keep the federal government employee welfare state operating. But Knowing this, my hope is that my family can leverage our cash reserves during the coming (hopefully) deflationary wave and get a good deal on land and/or house in "the real" Virginia. We like Charlottesville and Staunton a lot.

Mark_BC's picture
Mark_BC
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mememonkey wrote: I suspect

mememonkey wrote:

I suspect we will see some interesting worker adaptations. such as  micro entrepreneurship and reinvigoration of  home economics, which was once the foundation of both a healthy household and a more self reliant one.  It is real work to run a' productive' household one that provides for many of the needs we now purchase. The sooner our culture can rediscover the value in that the better off we will be.

I like the idea and you may be right, but I have a hard time specifically envisioning, firstly what the households will be doing that will provide for the needs of others and can be traded in a kind-of underground economy, and secondly, how anyone can even have a household producing anything when they don't own anything real anymore -- they are in debt to the banks, and when they do own something it is generally a suburban house or condo with which you really can't do much with. This isn't the 1930's anymore where average people owned farms and could hunker down and do the things necessary to get by independently. Average people these days own nothing, assets net liabilities.

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Freedom Tax
Sorry for the War and Peace essay, but taking a broad, 100 mile high bird's eye view, there is no real reason why we cannot all be just as prosperous today working a 20 hour week as we used to be at 40 hours, if machines hypothetically do half our tasks. If we aren't then the problem stems from a broken wealth distribution system, not from the 20 hour week.
 
It was noted that municipalities etc. are going to have a hard time getting enough revenue going forward. Agreed (although a currency reset would solve a lot of that problem), but historically state and federal governments usually got "enough" revenues through taxes. Income tax worked when the economy was growing and enough people were employed and actually earning a healthy income that could be taxed. I argue that today when the economy is not growing and unemployment is high, income tax is a totally inappropriate means for governments to obtain funds. Furthermore, big corporations and private companies (Cargill?) have twisted the rules in their favour so that they now hardly pay any taxes. So who is left holding the bag? The upper middle class which Charles points out is being squeezed despite their relatively high incomes. Exactly! That's why the middle class shouldn't be paying tax. surprise
 
Call me old fashioned or whatever else comes to mind ("socialist" is the usual label, even though it's far from socialism) but I am of the opinion that individual people should not be allowed to own more wealth than entire countries, in a finite world with only 200 countries but 7 billion people, that has hit growth limits. I am also of the opinion that if we do not actively take that wealth back, then we are forever doomed to serfdom regardless of how hard we try to become masters of our own destinies in our mortgaged condos as suggested by mememonkey above. We can debate this morally, which is all great, but from a simple practical standpoint I don't see how a system like that can function with any hope of democracy and sustainability.
 
Instead of taxing the middle class, let's tax the likes of George Soros, Warren Buffett, Mark Zuckerberg, Jeff Bezos, Jimmy Pattison, Jamie Dimon etc. etc. and of course the Rothschild types at the center of it all. There is a lot of wealth tied up there (to put it mildly) that could fund municipal budgets. Poor Bezos. Under such a system he might be forced to live like the top 1% and only be worth $10 million. I'd really feel for him...
 
Correct, under such a system it will be more difficult to become a billionaire. Boohoo -- the problem being?? Instead, you'd have an incentive to work and become upper middle class, live a nice life with reasonable free time, and save up enough to fund your own retirement.
 
So the solution is to ditch income tax, which so many argue is unconstitutional anyways, and replace with a .... get ready for it... a wealth tax! GASP!!! A WEALTH TAX???? What is this, communism???
 
Far from it, I argue that a properly implemented wealth tax is the most democracy-friendly taxation system and provides for the most individual freedom for citizens and the greatest incentives for individuals to get off their butts and work, to "produce" as so many people say, and to innovate as entrepreneurs. That statement flies in the face of everything you automatically assume, doesn't it?
 
That's because when people hear "wealth tax", in their minds they envision poverty tax. But I'm arguing for the opposite of that-- a wealth tax. So discard all your preconceived notions about wealth tax because you are confusing it with poverty tax (aka communism). Maybe I shouldn't call it a wealth tax, I think a better name would be "Freedom Tax". There -- now it will appeal to the American readership.
 
Once people get over their initial gut wrenching reaction to the idea of a Freedom Tax, based on invalid assumptions about what it actually would entail, we can begin to discuss it rationally and will inevitably come to the conclusion that it is the only taxation system that will work in the long run if we hope to have any chance of humanity surviving in a civilized form.
 
So, what is a Freedom Tax? Pretty simple, we tax 10% of people's wealth (real estate + ownership of companies, bonds etc., anything that can't be hidden from the tax man) per year until that person is worth say $2 million in today's dollar equivalent. Below that, they don't pay any tax except maybe some excise taxes (my numbers are all hypothetical, obviously they would be fine tuned).
 
You want to get stinking rich? Sure, you can get stinking rich if you want to and if you can find the means, but you will be forced to give back 10% of that stinking pile of riches per year until you are no longer stinking rich, but merely comfortably rich. Then no more tax. This means that if you grow your stinking pile of riches at 20% per year, beyond $2 million, you will still get rich at a post-tax rate of 10% per year. Doesn't seem so bad to me.
 
It means that if you earn $50k a year you get to keep $50k a year. Wow, what a concept, what an incentive to work. If you own a house that is less than $1 million, you pay no tax. You could own a house, a cottage at the lake, a nice car, and pay no tax. Concurrently, scale back welfare and the work week so that there actually are jobs available for people who would now have a real incentive to work.
 
From this, most things would automatically fall into place and provided we didn't have a debt based monetary system built around exponential growth, governments would be able to find funding, simply by fine tuning the tax rate and net worth which triggers the tax. Most of Charles' specific objections would just automatically solve themselves as wealth distribution returns to sane levels. Individuals would no longer be able to hoard things and would be forced to sell if they accumulate too much - this would cause prices for those things to drop and find equilibrium with what average people can afford.
 
Alas, purists will never accept that they should be forced to give up the wealth that they have earned with such determined effort (I mean, billionaires really deserve $10,000 an hour, they are worth it!) But many others do not share that ideology. I say, too bad, we live in a society and it is no longer acceptable for such gross wealth inequality to exist based on an ideological belief system about how wealth is created by private individuals contributing to a capitalist economy. Of course, I've always argued that wealth is not "produced" or created by people, but rather it is harvested from the natural world and transformed by people. Depending on the incentives and regulatory environment, we get different results of how that wealth is transformed and distributed.
 
In a nutshell, communism is almost always a total disaster. On the flip side, traditional capitalism is unsustainable, unfair, at odds with the natural processes that sustain life, and inevitably ends in what we have today, replete with capitalists up in arms blaming "socialists" for capitalism's failures. So let's get out of the dualist thinking and come up with different systems of taxation.
 
Would a Freedom Tax provide an incentive for people to convert their wealth into gold which can't be tracked and taxed? Yes. I ask: so what? Gold isn't a productive asset; it is money. To live, people need houses, food, energy, technology and the companies that bring about such things, and those things can be tracked and won't be allowed to be hoarded. If you convert your assets into gold to avoid taxation then all that does is make the assets you are selling (your third house, your farm, shares in some company) cheaper for the next guy to buy, which therefore helps alleviate wealth inequality. If you instead elected to convert your pile of gold into 3,000 acres of farmland, you would be forced to give up or pay the equivalent of 10% of that farm per year until it reaches $2 million equivalent (100 acres?) See how that makes farmland available for the average person to buy, rather than being hoarded by big companies?
 
Would gold leave the country? Why would it? It wouldn't be taxed. Gold flows are dependent on net trade balances and basically nothing else.
 
Would there be potential for abuse of the Freedom Tax system? Of course, like there is with any system. Do I see it actually being implemented properly? No, not as long as bankers are in control. But that doesn't mean we can't discuss it. We have a choice: we can either continue struggling with taxation systems that are guaranteed to fail by their very nature regardless of what happens (income tax and communism) or embrace ones that might actually succeed (Freedom Tax) if implemented properly along with political and anti-corruption reforms. Ultimately it boils down to the same issue at the root of so many of our social problems: are the masses going to grow some balls and stand up to their oppressors, or will they meekly beg for more domination like they have for 95% of history and pray that they too will one day win the lottery and become a billionaire like Jeff Bezos?
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My job is safe...

...but that's because I own my own company.

Is the company safe?  Heheh.  Good question.

Suffice it to say that I am working like three men to build up my social capital (I have only been a resident of my current community for 13 months) since that is where I can put my efforts currently.

Live in a condo, so it's not like I can build my garden/food resilience.  But that will hopefully change by Summer with a move to a actual home-type domicile and in the meantime I have a reasonable amount of preps in place (food, cash, hand-crank flashlights, genny, etc.) considering I just moved halfway across the hemisphere to live in a 700 sq ft home.

I have built my biz up from zero as of a year ago to the makin-it-with-nothing-left-over phase.  If I have another 3-6 months I'll get to the putting-money-away (or spending it on gardening supplies -- just another kind of savings account, yah? <smile>) phase.  One of my clients owns a hardware/gardening store.  Can't wait....

But if the economy craters immediately and my biz follows suit, I think -- in a community where (assuming you're not so wealthy you can Simply Ignore Everybody)  social linkage is the key to more or less everything (it's an entire money-free economy of relationship and obligation unto itself) -- I'd like our chances to catch on with some group that was organized to plow through the next downward lurch.  Between my Sweet Sweet Lady and I, we have a lot of useful skills.  Not to mention great attitudes, strong bodies, and -- as alluded to above -- a swiftly growing network of friendlies.  

It's an interesting time.  Along with everything else, I'm learning ukelele.  Doesn't cost a dime to sit on the porch and make music with friends.  Or make music and make friends thereby.  And an uke doesn't even need electricity...

Between my mindset, preparations, and so forth, I'm one of the wealthiest people I know.  And my net worth is a scandalously small number when defined in fiat bux terms...

To those out there who feel stuck in bad employment situations or threatened with the loss of employment, I'd urge you to consider:  what's the worst that could happen?  If the job went away suddenly (tomorrow next week before Memorial Day?) what's the worst that could happen?  And what are a few easy (or if not easy, just do-able) things you could do to mitigate and cope with the fallout?  Skills -- once learned -- cost nothing and are portable and you'll probably build social capital while you learn them.

Don't let the perfect be the enemy of the good.  Don't let the big picture drown out the power of the small things that matter -- and can be accomplished.  If you set aside 6 months of freeze-dried food in the 3-car garage of the house that you later lose, you can take that food with you.  And feed your family for half a year.  If you give up a $5/day coffee habit (or smoking?  or whatever) you can pay for 6 months of storage food damn quick without pinching anybody else's budget.

It's never really hopeless.  Okay, it can actually get hopeless, or seem so.  But for the most part, for most of us, we just have to let go of HOPE as a strategy.  

You'll be astounded at what is possible once you give up the narcotic of hope, and focus on what is.  

Yeah, the world right now is a scary place.  But we humans organize into tribes and we are astoundingly good at surviving hard times.  There's a virtual tribe here at PP.  There are actual tribes of 3E people everywhere at this point.  Go find your tribe.  

Don't fret the doomsayers.  There is and will be beauty and satisfactions various everywhere.  Develop an eye, and an appetite for the new strains of it.  (ProTip:  it pretty much always involves real live people in face-to-face situations.)  Wean yourself off complicated and system-dependent sources of pleasure.  Go watch a sunset.  Or sunrise.  Or go comfort -- in person -- a friend who just got laid off.

Mmkay.  Work starts in 8 hours.  Up in 6-1/2.  

VIVA -- Sager

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Indeed

Mark_BC wrote:

mememonkey wrote:

I suspect we will see some interesting worker adaptations. such as  micro entrepreneurship and reinvigoration of  home economics, which was once the foundation of both a healthy household and a more self reliant one.  It is real work to run a' productive' household one that provides for many of the needs we now purchase. The sooner our culture can rediscover the value in that the better off we will be.

I like the idea and you may be right, but I have a hard time specifically envisioning, firstly what the households will be doing that will provide for the needs of others and can be traded in a kind-of underground economy, and secondly, how anyone can even have a household producing anything when they don't own anything real anymore -- they are in debt to the banks, and when they do own something it is generally a suburban house or condo with which you really can't do much with. This isn't the 1930's anymore where average people owned farms and could hunker down and do the things necessary to get by independently. Average people these days own nothing, assets net liabilities.

And it's not just the assets they lack, but the key skills and understandings that our ancestors had but which we lack. Most people don't know how to grow food, how to create cloth or leather, how to build anything, etc. 

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Heart of the Oilpocalypse

Hi All

First time commenting.

Just some quick thoughts from one of the "front lines" in the current economic meltdown...

I live in Calgary, Alberta (the Houston of Canada). We've seen pretty dramatic changes in our city in a relatively short period of time. Traffic on the roads is noticeably down, there is a palpable sense of dread  everywhere, housing sales are in a serious slump, home prices are falling - and something about $8 cauliflower too. :)

Mass layoffs in the oil patch has hit our city hard and fast, with more predicted with the continued low price forecast. This has sent a "chill" through the whole city and across industries. Restaurants are closing, downtown offices are at 60-70% occupancy, and people who are not at all connected to the energy business are all sitting on their wallets, waiting for the other shoe to drop.

I own a small bike shop here and we're girding ourselves for a more volatile year. We're planning on hiring less (seasonal) people and are proactively shortening our business hours to save expenses.

It's going to be a very interesting 2016.

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"Collapse now and avoid the rush"

Sager, I'm so happy to hear how well you are doing.  For me, you are a real example of someone who took the advice "collapse now and avoid the rush" to heart.   And despite all the challenges such a collapse can entail, you have followed it through, and successfully transformed your life.  It is kind of inspirational.  :) 

Also, I love this:

Yeah, the world right now is a scary place.  But we humans organize into tribes and we are astoundingly good at surviving hard times.  There's a virtual tribe here at PP.  There are actual tribes of 3E people everywhere at this point.  Go find your tribe.

Again, nice to hear how you are doing, and about the good life you are building for you and yours!  Complete with the ukulele!

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CuriousCDN wrote: Hi

CuriousCDN wrote:

Hi All

First time commenting.

Just some quick thoughts from one of the "front lines" in the current economic meltdown...

I live in Calgary, Alberta (the Houston of Canada). We've seen pretty dramatic changes in our city in a relatively short period of time. Traffic on the roads is noticeably down, there is a palpable sense of dread  everywhere, housing sales are in a serious slump, home prices are falling - and something about $8 cauliflower too. :)

Mass layoffs in the oil patch has hit our city hard and fast, with more predicted with the continued low price forecast. This has sent a "chill" through the whole city and across industries. Restaurants are closing, downtown offices are at 60-70% occupancy, and people who are not at all connected to the energy business are all sitting on their wallets, waiting for the other shoe to drop.

I own a small bike shop here and we're girding ourselves for a more volatile year. We're planning on hiring less (seasonal) people and are proactively shortening our business hours to save expenses.

It's going to be a very interesting 2016.

Hi Curious,

Are people selling and moving, or are they going to try to hang on until oil prices improve?  I figure the reason Notley was voted in was firstly, the hatred of Harper, but also an acknowledgment that in tough times, you really want a socialist government to deficit spend, initiate infrastructure projects and do everything they can in the interest of those who suffer the most. 

I hope the socialist paradigm catches on in a big way -- close tax loopholes and sock it to the super wealthy and anybody making over $250,000, per year. If doctors and other essential service people don't like it and want to move away, they should have to forfeit citizenship. 

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stevejermy wrote: We're

stevejermy wrote:

We're hearing a very similar story in key area on this side of the Atlantic, starting with North Sea oil, where the lays offs are gathering pace.

But there is a bright spot, which is renewable energy. Having worked in the sector for the last 5 years, its gathering pace. Offshore renewable energy, my sector, is particularly exciting as a frontier industry, with so much potential energy to tap into, just as long as we ensure that we don't squander the oil that we need to exploit the opportunities on frivolous consumption for the discretionary industries profiteers.

This is where it's all eventually headed. Oil has preserved dollar hegemony and allowed the U.S to behave in a rogue way for quite some time. So much of the crap going on in Syria involves the U.S wanting to maintain control over China through oil pipelines that would easily service them. To be able to control countries who will provide easy access to this oil is a way of controlling China and disabling it, should the need arise. This is one of the reasons the U.S is buddy buddy with Iran now and why Saudi Arabia has become such a pain in the ass. 

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My bad Climber99

climber99 wrote:

The standard run model in Limits to Growth book did not put exact dates on the x-axis as you have shown in your post.  It was felt very important by the authors not to fall into the trap of making exact date predictions but instead model general behavior of the system over time.  I urge you to remove them Time2Help or to clearly state that the dates you put on the x-axis are purely your predictions and not the book's.

Alright, I'll bite. Why the taboo with plotting out the LTG curves? If someone makes a model that has a time abscissa...how is "zooming in" on that model misrepresenting the book? Particularly with trend data roughly following the standard run model over the past 30 years?

Apologies for snapping Climber99...just minutes before I read your post I was on the receiving end of a rather acute case of road rage. This is just my impression, but my take is that the general stress level out there is quite high.

Advice to all right now - proceed with vigilance and caution.

PS. - The Baltic Dry Index at 298...might that be related to "Industrial Output per Capita"?

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I suspect that if you hit "alert moderator" on your own post...

... and in the reason for the alert, asked the moderator to add the caveat "dates added by me", the moderator could and would do so.

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Look for the reason for the forty hour work week in DST

Consider the reason for Daylight Savings Time: by fiddling with the clocks, masters could get an extra hour of labor out of their slaves and servants.

In other words, it was all about taking everything the owners could get.

Or look at the Children of Israel in Egypt when Moses started acting up: what did the slavedrivers do? They increased the workload and decreased the tools, beyond the level of what was supportable, and lost everything, including their lives, their gold, their slaves, and all.

The forty hour workweek is most likely not the optimum level of labor; it is the maximum level of labor that is available to be seized by the owners.

More than that, and the maintenance on the chattel is not being handled.

I know, I work in construction (with an engineering degree) and work from between 4:30 am - 6:30 am, until between 4:30 pm and 600 pm... six days a week. I refuse the seventh on religious grounds, but therefore the seventh is also not available to me to maintain my family. Almost ALL of my labor is seized or destroyed one way or another. I am not free to move, but I am NOT planning on directing my sons into the same path.

Rather, the path I am guiding them towards is going to respond to that.

It's worse for the low-value labor, but what with government benefits to the poor, the difference is marginal. There's a reason for that: it is so that the owners can seize all of everything they can get.

Of course, with God's help, the effect of that marginal difference hopefully will be huge. Hopefully. We'll see.

We are living in very interesting times.

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in evidence of my viewpoint on the forty hour workweek

I offer this article of a near miss disaster for Virginia slavedrivers everywhere.

http://www.nbcnews.com/id/5353196/ns/business-us_business/t/judge-blocks...

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and a very volatile future beyond 2016

Hi CuriousCDN!

As a former Calgarian (lived there 23 years) who still has family in that city, I am watching with interest how family and friends alike are reacting to what is happening. Most are still wearing their rose coloured glasses, insistent that this too will pass and before long it will be back to let the good times roll. There have been so many booms and busts that most think this is just one more downturn that will hurt for a bit and then things will turn around again. The endless optimism and can do attitude that defines Calgary means many believe that solutions will be found via technology or other means that are not yet invented. The biggest mistake I see is the collective failure to acknowledge the limits to growth. People just cannot go there. They refuse to go there... 

Someone close to me, who is perfectly representative of the Calgarian personna and all the braggadocio that goes with that, is trying to convince me that there other visions that I can buy into (read: I do not need to prep or buy into all the crap blogs I read). He gave me a book called The Rational Optimist by Matt Ridley, which was a NY Times bestseller. Curious, I flipped through it but when I came across a passage where the author suggests that herbicides and pesticides as well as GMO foods are great because they enable us large scale agriculture with which feed the masses, I knew that it was not a vision that would align with my views. Quite the contrary. Did not read the book, don't need to. I then Googled the author to find out who he was and learned that amongst other things, he is the former head of the UK bank Northern Rock which had to be bailed out after a bank run. Another check against his credibility. Yet people are willing to overlook that because his vision feeds their need for optimism, enabling them to continue denying what is happening before their eyes. They are still seeing problems that have solutions, refusing to see predicaments that can only be managed. Most Calgarians are seriously married to the idea of endless growth and prosperity and nothing short of a collapse is going to move them off of that point of view.

The fact that you have posted here tells me that perhaps some people are starting to wake up. If I were you, as a small bike shop owner, I would be doing some strategic thinking around how you can benefit from the inevitable decline in the city's love affair with big trucks & SUV's, and a profound driving culture. Bring in electric bikes; push for the city to allow electric bikes on the multitude of bike paths; find ways to be the early leader helping the city transition to new transportation models. Find a way to change people's view of cycling from being a recreational pursuit to a viable form of transportation that has many side benefits. Find ways to make cycling more viable in winter conditions.

At least you are in control of your destiny, and your product is something that has a future. This cannot be said for the thousands who are losing jobs and now having to face the realities that most Calgarians have been denying for so long. The party punch bowl is empty and this is going to be a doozy of a hangover. As much as I wish it were not so, there will be many years past 2016 that will be painful. Few people are prepared for what is coming and it is not going to be pretty, especially for those who have been living large and well beyond their means.

Good luck to you!

Jan

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pinecarr wrote: Sager, I'm so

pinecarr wrote:

Sager, I'm so happy to hear how well you are doing.  For me, you are a real example of someone who took the advice "collapse now and avoid the rush" to heart.   And despite all the challenges such a collapse can entail, you have followed it through, and successfully transformed your life.  It is kind of inspirational.  :) 

Nice to see you, Pinecarr!

Glad if I can help anybody get excited about their own personal collapse!  <smile>  But I must say I have had plenty of help getting my collapse on, whether from the world, TPTB, or my ex-wife.  They all deserve some credit too!  <wry grin>

I play a little game with myself:  I think in terms of my true needs.  Can I provide for X without needing to earn fiat bux?  Or can I do without?  Every bit of fiat bux I don't have to earn is Precious Time I can spend doing something more dear.  I've become quite ruthless (happily so!) at cutting away the unnecessary, or figuring alternate ways of providing for X.  Learning to play a (portable, non-electric) musical instrument serves so many needs and costs so little it's a no-brainer.  It's a social activity, it's a creative activity, it's a way to make friends and pass time.  It's therapeutic -- a way to express emotion, shift your state of mind.  

It's deeply human in an old-fashioned way.  Try and you'll see.  People will respond in ways that will surprise even them....

To quote something I saw recently:  "You're a spirit inside a meat-covered skeleton standing on a rock hurtling through space at 60,000 mph.  FEAR NOTHING!"

Just learned Blind Boys of Alabama's version of "Amazing Grace."  Really simple, really awesome!  

VIVA -- Sager

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I work for one of the big tech companies

And am very new to PP and the concepts herein. And wondering if I should sell my stock in said employer. I survived the 2008-2009 layoffs.

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Sell?

darcieg76 wrote:

And am very new to PP and the concepts herein. And wondering if I should sell my stock in said employer. I survived the 2008-2009 layoffs.

Short Version... Y E S !

Long version..

It depends... Let's assume the worst that happens is just that its a mere temporary dip and your out of work for a while whilst the stock market goes down, you could sell now and buy back later?

Ensure you have liquidity to pay the bills/debts for at least a year

Also... As your new try not to be too freaked out by the info on here, it can be daunting at first, we are here to help, the future can be good despite the headwinds that face society, take care..

SR

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Hello darcieg76

Hello darcieg76.

I'm jealous that you are even able to sell your company stock. My husband's retirement is at least in cash but always shows up at stock first and then we have to wait 6 months to change the next batch to cash.

IMHO if your stock is not in immovable retirement funds you should probably put those resources into something else.

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Super Bowl Commercials

I have to admit that we really love watching to see which will be most entertaining or interesting every year at this time.

But I almost had to turn off the TV and have a teachable moment with my kids last night during the Rocket Mortgage commercial which was basically a promo piece for Keynesian economics!

Get a mortgage!  Go into more debt! Buy more stuff!  Generate more jobs so those people can qualify to go into more debt so they can buy more stuff!  That's the American Dream!!

I almost got sick...

Keith

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Sweeet!

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Re: Sweet

pinecarr wrote:

[video]

Well, that's an interesting version...house of the rising sun chords and melody with the words of Amazing Grace sung to them.

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Difficult to answer

darcieg76 wrote:

And am very new to PP and the concepts herein. And wondering if I should sell my stock in said employer. I survived the 2008-2009 layoffs.

That's probably not a question you should have answered on some comment section on some website...but the basic things I asked myself when I had company stock were:

  1. How much of my net worth is tied up in this one stock?  If it's over 10%, time to dial it back.  Need more diversification.
  2. How much more of this stock might be coming my way this year (and next, and next)?  If more, then I might be tempted to clear even more out right now.
  3. How would I feel if this stock went to half its current value?  Could I sleep?
  4. What are the prospects for my specific company?  Is there any chance that the stock is overvalued right now?
  5. What would happen to the price of this stock when (not if) the economy goes into another recession?  How did it behave in 2008?
  6. What are the tax implications of selling right now?  Will I have to find cash because there are options involved?  If so, can I afford the tax and/or cash hits?

I sold out of my company stock when I left each of the two major corporations I worked for along the way and all of it as soon as I left.  Those were the right decisions for me, and they worked out perfectly well to my satisfaction.  

Your results may well turn out differently.

darcieg76's picture
darcieg76
Status: Bronze Member (Offline)
Joined: Jan 3 2016
Posts: 28
Reply: I work in one of those tech companies

Thanks, Chris. And thanks to everyone else who shared their insights. 

Definitely not over 10%. To be honest, I don't even know what my net worth is. I'm very uneducated in this stuff and only have my current career, my 401K, and stock in my company. We're talking quite a small amount of stock--like $10K. But if it's going to keep going down, and there's a chance I might get laid off, it might be good to have the cash cushion.

Because my stock holdings are fairly small, yes, I could sleep if it went to half its value, but I'd be disappointed that I hadn't sold it.

I'll need to do my research for questions 2, 4, 5, and 6. It's quite a stable company, but its stock did go down a fair bit in 2008-2009, IIRC.

I listened to your podcast with New Harbor--do they deal with small potatoes people like myself? One thing that's been nagging me for years is that I'm not working with a financial advisor. 

Was introduced to your work on Robb Wolf's podcast, by the way, and was captivated by the idea of resilience, especially on the permaculture, sustainable food production side of things.

Thanks!

darcieg76's picture
darcieg76
Status: Bronze Member (Offline)
Joined: Jan 3 2016
Posts: 28
Thanks for the insight,

Thanks for the insight, Wendy!

darcieg76's picture
darcieg76
Status: Bronze Member (Offline)
Joined: Jan 3 2016
Posts: 28
Sell?

Thanks, ScubaRoo. I am equally freaked out and intrigued. :-)

Vilbas's picture
Vilbas
Status: Member (Offline)
Joined: Aug 14 2014
Posts: 20
Darcieg76, I totally

Darcieg76, I totally understand where you are coming from and often feel the same.  I've been following PeakProsperity and similarly situated experts for more than a year now and while I feel better educated than before, I still feel lost at times.  ESPECIALLY concerning my financial situation.  Luckily for me I don't have stocks nor major debt other than law school debt.  That said, I have been building a pretty sizable nest egg of "cash" in the bank and have been fairly paralyzed about what to do with it.  The concept of staying out of harm's way can't be emphasized enough - protect what little you do currently have!  

I recently opened a 2nd bank account in a small hometown bank to just to spread my savings out and not have everything I own financially speaking sitting in the hands of Wells Fargo.  I still don't feel all that confident in digits on a screen as far as my wealth goes but I don't exactly have a safe place to keep a bunch of cash or metals currently (I'm a renter, not a home owner.)  So, I'm just keeping my powder dry hoping I can be financially limber enough to maneuver the mine field that lays ahead.  

In other words, just standing firm and limiting exposure where you can is the safest play and has been for a little while, especially for the small fries like us who don't have a ton and could be really hurt if what little we have disappears.  

I still have some work to do to feel better about where I sit since I only have cash and no land or chattel, but that will come at hopefully soon to be depressed panic-driven prices.

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