And Now, Even Microsoft

Today, Microsoft Corporation, the Redmond, Washington computer operating system behemoth, announced it was laying off 5,000 employees and instituting other cost saving measures.  Of those 5,000, 1,400 apparently were laid off today at the Redmond headquarters.    

This news comes when Microsoft reported that it's earnings were less than expected for the 4th quarter, 2008.  However, what is important to note, they still performed quite well.

But if it isn't clear by now it may never be.  Our economy is in deep, deep trouble.  And I am beginning to wonder whether the proposals made by the Obama Administration are sufficient to self arrest the avalanche of news like today's layoffs at Microsoft.

Several days ago I wrote about banking institutions that are "too big to fail."  And I cautioned that anything that is too big to fail, whose collapse would have, according to some, catastrophic impacts on the global economy, should not even be allowed to exist.  Indeed, within the past week, we have seen the outgoing Secretary of Treasury deliver more federal money to two such banks, Bank of America and CitiCorp.  And the word is that both are still, essentially, insolvent.  

It seems that a wiser, more prudent use of our money may be for the federal government to start several smaller, regional banks.  New, healthy banks.  But to continue dumping federal money into cesspools where we haven't a clue where the bottom is, what kinds of assets they have, how much they actually owe other lenders, seems, well, bad banking.  We are making loans, or investing, in exactly what we don't want banks to be doing anymore.  So, while I understand the panic in the Obama Administration, of not wanting Bank of America or CitiCorp to fail in the first few glorious days of this Administration, perhaps a wiser course would be to just stop giving them money and begin creating new, more stable banking institutions who will act like banks rather than money sponges.  Creating new institutions while we watch the old, lumbering, banks fail, could be a very healthy idea.  Short of this, Obama just need to nationalize the banks, kick out the management, and well, maybe hire some of the 5,000 bright young stars from Microsoft to run them.  They need jobs.

The other fundamental problem is a trade issue.  Again, at the risk of becoming the Cassandra of the blogging universe, we can not keep importing and buying their stuff.  We have got to be creating, manufacturing, and exporting our stuff.  The so-called "new economy" has failed.  Let's be real about that.  And what did we really export anyway, credit default swaps?  The Lords of Wall Street who got us into this mess?  Yep, sure, they are advising China, India, Singapore on how to look just like us?  Come on!  

We have so gutted our manufacturing capability that it will take years and years to get that back.  But I think part of the deal this Administration has to make with private industry is if they want bail-out or stimulus money, they have to be American.  No call centers in other countries, no imported steel, concrete, or solar panels.  And if, because of all the trade agreements we have made this requirement is considered a trade barrier, well, tough.  The world feasted on our stupidity for a long time, it's had more than it's share.  Sounds tough, I know.

But Obama has to explain to other countries that if they don't want bread riots in their streets, America has got to get it's own economy on a sustainable basis, and that means reducing our trade deficit, developing well paying jobs here.

Pundits are saying much the same thing.  Obama promised to listen to all of us.  Hopefully he does, and soon.

Meanwhile, I'll keep my accounts in one the of "too big to fail" banks, because I am not sure there are any other solvent alternatives.