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Old 12-22-2008, 03:20 PM
 
Location: Georgia, on the Florida line, right above Tallahassee
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Caterpillar and FedEx are forcing pay cuts. That's interesting.

Caterpillar announces pay cuts, buyouts | Reuters

Experts say the takebacks are an ominous sign of things to come at many other U.S. companies in the coming months as businesses -- even relatively healthy ones like Caterpillar and FedEx -- take defensive measures in response to the worst economic downturn in decades.
According to the employment consulting firm Watson Wyatt, 11 percent of all the companies it recently surveyed either already had cut wages or planned to do so over the next 12 months. Caterpillar said that compensation for the most senior executives would be cut by as much as 50 percent, while pay for senior managers will be reduced 5 to 35 percent and other management and support staff will see cuts of up to 15 percent.

401K matching is on its way out, too... I guess. Oh well, easy come, easy go.
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Old 12-22-2008, 03:26 PM
 
Location: Great State of Texas
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I was wondering when that would start. Cutting back hours and 401K matches is one thing..but now pay. For those people with high debt to income ratio this will be a big hit, almost as bad as losing your job. I'll wager we'll be reading about more big corporations doing this.

Truly we are living a page in history folks. No recession that I have lived through was this bad and it's not the bottom by any means.
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Old 12-22-2008, 04:02 PM
 
Location: Sitting on a bar stool. Guinness in hand.
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Well which is worse. Taking the pay cut? or being out of a job? They both suck but which one sucks more. Like you said 70ford. Easy come easy go.
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Old 12-22-2008, 04:46 PM
 
Location: Chino, CA
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Quote:
Originally Posted by baystater View Post
Well which is worse. Taking the pay cut? or being out of a job? They both suck but which one sucks more. Like you said 70ford. Easy come easy go.
Well I guess it depends on how much of a cut, and how long the cut will last. If the cut is high, and it's an indefinite time span (or no end in sight - permanent cut).... then perhaps finding a job in a growing industry would end up being better in the long run.

I mean you can only go for so long supplementing lost income with savings or not saving at all. And, there is going to be growing segments of the economy (ie, health, medical, education, government, and soon engineering, infrastructure, alt. energy sectors) that will come online in the near future.

Anyhow, the company I work for already made some hefty cuts in the last months to weather some revenue shortfalls.... but hopefully when things pick up with infrastructure spending and engineering in the coming year, my company should benefit from the future pick-up in these activities.

Therefore, I see the cuts as temporary. If the cuts last quite awhile and even if things pick-up, but the cuts remain... then it'll be a good time to move to another company/industry.

-chuck22b
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Old 12-22-2008, 05:07 PM
 
Location: Los Angeles Area
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Ahem.......deflation...

The 401(k) cuts are interesting, just when people will sell equities to fund retirement or due to hardship....there will be less buyers. Gee.....I wonder what is going to happen.
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Old 12-22-2008, 05:31 PM
 
Location: Chino, CA
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Originally Posted by Humanoid View Post
Ahem.......deflation...

The 401(k) cuts are interesting, just when people will sell equities to fund retirement or due to hardship....there will be less buyers. Gee.....I wonder what is going to happen.
The equity markets are going to sky rocket right?

Anyhow.... if all that theory that has been going around on these boards lately are right... then inflation/deflation or whatever state we are in in regards to the money supply is in the Fed and the Central banks control.

So, we can pretty safely assume that the Fed is going to do whatever is necessary to generate more debt/money (through debt purchase policy) and the new administration will act through fiscal policy.

The near $1 trillion proposal for the upcoming administration's stimulus plan seems like the "appropriate" government response to advert a total deflationary spiral and falls inline with Bernanke's thesis on policies in a zero interest rate situation.

-chuck22b
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Old 12-22-2008, 05:42 PM
 
Location: Los Angeles Area
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Quote:
Originally Posted by chuck22b View Post
Anyhow.... if all that theory that has been going around on these boards lately are right... then inflation/deflation or whatever state we are in in regards to the money supply is in the Fed and the Central banks control.
Not really, deflation is much harder to fight than inflation. You can force banks to reduce lending etc by a variety of mechanism, but how do you make them lend? How do you make people borrow? How do you make people spend? You don't. Even dropping money from a helicopter would do little if all people did with it was pay off debt and save it.

The FED isn't going to save the day, the only option now is fiscal policy.


Quote:
Originally Posted by chuck22b View Post
The near $1 trillion proposal for the upcoming administration's stimulus plan seems like the "appropriate" government response to advert a total deflationary spiral and matches inline with Bernanke's thesis on policies in a zero interest rate situation.
Yes, Bernanke's "thesis". Given his track record so far....I'm thinking I'm not going to put too much weight into his "thesis".

But yeah....big daddy government will make it all better. Just like they have in the past........
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Old 12-22-2008, 05:46 PM
 
Location: Charlotte, NC
2,193 posts, read 4,618,974 times
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Quote:
Originally Posted by chuck22b View Post
The equity markets are going to sky rocket right?

Anyhow.... if all that theory that has been going around on these boards lately are right... then inflation/deflation or whatever state we are in in regards to the money supply is in the Fed and the Central banks control.

So, we can pretty safely assume that the Fed is going to do whatever is necessary to generate more debt/money (through debt purchase policy) and the new administration will act through fiscal policy.

The near $1 trillion proposal for the upcoming administration's stimulus plan seems like the "appropriate" government response to advert a total deflationary spiral and falls inline with Bernanke's thesis on policies in a zero interest rate situation.

-chuck22b
But if you look at Table R. 100, it shows the how much wealth has been destroyed in 2007 and 2008. (Specifically lines 10-14). The total is already over 7 trillion dollars and that *only* includes household assets. A 1 trillion dollar plan doesn't even put a dent into what's happening today. And that 1 trillion will take a long time to implement.

http://www.federalreserve.gov/releas...Current/z1.pdf
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Old 12-22-2008, 05:51 PM
 
Location: Chino, CA
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Quote:
Originally Posted by Humanoid View Post
Not really, deflation is much harder to fight than inflation. You can force banks to reduce lending etc by a variety of mechanism, but how do you make them lend? How do you make people borrow? How do you make people spend? You don't. Even dropping money from a helicopter would do little if all people did with it was pay off debt and save it.

The FED isn't going to save the day, the only option now is fiscal policy.



Yes, Bernanke's "thesis". Given his track record so far....I'm thinking I'm not going to put too much weight into his "thesis".

But yeah....big daddy government will make it all better. Just like they have in the past........
Man, I wish I had a mighty mouse image or animated .gif with a big "G" on its' chest... here he comes to save the day!

Anyhow, if people pay down debts, that only means there's a transfer of debt from the household sector to the government sector. Which is good for the household sector as it'll free up disposable and livable incomes (income tax holidays, or stimulus checks?).

The other part, is to create jobs and that is where the infrastructure and other spending plans (including business tax breaks?) and potentially future incentives to keep and retain R&D and jobs in the States. If people have jobs and are working... eventually some of that income will translate to spending, loaning, and re-expansion of credit.

It's really not that hard to get banks and people to spend. The "government" somehow helped spur spending in the last decade through low interest rates and unregulated markets.

Although it'll be harder this time through... fundamental economic improvements can also still stimulate long term growth effects. Efficiency improvements in energy, better transportation/reduced time, and less reliance in imports (oil) would greatly improve our GDP mix and get us on a better frame work for more sustainable growth.

-chuck22b

Last edited by chuck22b; 12-22-2008 at 06:01 PM..
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Old 12-22-2008, 05:59 PM
 
19,123 posts, read 20,697,215 times
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Somehow I don't see Americans "saving" IF they pay off their debts.. they have an image to live up to and expect it... as spendthrifty people who act like they have more money than they actually have...
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