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alstry (36.24)

35% Unemployment!!!!!

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April 09, 2008 – Comments (8)

April 9 (Bloomberg) -- Kenneth Moelis, the former president of UBS AG's investment bank, said Wall Street firms may have to eliminate as much as 35 percent of employees as leveraged lending dwindles and the pace of mergers and acquisitions slows.

``The Street got staffed up to support what was a slight bubble in M&A,'' Moelis, 49, said in an interview on Bloomberg Television today. ``You're going to see a significant retrenchment.''

Moelis resigned from UBS, Switzerland's largest bank by market value, a year ago and now runs Moelis & Co., an investment banking boutique. Some of the largest financial ``conglomerates'' may break up as Wall Street shifts focus from lending to its clients to furnishing them with strategic advice, he said. Wall Street banks hit by mortgage losses and writedowns have cut more than 34,000 jobs in the past nine months, the most since the dot-com boom fizzled in 2001.

``They're going to have to go back out and remember that their client is a relationship, not a counterparty,'' said Moelis, who is based in Los Angeles....

http://www.bloomberg.com/apps/news?pid=20601087&sid=aEiGgw2lOnUk&refer=home

As I have been saying, by the end of the summer we are likely going to see reported unemployment North of 10%.  Employers accross America ramped up hiring because of a party of spending directly related to credit expansion.  Now airlines are shutting down completely or imposing hiring freezes.  Homebuilders are building less than half the homes they built just a couple years ago.  Mortgages  companies have shut down by the hundreds.  Here comes Wall Street with some estimates calling for 35% of jobs to be cut.

The math is simple.  We are seeing technology companies, pharma companies, and governments cutting by 10% or more as a matter of routine.  Add that to the above with the current 5% unemployment rate and exceeding 10% by the end of the summer seems like an easy call....it could be 15% if credit remains constrained.  Remember, if banks are the only ones able to get money to repair credit defaults, few are spending simply to maintain current status quo.

 

 

8 Comments – Post Your Own

#1) On April 09, 2008 at 7:27 PM, camistocks (< 20) wrote:

35% unemployment? You are losing credibility.

Do you work for a short seller boutique firm? You come to CAPS and post some horror visions... (which won't happen)

Well, I guess everyone is entitled to his opinion 

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#2) On April 09, 2008 at 7:30 PM, mandrake66 (69.52) wrote:

Here is an interesting article shedding some light on this and other topics you've raised recently: The Fading American Economy by Paul Craig Roberts.

One interesting fact -- measured the old way, around 1980, the current unemployment rate would actually be about 13%. 

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#3) On April 09, 2008 at 8:17 PM, alstry (36.24) wrote:

Actually, I am only forecasting 10% unemployment.  35% unemployment comes from the former President of UBS's Investment Bank.

The link is provided for your convenience and personal review of the entire story.

If you notice, most of what I post is simply articles supported by my commentary.  If you have a problem with the 35% unemployment projection, you may want to contact UBS.

As far as my negative bias, I post things as I see them.  If you have facts to refute, please provide the information as socratic debate will only serve to benefit all CAPs members draw their own conclusions.

Remember, in a free market, only those ideas with long term credibility survive.

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#4) On April 09, 2008 at 8:45 PM, alstry (36.24) wrote:

Cami,

The following is the link for the video of the UBS President's forecast of 35% umemployment.

http://www.bloomberg.com/avp/avp.htm?clipSRC=mms://media2.bloomberg.com/cache/v_qFhHcHMKvU.asf

By the way, to keep your success(my CAPs performance) in perspective.  You single point score on SPF alone as of tonight exceeds the total points of my over 60 picks. 

Congratulations..... but I doubt this situation will last very long....especially if some CAPs member brings a lawsuit against the company's entire board for malfeasance and misfeasance.  The CEO and CFO are already defandants in a class action case alleging providing false guidance.

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#5) On April 09, 2008 at 9:08 PM, alstry (36.24) wrote:

PUBLIC COMPANY FIRES ALL EMPLOYEES AS IT SHUTS DOWN DUE TO SLOWDOWN IN HOUSING

American Mold Guard Inc. shut its doors and laid off all its staff this week, citing the “severe and unprecedented” decline in the new home market. The publicly traded San Juan Capistrano provider of mold-protection services to homebuilders employed 63 people at the end of 2007. (That’s a photo of a house with really bad mold!)

The company, formed in 2002, also had been unsuccessful in raising capital to transition into other types of services, according to a company news release. The shuttering of the business comes after at least two consecutive years of red ink, with 2007 net losses totaling $5.7 million, the company reported. CEO Mark Davidson, pictured at the company’s first stock sale, issued the following statement:

“We are saddened and disappointed by the sudden discontinuation of American Mold Guard’s business operations. We and our employees worked extremely hard to avoid where we are today. Unfortunately, the severe and unprecedented decline in the residential new construction market, combined with our inability to raise capital sufficient enough to effectuate a planned business strategy of making us less dependent on the residential new construction market for our revenues and cash flows, proved to be business conditions that we could not overcome.”

American Mold Guard had raised $16.6 million in an initial public offering in May 2006.

The above is from Lanser's Blog  at O.C. Register.  Can you imagine how many millions of people have either lost their jobs or suffered substantial decline in income as a result of the housing slowdown?  And some people are questioning my forecast for 10% umemployment.

As Mandrake pointed out above, if we simply used  constant statistics, we would be above that rate right now.  That is why my prediction is really not a prediction, it is simply a reality.

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#6) On April 09, 2008 at 10:50 PM, TMFKopp (97.79) wrote:

Just as a point of clarification, nobody is calling for 35% unemployment in that article. He claims 35% of Wall Street employees could get laid off. That's not good, but Wall Street is not a huge percentage of the US job market.

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#7) On April 09, 2008 at 10:59 PM, alstry (36.24) wrote:

PUBLIC COMPANY FIRES ALL EMPLOYEES AS IT SHUTS DOWN DUE TO SLOWDOWN IN HOUSING

American Mold Guard Inc. shut its doors and laid off all its staff this week, citing the “severe and unprecedented” decline in the new home market. The publicly traded San Juan Capistrano provider of mold-protection services to homebuilders employed 63 people at the end of 2007. (That’s a photo of a house with really bad mold!)

The company, formed in 2002, also had been unsuccessful in raising capital to transition into other types of services, according to a company news release. The shuttering of the business comes after at least two consecutive years of red ink, with 2007 net losses totaling $5.7 million, the company reported. CEO Mark Davidson, pictured at the company’s first stock sale, issued the following statement:

“We are saddened and disappointed by the sudden discontinuation of American Mold Guard’s business operations. We and our employees worked extremely hard to avoid where we are today. Unfortunately, the severe and unprecedented decline in the residential new construction market, combined with our inability to raise capital sufficient enough to effectuate a planned business strategy of making us less dependent on the residential new construction market for our revenues and cash flows, proved to be business conditions that we could not overcome.”

American Mold Guard had raised $16.6 million in an initial public offering in May 2006.

The above is from Lanser's Blog  at O.C. Register.  Can you imagine how many millions of people have either lost their jobs or suffered substantial decline in income as a result of the housing slowdown?  And some people are questioning my forecast for 10% umemployment.

As Mandrake pointed out above, if we simply used  constant statistics, we would be above that rate right now.  That is why my prediction is really not a prediction, it is simply a reality.

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#8) On April 16, 2009 at 2:11 AM, BraylonE (< 20) wrote:

We all make financial mistakes at one point or another. Maintaining a good credit score is necessary to avoid these financial mistakes. The credit repair is a pretty popular topic right now. Advices about credit repair are everywhere. Well, getting payday loans now and again to make higher than minimum payments isn't a bad step to take.  You might also make some alterations in your personal budget to make more payments and get out from under the cloud of debt.  It could save you from worrying about payday loans later on if you repair your credit.

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