Spread this message with Digg, Del.icio.us, Reddit, or Stumbleupon, and subscribe to the RSS Feed to track articles

Stemming the Blood Loss

Published 11/17/08 Craig Harrington - Print Article
E-mail - editor@economyincisis.org

Citigroup, one of the world’s largest banks, announced plans Monday to cut 53,000 jobs.

Citigroup already exercised 23,000 layoffs and early-retirements in the last year as it tried to reduce costs in response to dwindling revenue and share prices. CEO Vikram Pandit, formerly of Morgan Stanley, has led the company since December 11, 2007 and has taken part in its epic collapse. When the most recent round of layoffs finalize, Citigroup will be left with just 300,000 employees worldwide, down more than 20 percent of its workforce in the past two months.

Citigroup’s layoffs are in line with the newswire from other embattled financial institutions. JPMorgan Chase announced over the weekend that it would cut several thousand employees from its payroll as well. Layoffs in the big financial firms have become the norm as profitable and productive workers become expendable. Companies fighting against the devastating effects of government deregulation and their own complete lack of self-control have now turned to their employees once again to shoulder the burden. In one year Citigroup will have put over 70,000 employees out of work, but it can be assured that Vikram Pandit’s personal finances are more than enough to survive on even if he takes a cut in pay and bonus salary.

Massive layoffs and overcompensating CEO’s have become disturbing trends in the United States. When the company falters the workers pay for it, when the company succeeds the executives reap the rewards. With American unemployment skyrocketing – expected to reach 7.5 percent in 2009 – the thought of thousands of newly unemployed workers is hard to comprehend. Every new member of the “jobless pool” makes it more difficult for everyone else to find work. Unemployed workers will be forced to accept less and less in order to secure a position; likely well below their previous standard.

The United States cannot dig itself out of this recession without putting people to work. Waves of layoffs are not a solution; they only make the problem worse. Citigroup hoped that its move would show investors that the company was willing to take charge. Investors on the other hand saw through the guise and understood it to be a move of desperation.

Cutting 70,000 workers may free up enough capital for the company to survive a bit longer, but it will not recover until it hires competent leaders and employees capable of bringing in profits. The United States is in a similar state we, like Citigroup, seem obsessed with merely stemming the blood loss as opposed to actually fixing the problem (see: Bailout).

Source Guardian:

Citigroup said Monday it planned to cut more than 50,000 jobs, the latest move by the struggling bank to cut costs in order to weather the credit crisis plaguing Wall Street.

In an investor presentation on its Web site, the company said it would reduce its staff levels to approximately 300,000 employees. As of the end of September, the New York City-based bank had about 352,000 workers.

...

Citigroup tried to impress upon Wall Street Monday that it was in a position of strength. The bank said its revenues have remained stable and that the company had plenty of capital following a move by the U.S. Treasury into inject $25 billion into the bank as part of the government rescue plan.

But investors seemed unconvinced. Citigroup stock fell nearly 3% in morning trading on the New York Stock Exchange. In the last two weeks alone, shares have lost about a third of their value and so far this year, they are down about 68%.

Click Here For Solutions To America's Economic Problems

Click here to contact your Representative in Congress.

Unless the above article is already copyrighted, this article is licensed under a Creative Commons Attribution-No Derivative Works 3.0 United States License, EIC grants permission to use this article in whole or in part provided attribution is given, preferably in the form of a link back to EconomyInCrisis.org.