Marketwatch can be thought of as a news site
or as a high-quality, multi-person hub for bloggers.
Yesterday it ran this story:
More than 170,000 tech-sector employees have lost their jobs since the start of 2023
The data show that 2023 has surpassed 2022 for global tech redundancies, with 589 tech companies laying off 170,611 employees since the start of the year. Last year, 1,024 tech companies laid off a total of 154,336 employees, according to
Layoffs.fyi . . .
The extended period of low interest rates had made it very easy for tech firms to raise capital. From an investor standpoint, the cheap cost of money made riskier investments more appealing.
As the Fed has raised rates to tame inflation, investors have pulled back substantially. In my personal experience (a company I started lost its investor) I think they over-corrected, but you could call me biased.
But basically, this is capitalism working the way it should: correcting and sometimes over-correcting. As capitalism adjusts, individuals experience adverse outcomes. This is a good thing, right?
Under a socialist or communist regime, the government would step in to prevent those individual adverse outcomes. Think of how much money China invests on unnecessary infrastructure projects to prop up local economies.
The fact that the Biden Administration is letting this happen with taking action demonstrates how silly it is to call his administration socialist or communist.
A person could easily convince me the Fed moved too quickly in raising rates.
but long term interest must be > inflation or else very bad things will happen.
We are not there yet.
(And yes the extended period of silly-low interest rates led to a lot of malinvestment.)
You may be correct about the speed issue but I think it will take a few more years to judge that.
There was a lot of political pressure from the far right insisting that inflation was a major problem, even though it was a global problem that was less severe in the US than in other developed consumer economies.
Given that the Fed has to go
The sad fact is 1) comments from Powell, and 2) comments from other FOMC members and 3) the dot-plot each indicate the Fed has not yet come to grips with the fact that their terminal rate needs to be “that high.”
They still believe the current basket of policies will cause inflation to come down and stay down. They are wrong in that belief. They are still “too dovish.”
Oh nice, haven’t seen one of the sock puppets in a while. lol
Well it looks like at Facebook it was more than warranted:
