It's been awhile since we've heard about job cuts by major U.S. employers. Instead, we hear statistics about falling unemployment, as if those whose unemployment benefits have expired, no longer count.
Making headlines today, however, is Cisco's elimination of 550 jobs. Is this a sign that recovery may be slower than the slow we hear about? Other giant companies are taking similar action. In late February, Medtronic, a Minneapolis based medical device giant, announced it would be cutting 1500 to 2000 jobs by 4Q. Now, the news is out. Announcement of which jobs will be cut has begun.
In March, another medical device maker, Boston Scientific, also announced a plan to cut jobs. Specifics have not yet been released as to how many or which jobs. Cuts nonetheless!
The Medical device industry is not alone, Boeing announced 190 job cuts in its Huntsville, Alabama facility. Then, just last week, bank giant Wells Fargo announced it would cut some 1900 jobs due to a dramatic fall in demand for mortgages or refis. Surprise surprise!
Bank of America is also joining the chorus announcing a Small number of job cuts. But, according to an April 4, 2011, Financial News report, in order to reduce costs by 6% to 8% in the next 12 - 18 months, banks could be looking to make massive job cuts. It is estimated the top 20 banks are top-heavy by as many as 20,000 employees, which puts those jobs at risk.
These don't seem like signs of recovery, especially in light of the massive cuts expected from the industry that benefited most from government bailouts. After trillions in collective bailouts, that were supposed to trickle down to the average worker and homeowner, it seems the average of us are suffering the most. Is it any wonder the banks need less employees when foreclosures are expected to rise in 2011 beyond the record 1.2 million in 2010?
So, where does that leave further stimulus efforts? So far it seems, the more stimulus needed the more that is created. But, even in light of $10 plus trillion in collective Fed and Government bailout efforts, progress seems to evade the effort. It's like the Fed is running on a debt treadmill wearing roller blades. They never get tired of printing more money even if no progress is made toward recovery.
That's why I believe, we have many more QEs to look forward to along with much higher gold prices. In the last 30 months, in the midst of the most money printing in history, gold has doubled. I see no reason for that momentum to stop. As fast as the debt treadmill is set to run, the Fed will keep pace. Inflation has already taken root. Even the Fed is beginning to fear it, telling us higher interest rates may be ahead.
If you doubt inflation is upon us, just look at gas next time you fill up. Hence, another reason to own gold as inflation and higher gold prices go hand in hand.