Monday, January 26, 2009

Job Losses and the New Economy

The BBC radio news this morning says the European Union is now officially in a recession.

Today a young man who worked with us in the past came by for a visit. He had left this Fall to go visit his family home in Taiwan. He was also thinking about doing his "mandatory service" in the Taiwan military.

He told us that the economy there has just completely fallen apart. The young folks that are graduating college are leaving because there are no jobs. In fact, so many are trying to get into the military that apparently the Taiwanese Army is no longer taking recruits. 

Then I read this CNN story about job losses announced just this year. They article says most experts think we will start a recovery after the 2nd quarter of this year. 

I am not so sure. Nevertheless I did my part this weekend by buying a new refrigerator.

But I do think each of us will put off spending - the old refrigerator died last year is my excuse for spending.

I do think prices on manufactured goods and commodities will be depressed. I think that will lead to no raises or wage cuts in order to maintain employment.

As an owner of a software company during the Y2K event, we had to pay extremely high salaries to get programmers. But when the bust hit those folks went out the door first and the folks who stayed got no raises for a good while. But they did keep their jobs.

This may well be the same except much broader. That event was limited to IT - and mostly in the US. This event is across almost all industries and worldwide.

What should we all do? Go carefully and plan for the worse. But remember the go part. And going carefully does not mean going slow. Spend extra time learning new things. They add value which grows.

Inflating your knowledge and skills is the balance for depressed prices and salaries.

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