Recession 2023 — The actions of the past 6+ years brought us here…

All Thanks to the Defanging of Dodd-Frank in 2018

In response to a posting by Alan Stein — Quote From LinkedIn:
Meta earned $23B in profit last year.

That equates to $63M in profit per DAY.

That obscene amount of profit did not stop Mark Zuckerberg from laying off another 10,000 people yesterday.

Mark wants to earn more profit. He wants to make more money. He wants to delight more shareholders.

That is Mark’s choice.

But his choice has now impacted 21,000 lives, in total.

Let’s stop waiting idly for the corporate overlords to decide our fate.

If that isn’t a wake-up call that we are all employed at the will of the company, what is?

There is a fallacy that I’ve heard from so many employers who use a really disingenuous tactic to bring employees & leadership together in a manufactured kumbaya moment — that we’re all a team/family/together unified against the world/yada yada… and for the fresh out of college folks who are yearning for that big mission statement and wanting to be impactful — it works.

But folks — it’s all bullshit. Alan’s 8 lines of truth should be a wake up call for all of us that we’re not a family, or a team. Maybe a sports team where pieces are interchangeable and you buy your way to a championship ring… but there is no sentimentality allowed when profitability is the target.

Bowing down to the mega-money overlords, who themselves are obliged to prostrate themselves to institutional and uber rich individual investors, highlights a 21st century form of feudalism. Everyone from the topmost rung of the ladder in every country of the world down to the individual who is cleaning the toilets and emptying garbage receptacles at Disneyworld are bound up in this medieval feudal system that permeates life.

There is no single person or entity who is not bound into servitude to the almighty dollar. Even those who are considered policy makers (like the Fed) are prone to pressures from those who hold money and therefore power to dictate what their policy should be. Whatever has the greatest promise for multiplying the return on investment is the root justification for the policy decisions made at any given moment.

For years, the Fed kept their prime rates near zero, making stock investments and dividends the only real source of return for the ultra wealthy. It virtually eliminated any pressure on CEOs to produce results since any income from company stock was better than the low returns on bonds and other investments. This same situation fueled the greed bomb that drove crypto — vaporware that manufactured huge gains proportional to the hype engine that promised them.

Now that the Fed has cranked up the economy killing pressure of interest rates, investors who have had it good for years reaping rewards from company stock are now pissed off that the profits and their own dividends have shrunken. Baby Rockefellers are now demanding that CEOs cut operating expenses to boost their profits not realizing those gains are short term — just a sugar rush of money that wont last long.

When you lay off a ton of people several things happen that damage the economy:

• innovations being made by those companies shrinks, since whoever they have left are being asked to work twice as hard to try to maintain the prior output. This results in a Keep the Lights On mentality that lasts for however long the recession lasts, and the lack of new product stagnates the earnings for those companies.
• when you let people go, they have no income. No income in the near term means no discretionary spending — the economy tanks as companies now have inventory that doesn’t move and is costing money to store.
• No income means that basic necessities start to not get paid — it happened in the first few months of the pandemic when evictions got frozen in a moratorium, utility bills were allowed to accumulate in deficit, and finally the governments stepped in and provided financial aid. This drives up the national debt, devaluing the currency and then causing political turmoil as one political party faction demands payback for short term memory loss.
• financial institutions which made bets on the continuation of easy money Fed policy now start to lose money and as we’re seeing, banks are defaulting on obligations. SVB lobbied for and took advantage of irresponsible loosening of the Dodd-Frank bank regulations in 2018 that just a few years ago in 2008/09 would have saved several banks from collapse. For those who will choose to blame a particular political party for this — sorry to disappoint you but there was sufficient pressure from lobbyists on both parties that this legislation passed Congress as a bi-partisan act. Yes TFG signed it and he had been pushing very hard for it on the promise to his donors, but there is plenty of blame to spread like peanut butter across both parties and have it stick. It has been proven time and again that corporate entities and financial institutions can’t police themselves, so lifting the “bank health check” requirements essentially allowed the junkies free reign of the drug repository — and they abused it. SVB and Signature are just the tip of the iceberg. Credit Suisse will either go on government welfare or collapse here soon, and there will be others to follow. 2008 will be repeated…
• the final shoe to drop here will be devaluation of property. Its starting to happen, and depending on the degree of job losses in the tech space to start it will spread out to manufacturing and service industry as well. People will be doing forced sales of their homes as so many bought their homes at the falsely inflated values caused by the pandemic panic, and write offs and foreclosures will again start to skyrocket once the recession really does start to become obvious and is felt by everyone top to bottom — not just the folks who are dependent on the non-existent trickle down economics that has been in place since 1982.

Make no mistake about this folks — we are in a recession. Certain markers are at this moment hiding the obvious — unemployment is at a 50 year low, sure, but the types of jobs that have been available aren’t those which grow economies through innovation or world leading growth. Additionally, and I’ve noted this several times in my writings and postings, some roles are multiply posted in LinkedIn. Recruiters are noticing that they can’t find candidates to fill a role in one geographical region so they duplicate the role for each major employment center in the hope that in casting a wider but more specific net they’ll find the one person who can fill it effectively. It results in a mirage effect of having 5x-10x more jobs listed for a given skill set than what really exists.

Employers also have a false sense of power now as well — requiring employees to be seating in the locations the employers have office space after a time when so many people lifted and shifted to more affordable and lifestyle supporting areas will further damage the economy. Forced relocation even 4–5 years ago was accepted, but after 2+ years of work from home showed that productivity could be the same or even in some cases increased and provided higher profit margins, the stubbornness of CEOs that demand employees jump when told will result in people leaving their roles and becoming more creative about their vocations. The sugar rush of increased profits from reduced operational costs will justify the CEOs in the short term, but when capital expenditures for contract workers eats away at those profits in the next year or two there will be hell to pay.

In summary — the human business animal has a poor retention rate for lessons learned. In 2008, Zuckerberg was fresh out of Harvard and at the helm of a new thing called the Harvard Facebook that was a offshoot of Hot or Not and took on a life and momentum of its’ own. Now 15 years later, after it has been effectively and efficiently monetized and all who participated in lifting it up have gotten rich, its not enough. Lessons of 2008 and to contradict and paraphrase Gordon Gekko “Greed is (not) good” have been forgotten, the latest grift opportunities have started to peel their golden veneer, and the sugar rush of easy money is fading — we’ll see another economic event for the next several years that will be highly reminiscent of 2008–2012 with many people who didn’t partake left to pay the price of the gamblers at the top.