It was announced officially this morning that Citigroup is going to cut its labor force 20% from its peak of 375,000 employees in 2007. In October, there was an initial round of job cuts and more were expected given the market in the last 3 months. But I don't think anyone expected this many people. The hard line stance from Vikrum Pandit is bold, but it may pay off. Citigroup needs to reevaluate the way they do business as many bets against mortgage related securities have soured. Stronger competitors have emerged and will begin to take market share away from Citigroup if they don't make changes. I think this is a step in the right direction (Yes it sucks for the people losing their jobs). In hard times, firms need to be agile and adaptable in order to emerge a better company. With less employees they will be focusing better on the areas of business that have the best margins. Also I think we will start seeing the other banks (JP Morgan, Wells Fargo, B of A) do the same. It's impossible to maintain employment levels from an economy growing at 3-5% when currently there is negative GDP growth. If production levels are down then less labor will be needed to provide the goods and services.
Monday, November 17, 2008
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The idea that the bedrock of a solid economy in the united states economy can be a country of bankers financial planners financial researchers dealing with numbers marketing consultents' salesman lawyers is completly false. I could go on and on but I need not. The intangable economy of sorts must be replaced with a economy that produces or provides useful products and services that are really needed. Otherwise we will end up with a few bright CPA's with master degrees siting behind their desks making a good living and everybody else cleaning the carpeting and emptying the wast paper baskets. For six dollars an hour.
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