The Economy

Up next, Google.

Exclusive: Google parent to lay off 12,000 workers in latest blow to tech sector

 

The latest Google layoffs will amount to 6 percent of their workforce.

All of those big tech companies went on hiring sprees during the pandemic. They hired tens of thousands of workers, because demand for digital services (and Amazon's retail delivery service too, not just its cloud services) skyrocketed. They all treated it like it was going to be a new normal. It's clear now that it wasn't. Those are the excesses they are shedding right now.

The reality they are looking at now is, rising interest rates and a global economy that is raidly weakening as a result. Their businesses are in decline from the peak pandemic business they were doing. Ad revenue is down (in the case of Google). So all of those companies are adjusting to those realities.

The question is whether this is the beginning of an economic decline that is going to spill over beyond the big tech companies.

Probably not. You are seeing layoffs across the banking sector, too, for example, because all of the investment banking and trading revenue that was rolling in due to an insane cheap money environment has been challenged in a higher rate environment.

The housing market has been getting hit, as higher mortage rates are hitting the bubble cheap money blew. For example, KB Homes reported a few days ago, and buried in their results was that they saw an unbelievable 68 percent cancellation rate during the quarter.

There was a sell off in the credit card issuers a few days ago, when buried in Discover's results was that their charge offs (people who aren't making their minimum payments) rose. Credit card balances have really run up, and I think it's because a lot of people have been running up debt to get by with how much costs have gone up for everyone. And the paradox is that because of that "inflation" that was stoked by cheap money, we now have a central bank tightening credit (ostensibly to deal with the inflation), which makes it so that the interest due on that rising debt is growing.

I can go on and on about it, but we are in an environment where prices have risen a lot and economic activity that was really being driven by artificially priced debt markets is going away due to rising rates (again, ostensibly to try to deal with the consumer price inflation).

There is not going to be an easy way out of what we did to ourselves with a long period of stupidity.

 

Believe it when I see it.

That's not me saying it won't happen, just means that if it is going to happen. ... well, we're not there yet.

1) reliable results are not there as of right now, and 2) it is expensive as hell to run those servers, and do they have a realistic plan for how to monetize the technology in a way that can meet the expense?

It's not even a business right now, let alone something that is making Google obsolete.