RSSCygnus Pay Cuts Sign of a Weak Economy
Despite the implosion of the sub-prime housing loan market, the economy has been fairly resilient. Stocks are up, consumer confidence hasn’t nose-dived, and Americans are still spending.
That’s most of the good news. And now, some of the bad news:
- The dollar is at its weakest point since the 70s. One greenback is now roughly equal in value to one Loonie, the Canadian dollar.
- The Army Corps of Engineers recently assessed America’s infrastructure and gave it, overall, a D. (See the Minneapolis bridge collapse.) This is a problem that will affect commerce increasingly in the coming years.
- The EU has recently passed a chemical control act called REACH that, because of the size and economic power of the EU, will be the industry standard. The American Chemical industry is already reacting, and it will cost billions of dollars over the next 10 years–that’s on top of the hundreds of millions our government and industry has spend lobbying the EU, basically to keep carcinogens in American products. (Turns out, though, that in the end, this legislation will benefit the larger chemical companies, as they will have control over the information that the EU will demand on their products, and downriver chemical users will have to buy that information from Dow Chemicals, etc, to be able to verify the safety of the products they sell in Europe.) This is not the only instance in the world of America taking a back seat to forward-thinking policies that are stimulating foreign economies and hurting our own. This is entirely due to overly business-friendly, short-sighted, interest-group driven government policies.
- And, probably most disturbing, our national debt has reached a dizzying $9 trillion. This, compounded with the recent gashes the fed has made in the prime rate, should send inflation spiraling out of control soon. Why hasn’t this happened yet? Prices on foreign goods in this country have been kept artificially low by massive foreign firms who are looking to protect market share. (Do this: go to amazon.com and search for a Japanese product. Now go to amazon.de and search for the same product.) But how long will that last as long as the dollar weakens? And now on to Cygnus….
People were saying that the sub-prime mortgage scandal wasn’t going to affect other lending and debt markets. Watch this:
Why isn’t Cygnus going to rework its bank covenants? Why did they have to cut salaries? Because there is no more wiggle room for them, and probably lots of other companies. This wouldn’t have been true a year ago when the debt markets were drunk. Now look at what happens: a large chunk of consumers now has less money to spend.
Cygnus is a great example of why our current economic policies are bankrupt. And now we’re going to see a lot of companies go bankrupt as a result. And ask yourself this: where has all the money gone in this, by far, richest country in the world?
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The workers at Cygnus are suffering badly because of the mistakes of the management. The company has been SO mismanaged in the past ten years, it’s amazing. Paul Mackler had no idea what he was doing, and now Davis and O’Brien are showing that they don’t either–meanwhile, they promised employees they’d be the number-one asset. Too bad they discarded that concept as soon as the purse strings got tightened. And to those arguing in defense of the managers having their salaries cut–come on, people. Losing 7.5% of a six-figure salary (which they often don’t even deserve, but that’s another story entirely) is a LOT less of an inconvenience than losing that same percentage of the average Cygnus worker’s salary, which ranges from $20,000 to $40,000. Yes, they have mortgages, etc…but with 92.5% of a six-figure, they’re still doing a LOT better than the rest of the company. Let’s keep some prespective here. It’s not the upper management that’s really suffering in this fiasco–it’s the rest of the company.