Hear: Too Big To Fail, Take Two
Today on Planet Money:
— Jay Rosen wants to know why, when the Senate spikes a rescue for U.S. automakers, Japanese stocks go down. One answer comes from Vinny Catalano, president of Blue Marble investment firm and keeper of a cool blog.
— Automakers in Detroit say they're too big to fail. As business historian John Steele Gordon tells David Kestenbaum, we've heard that one before — from the U.S. steel industry.
— Last year, Adam Davidson went to Pittsburgh to see what remained of the steel industry and its workers. Also, to find out what a "cake eater" might be.
After the jump, a letter from Utah.
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I work for a small water treatment service company in Utah, so I go into many different companies each month to provide services. I haven't seen any companies go under yet, but most have some kind of freeze going on...generally either a hiring or purchasing freeze. One of my larger accounts just lost an order, which means 2 months of planned production instantly disappeared. They asked for a price reduction last week, only a few months before we were going to come to them for an increase.
We also provide some services to the oil fields in Wyoming, Utah, Colorado, and South Dakota and they have been decimated with the drop in gas prices. I know most people won't feel much sympathy for the roughnecks that populate these boom-and-bust towns, but as the high-powered executives run with their windfall profits, they leave their workers behind...and then the ripple effect follows: We hired two new employees in September to cover additional rigs, and barely have enough to keep them afloat because rigs keep stacking. I personally had 9 rigs a month ago and am now down to 2. That cuts into my pocketbook.
Personally, I'm not worried about my job because buildings will always need maintenence, but we had a baby a couple of months ago and my wife quit working so we're having our own purchasing freeze. Last month we had to cut $400 out of our monthly budget to stay afloat. And most of Christmas is going on credit cards this year (not that it hasn't in past years, just less this time). My wife is a speech pathologist, so if times really got rough, she could easily find a job, but she wants to be home with our 3-year-old and newborn as much as possible.
We bought our home in 2005, a couple years before the bubble reached its bursting point. We've recently looked at moving to a new home with a mother-in-law apartment in the basement so we could rent it out, we even found one we wanted. Unfortunately, with our deflated equity and lack of eager loaners (not loners), we'll be here awhile.