Tuesday, November 22, 2022, Rancho Santana, Tola, Nicaragua


The Economy & Investing

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More Layoffs: A Sign of… What? 

As you know if you’ve been reading this blog for any length of time, I’m pessimistic about the economy. American GDP is down. Inflation is up. And rising crime and taxes are driving big companies and wealthy taxpayers from our major cities.

One of the bright spots has been employment. Starting with the COVID shutdowns and accelerating with the government bailouts, the number of Americans looking for work dwindled. That created a workers’ market, with two openings for every person looking for a job.

During that time, most of the businesses in which I’m involved were finding it challenging to hire and retain good employees. Many of their CEOs told me that their biggest worry was about losing those good employees. I told them that I didn’t feel that way. I felt that the imbalance was temporary. That the job-seeker/ job-opportunity pendulum would swing to the other side. And before long, millions of Americans would be looking for work.

As I mentioned here many times during those years, I believed the US was moving into a deep and extended recession. One reason for my pessimism was the fact that when sales ebb in the financial information industry, it’s an indicator that sales in the larger industry of corporate and personal finance will tend to drop soon thereafter. This has been the case for pretty much every economic downturn since I got into this business 40 years ago. And about two years ago, I began to see sales slowing down.

So, there was that. Then, as the months passed, I began to hear similar stories of declining revenues and profits from CEO friends in other industries. And recently, I began hearing the same story from the commercial and residential real estate markets.

It was all anecdotal and hearsay. But when the economic data alert re inflation and GDP began flashing early this year, I began to feel more certain about my worries. The assurances that these trends were temporary from the Biden administration’s economic captains, Janet Yellen and Jerome Powell, didn’t make me feel any better. No, I thought. Higher inflation and lower GDP aren’t going to be temporary. What is going to be temporary is the low unemployment numbers – the only positive economic data they had.

I’m not pretending that this is a solid economic argument. Consider it an update on a gut feeling. Take it or leave it. But since the feeling is strong, I’m going to be giving you news that serves to support or refute it.

Here’s an example – data gathered by Charlie Bilello, and published by Bonner Private Research:

* Twitter is cutting 50% of its workforce (3,700 jobs).

* Facebook is cutting 13% of its staff (11,000 jobs), its largest round of layoffs ever.

* Snap is cutting 20% of its workforce (1,200 jobs).

* Shopify is cutting 10% of its workforce (1,000 jobs).

* Netflix cut 450 jobs in two rounds of layoffs.

* Microsoft is cutting <1% of its workforce (1,000 jobs).

* Salesforce is cutting 1,000 jobs.

* Robinhood is cutting 31% of its workforce.

* Tesla is cutting 10% of its salaried workforce.

* Lyft is cutting 13% of its workforce (700 jobs).

* Redfin is cutting 13% of its workforce.

* Coinbase is cutting 18% of its workforce (1,100 jobs).

* Stripe is cutting 14% of its workforce (1,000 jobs).

There may be a way to put a positive spin on these facts. But to me, right now, it feels like recession.

Worth Reading

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Small Things Like These 

By Claire Keegan

128 pages

Published Nov. 30, 2021

Every once in a while, I read a book that makes me want to read everything the author has written. That is how I feel after reading Claire Keegan’s Small Things Like These.

The Genre: Small Things Like These is only 128 pages. I’d call it a novella, but by the time I finished it, it felt like a novel. So, let’s call it a short novel. The story takes place a week before Christmas, and much of it is driven by the advent of that holiday. So, it is a Christmas story. A very good one, that will remind you immediately of Charles Dickens’s A Christmas Carol. But it reminded me, too, of O. Henry’s Gift of the Magi and short stories (whose titles I can’t remember now) by Pearl Buck, Leo Tolstoy, and Anton Chekhov. This is definitely a good book to give as a Christmas present to anyone that likes literary fiction.

The Plot: The “action” is almost entirely in the mind of the protagonist, a 40-something coal merchant living in the mid 1980s in a small town in Ireland. He is the hardworking father of four children, and the only thing he cares about is making a good living for his family. Of course, something happens, something small, that challenges that.

Critical Reception 

Small Things Like These was shortlisted for the 2022 Booker Prize and the 2022 Rathbones Folio Prize. It won the Orwell Prize for Political Fiction.

My Opinion 

I’ve written here and there about how I judge the books I read. In general, I look at four things:

* Breadth – How well does it give me an understanding of the world the story takes place in?

* Depth – How deeply does it delve into what is sometimes called “the human condition”?

* Stickiness – How compelling is the plot? How effectively does it glue me to the page?

* Literary Style – How finely wrought is the writing?

That said, this is how I’d rate Small Things Like These:

* Breadth – 3.5 stars. While restricting the action to the week before Christmas, Claire Keegan does a surprisingly good job of painting a detailed picture of the people and culture of the town. By page 60, I felt like I knew the place all too well.

* Depth – 3.5 stars. The protagonist’s challenge, and Keegan’s handling of how he thinks about it and deals with it, took me into uncomfortable territory: recognizing how difficult it is to measure up to our personal moral standards.

* Stickiness – 3.0 stars. It’s a small story, with a minimalist plot. But it is told with such compassion and power that I was never bored.

* Literary Style – 4.0 stars. It’s been a long time since I discovered a writer that humbled me like Claire Keegan did with this book. (The last time, I think, it was Cormac McCarthy). She writes perfectly proportioned paragraphs. Beautifully simple and simply beautiful sentences.

My Overall Rating: an average of 3.875 stars

Click here to watch a video of Claire Keegan answering a few questions about the book.

Fun and/or Interesting

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Something I’d Like to See – I Think!

I had no idea this was a thing. It happens every year in Chile. Millions and millions of red crabs leave their homes in the wild to march, en masse, to the sea. My neocortex would love to see this up close. My basal ganglia would probably be horrified. Click here for details.

Arts & Letters

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From a letter Charles Bukowski, at age 64, sent to his publisher in 1971: 

“I now write from an old mind and an old body, long beyond the time when most men would ever think of continuing such a thing, but since I started so late I owe it to myself to continue, and when the words begin to falter and I must be helped up stairways and I can no longer tell a bluebird from a paperclip, I still feel that something in me is going to remember (no matter how far I’m gone) how I’ve come through the murder and the mess and the moil, to at least a generous way to die.

“To not to have entirely wasted one’s life seems to be a worthy accomplishment, if only for myself.” (Source: Letters of Note)

Readers Write

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Re Bill Bonner’s view of US politics in Friday’s issue: 

“Pleased to know that Bill Bonner and I concur: The bureaucratic class of both parties are having us on. We are being had.” – JM

My Response: I agree with you and Bill re the balance of corruption in politics. Especially today.

The issue is interesting. On the one hand, I cannot imagine that everyone that goes into politics is corruptible to the core. Indeed, I do see some of our politicians, past and present, as good people that maintained their integrity. (I’d put Jimmy Carter and Ronald Reagan in that box.) But the nature of politics is about power. To advance one’s cause, no matter what it is, the method is to gain power. And that teaches young politicians that the end must justify the means. (The more committed one is to his/her mission, the more tempting it will be to accept that Machiavellian principle.) Add to this, the pressure in a bicameral legislature, like we have in the US, to be a team player, and the associated punishment if one is not. That, too, is something an up-and-coming politician must learn if he/she is to advance.

So, you have these built-in experiences that have the effect, purposely or not, of eroding personal integrity. And you have the fact that the rewards for playing the game increase as you move up the food chain. Not just the money, but the power. When you consider all that, the near universality of corruption is not just understandable but logical.

If all that were not enough, there is the fact that what legislators are asked to do – write and rewrite laws regulating everything from human behavior to the design and maintenance of nuclear reactors – is way beyond the necessary comprehension of any individual. And you have a recipe for economic, social, and political ideas that are not just idiotic but destructive.

Postscript

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Is this even possible anymore? 

Dana White, president of the Ultimate Fighting Contest, providing leadership on getting along with people with whom you disagree…

Friday, November 18, 2022, Rancho Santana, Tola, Nicaragua


Business & Marketing

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How Safe Is Your Business from Employees Like This? 

I don’t know if this is real. This guy is so charismatic, I suspect he’s a professional actor.

Take a look at this video:

This may be a con, but this sort of thing does happen. In fact, when a business gets to a certain size – say, 1000+ employees – claims of racial discrimination and sexual harassment become commonplace. Even if you have a strict code of employee conduct and even if you have a hiring practice that gives preference to minorities.

I remember the first time this happened to one of the businesses that I was a partner in. The accusation was so implausible, and the claim of innocence by the employee accused was so credible, that I wanted to not just resist the claim but sue the claimant.

The claim, after all, was a smear on the reputation of someone I knew and trusted, as well as on our company. But when I suggested my course of action to corporate counsel, he said, “We can do that, if you want. But it will cost us at least $50,000 to cover the legal expenses. Or we could settle it now for $10,000.”

I was willing to spend the money. But the rest of the board was more pragmatic. “We could lose. We might be wrong. And who wants to risk $50,000 when we can settle for $10,000?”

We settled for $10,000.

This became standard operating practice. And each year the claims arrive. We rarely bother to review them anymore. It doesn’t matter who is lying. It’s cheaper to pay off the claimant and fire the accused.

I understand the logic. But I wish we had not let the bottom line determine our protocol. I can imagine a hack doing a hit piece on us, pointing out that we must be encouraging sexual harassment and racism. How else to explain the fact that we have settled out of court 20 times?

I sent the above video to our CEO, saying, “I guess the lesson is that if you make it easy and profitable for people to extort you, some of them will.”

He replied, “Not surprising. We have found the book How to Sue Your Employer and logs on perceived misconduct in people’s desks after they were fired.”

News & Views

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Lots Happening at Amazon… 

* The week before last, Amazon set a mind-boggling record. It became the first public company ever to lose $1 trillion in valuation, dropping from almost $1.9 in July 2021 to $879 billion. (It’s back up to about a trillion.) Click here.

* Rumor has it that CEO Andy Jassy plans to lay off 10,000 as early as this week. Click here. Perhaps to soften the bad news, Jeff Bezos announced plans to give away most of his $129 billion fortune. Click here.

* Amazon started its two-day delivery program about 17 years ago. But by the end of 2022, the milestone could drop to 30 minutes, as its 80-pound, 50 mph MK27-2 drone starts making deliveries of up to 12 kilometers roundtrip in California and Texas. Click here.

And at Twitter… 

Elon Musk is a big believer is putting in long hours in the office. Last week, he announced that most Twitter employees have to return to the office or find other work.

Next, he told them to be prepared to work “maniacally” for up 80 hours a week if needed.

To show them he could walk his talk, he said he was going to be sleeping at Twitter headquarters till the business is turned around.

And in an effort to cut costs, he suspended the company’s policy of giving employees a free lunch, a benefit he said was costing $13 million a year.

On the plus side, he told employees that even though he was taking the company private, they could still own stock in it.

The Economy & Investing

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The $32 Billion Crypto Scammer 

If you’ve heard about this crypto scammer but want to wait for Michael Lewis to finish his book or wait for the movie that will be made from it, here’s a good, short review of the story of Sam Bankman-Fried, who was hailed as the next Warren Buffett until his empire collapsed. Read it here.

How Ben Caballero Reinvented Real Estate Sales 

A typical agent in the US closes on 10 homes in a year, according to Mark Dent, writing in The Hustle. One 83-year-old in Texas does better than that every day. Check out this fascinating profile of Ben Caballero here.

 Backyard Rental Income 

Airbnb co-founder Joe Gebbia is launching Samara, a new venture that sells factory-produced apartments to rent out in your backyard. Click here.

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