How Long Will the Recession Last?

http://www.thestreet.com/story/10450705/1/jpmorgan-to-cut-9200-wamu-jobs.html
"NEW YORK -- JPMorgan Chase said Monday it will cut a total of 9,200 jobs at Washington Mutual, which it acquired Sept. 25 after Washington Mutual became the nation's largest bank to fail amid the ongoing credit crisis.
Of the 9,200 jobs being eliminated as JPMorgan integrates Washington Mutual, 4,000 will be cut by the end of January, a JPMorgan spokesman said. The remaining 5,200 employees will remain with JPMorgan through a transition period, but will lose their positions by the end of 2009.
Those 5,200 employees who stay on as transition workers will receive double their salary retroactive to Oct. 1 until their last day on the job, and be entitled to severance packages, the spokesman said.
Washington Mutual had between 41,500 and 42,000 employees nationwide when JPMorgan took over the bank at the end of September."



So there you have it. JP Morgan is planning on cutting jobs, a LOT of them. All the way to the end of 2009.
And they are so desperate to get rid of these people, that they are willing to put them on double pay for a year on top of normal severance packages, as compensation.
I don't know about the share market, but it is looking like unemployment will continue to build until 2010... or further.

You have to realise something. Due to the nature of unions and the size of the penalty for layoffs, in the form of severance compensation, companies do NOT conduct layoffs unless they really REALLY need to.
Furthermore, this means that JP does not foresee needing to rehire any of these workers until 2012. How do I reach this conclusion?
Well, if JP had decided to leave these 5200 workers alone, they would have had to pay them salaries of 5200 x A per year.
The amount JP has to fork out to these 5200 as compensation for firing them will be around 5200 x 2A + severance package.
That means, from a financial standpoint, it would be cheaper to keep these people onboard, rather than to fire them in 2009, and rehire them (or their replacements) in 2011.
In other words, the forecast by JP is for a 3 year slump in business.

People, firms, and economists can claim whatever figure they like for how long the recession will last, but look at what the big corporations are doing. They are battening down their hatches for a multiyear downturn. And what the big corporations can often turn into a self-fulfilling prophecy.