Midway Airlines filed for bankruptcy protection yesterday, reduced its flight schedule and laid off 700 employees, half its work force, as it sought to preserve cash while it reorganizes to cope with a severe downturn in corporate travel.
That is precisely what happened in many rich countries in the aftermath of the crisis, when heavy government spending helped to compensate for severe cuts in corporate and household budgets and sparked a fiery debate about the risks that entails.
Unilever P.L.C., the world's leading maker of consumer goods that include supermarket mainstays like Dove soap, Ragu spaghetti sauce and Lipton tea, said today that it would embark on a severe program of corporate cutbacks, eliminating 25,000 jobs over five years, closing 100 factories and possibly jettisoning up to 75percentt of its products.
The recent weakness in the euro and the yen may be a sign that those regions are exporting deflation to the rest of the world, as their exporters cut prices to seize market share.Deflation can cause severe pain in the corporate sector; a further sign of trouble is that the spread (or excess interest rate) paid by the riskiest bond issuers has widened by one-and-a-half percentage points since June.
A major issue, she said, is what is perceived as "corporate complicity in severe violations of human rights and international humanitarian law".
As the first major antitrust decision by a new group of political appointees at the Justice Department, the move also suggests that the Bush administration is willing to seek less severe penalties to move such corporate cases more quickly through the legal system.
Image damage from "no" votes could be severe in today's turbulent corporate governance environment, so companies must now become far more assertive in explaining how their top executives are paid.
Thus, the idea that a weak U.S. and global recovery with massive deflationary pressures and a severe financial crisis and massive corporate defaults will lead to a robust recovery of earnings and a sharp persistent bull-market rally in equities is totally far-fetched.
Travel restrictions and immigration crackdowns have become so severe in the U.S. that corporate leaders, particularly in Silicon Valley, have warned that the brightest brains on the planet will be fleeing to other nations to the detriment of the U.S. economy. .
