About that solid economic foundation...

Biglaw layoffs -- oh, good.

(I know, I know. Weep for the poor lawyers.)

But the economy is strong, right, Mr. President?

(Hat tip: InstaPundit.)

Comments

[George B]

Because lawyers are getting laid off means the economy is in bad shape?? I must have missed that lecture during Economics 101.

It couldn't be the bloated big law firms are finally starting to feel the pinch of clients streamlining and cannot simply bill clients for *often* exhorbitant rates.

[Brendan]

You're probably right, George. I guess it's just that, for me personally, lawyers getting laid off = bad economy. :) This post is just an expression of one lawyer-to-be's anxiety, not a deeply thought-out economic commentary. (I fully acknowledge that I understand very little about the economy.)

George, you post almost as well as you speak...
You're probably right though, layoffs in Cap Markets and Global Finance in Big law have nothing to do with the state of the economy. Streamlining, yes streamlining it is! The housing market isn't in a decline -It is Streamlining!

[Jay Johnson]

Dude, you've got to stop calling yourself a lawyer to be. You've graduated from law school and passed a bar exam. You're a lawyer, like it or not.

[Brendan Loy]

I'm not a lawyer till I'm certified to practice law somewhere, and I'm not certified to practice law till I take the oath of admission, and I can't take the oath of admission out-of-state till I get some (more) paperwork in the mail from Colorado. Ergo, I am still a lawyer-to-be. ;)

While lawyer's being laid off may not be prima facie evidence of a struggling economy I think the following indicators are:
* the gov's personal income & outlays report; durable goods report; GDP and new construction #s...
* Energy prices
* The Credit squeeze
* The pathetic state of the US dollar
* Mort-backed securities mess
* Goldman Sach's recession prediction for the US and Japan
* soaring food prices
* ^ foreclosure rate
* last month’s unemployment figures and manufacturing rate
* M. Lynch’s $15 billion loss
* an estimate of $3 TRILLION loss in the Financial (and related) sectors over the next few years
* The Fed’s aggressive moves of pumping billions into banking and slashing rates.

[Alasdair]

I understand why the post at 2:26:35 PM is anonymous ... I would hate to have *my* name attached to something so uninformed ...

[yea]

alasdair,

how about making a real reply and informing a few of us where 2:26 messed up instead of just insulting someone? a lot of 2:26s stuff looked correct to me.

[David K.]

yea, Alasdair doesn't deal in facts, just rhetoric

[USC 2L]

"Because lawyers are getting laid off means the economy is in bad shape?? I must have missed that lecture during Economics 101.

It couldn't be the bloated big law firms are finally starting to feel the pinch of clients streamlining and cannot simply bill clients for *often* exhorbitant rates."

But only the clients served by lawyers in the Capital Markets and Global Finance practices of that firm? All the layoffs were from those two practice groups. Further, 30 more were moved from those practice groups to other practice groups.

[Sandy Underpants]

The Alasidair style right-wingers have cracked me up for years. In the face of all the facts, which 2:26 has in the post, the answer is you don't have anything to back it up. I wish I could've seen them on the Titanic. "Calm down people, the boat is NOT going to sink, okay, it's a state of the art vessel on it's maiden voyage, trust me everything will be fine."

[Alasdair]

yea - start with the fact that "* M. Lynch’s $15 billion loss" doesn't indicate anything about the state of the economy - it just indicates that "M. Lynch" apparently is losing $15 Billion ...

Then go on to "* Energy prices" which only indicate that energy prices are high - which is due to China and India buying more and more of the currently-limited supply - which causes prices to rise ...

Then go on to "* soaring food prices" - where exactly are food prices "soaring" ? I buy the bread and milk and potatoes and other staples, and I see food prices as their usual seasonably-variable ... tangerine-like citrus are very cheap, and tomatoes are expensive - and, yes, the Sun continues to rise in the east ... and none of those indicates anything about a dodgy economy ...

yea - to the uninformed, they may well look correct ... to the better-informed, they look like someone attempting to baffle with BS - one of Sandy Underpants' expertises ...

Notice how one of the items listed - "* last month’s unemployment figures and manufacturing rate" - carefully specifies a single month's values ... such a thing is classically known as a "blip", and is not deemed top have genuine significance until it can be shown to be part of a continuing trend - like, perhaps, those numbers for the months and tens of months prior to last month, which were more indicative of a healthy economy (but you may not have heard about *those* 'inconvenient truths') ...

USC 2L also responded specifically to what he could tell - and he seems unconvinced of an indication of a struggling economy ...

[Derek]

As a brief note, while some of those certainly are signs of a recession, the recent indicators of "energy prices" and "food prices" are both unrelated to the economy (as in, their prices have been increasing not because of inflation or economic woes, but because of increased demand for ethanol, increased fuel demand from China, stagnant OPEC output, speculation of the futures market, etc.).

[Mad Max, Esquire]

Maybe clients are realizing that they should actually need to sue someone before sticking a law firm on a $100K-a-month retainer.

[gahrie]

The "The sky is falling " crowd have also failed to note that our current unemployment figures used to be considered an indication of full employment in the U.S.. (until of course we needed something to attack the president about now that Iraq seems to be going well) The dollar is gaining against the Euro and the Pound. Even given the huge increases in the price of oil due to increased international demand, and the increases in the prices of food, partly due to increased ethanol production (due itself to increased government subsidies) inflation in the U.S. is practically non-existent.

Also, when analyzing the mortgage situation, history gets tossed out the door. Twenty years ago, Fixed rate mortgages were all in double figures. So when ARMs are rising to 7% and 9%, I really have a hard time getting upset. The problem isn't interest rates. The problem is people buying more house than they can afford, with the plan on selling it in five years for a profit. The problem is people refinancing to take all of the equity out of a house, (and worse yet, taking paper equity out) to live beyond their means.

[Brian Foster]

The problem isn't interest rates. The problem is people buying more house than they can afford, with the plan on selling it in five years for a profit. The problem is people refinancing to take all of the equity out of a house, (and worse yet, taking paper equity out) to live beyond their means.

Exactly. Nail on the head. Amen and all that.

So when ARMs are rising to 7% and 9%, I really have a hard time getting upset.

Just ten years ago when we bought our first house, we were thrilled with the fantastically low (and fixed) interest rate of 7% on our mortgage.

[gahrie]

Brian

Not to brag...alright, I am bragging...I have a fixed rate of 4.5% on my first, and 5% on a silent second. I am actually paying less on my house each month than it costs to rent a 2 bedroom apartment in my area.

A couple of years ago a friend researched the price of my house and found I had about $250 K in paper equity. He tried to convince me to refi to get the money out. (as he and a bunch of other people I know did) I refused. I told him I was actually making extra payments. I knew I had a great deal, and I have no problem living within my means. (my friends are amazed that I put money into a savings account every month)

Guess who is laughing now?

[Brian Foster]

Heh. Nice!

(And just to be clear, I meant that we were thrilled with the then fantastically low rate of 7% . . . I know they fell even lower a few years later, but at the time (1998), they were talking about 7% as if they were just giving the money away.)

[Joe Mama]

Pretty good, gahrie. The quote I got yesterday on a first mortgage of $417k was 5.625%, and 6.55% on a second of $168k.