The New Economics: HSBC Bank Reports Six Months Pre-Tax Profits of $11.5 Billion – and Future Job Cuts of 30,000 Workers

Can We Go Back to the Old Economics?

HSBC Bank which used to be the Hong Kong and Shanghai Bank Corporation which used to be Marine Midland Bank which used to be, well who knows, has reported their six months pre-tax profits at just under $11.5 billion dollars and net income of just under  $9 billion. (Yes, that is just for half a year.)

While it is nice that the Bank is recovering from the financial crisis of 2008 and is posting a nice profit for its shareholders, the news is not so good for employees.

On top of 5,000 jobs already under the ax in the U.S., U.K., France, Latin America and Middle East, around 25,000 further roles will be cut between now and 2013, Chief Executive Stuart Gulliver told reporters

This is a pattern that has already played out in the U. S., and represents the macro trend in business and economics that is now driving the U.S. and world economies.  Firms used to grow and prosper by investing and hiring.  Today firms have found that aggressive cost cutting can increase profits better than expansion and investment.  Cost cutting means job cutting in the labor intensive service sector. 

Governments world wide will have to implement fiscal policy to change things back to the old model.  Governments world wide are doing just the opposite.