Note they are laying off contract workers. That's exactly why they use contract workers -- so they don't have to lay off full-time staff unless things get
really bad.
This whole mess was triggered by federal policies that encourage lending to low-income people for mortgages, on the grounds that home ownership is "a good thing" regardless of whether or not everybody can afford to buy and maintain a home. As soon as the risk of default was removed from the lender's shoulders, the fast boys and crooks moved in and milked the system for all it was worth. Couple that with the fact that in the US and UK mortgage interest is tax deductible and the Fed has maintained artificially low interest rates for several years now, and you have a situation where everybody is so over-leveraged that if one of the cards falls -- which has happened with mass mortgage defaults (doh, what a surprise!) -- the whole house comes tumbling down. The mess is being aggravated by the government bailing out financial institutions that should be allowed to fail and by the Fed keeping interest rates even lower than they were even though that was one of the main contributors to the disaster. So nobody knows what will happen going forward from here but it's likely to be ugly, particularly since it looks like a left-leaning interventionist presidency is in the cards.
But I am old enough to have seen similar crises before and to know that
anything could happen, even a resurgence in sales of gas guzzlers if oil prices continue to fall. An old Chinese curse says: "May you live in interesting times". We sure do.
