The Twinkie That Broke The Economy's Back

Large numbers of once thriving businesses are either shutting down or laying off workers

By Michael Snyder

Can you hear that sound?  It is the sound of the air being let out of the economy.  Since the election, there has been a massive tsunami of layoffs and business failures.  Of course the company that is making the biggest headlines right now is Hostess.

On Monday, Hostess will be in a New York bankruptcy courtroom as it begins the process of liquidating itself.  Needless to say, Twinkie lovers all over America are horrified.  Many are running out to grocery stores and hoarding as many as they can find, and some online sellers are already listing boxes of 10 Twinkies for as much as $10,000 on auction websites such as eBay.  Well, there is really no reason to panic.  It is very likely that another company will purchase the Twinkie brand and continue to produce them.  In fact, it is already being rumored that a Mexican company may have the inside track.

But even though the Twinkie may survive, the failure of Hostess is yet another sign of how weak the U.S. economy has become.  Approximately 18,500 Hostess workers will be losing their jobs, and even if some of them are rehired by the company that takes over the Twinkie brand, the truth is that those workers will almost certainly be looking at greatly reduced pay and benefits.  Sadly, we are seeing this kind of thing happen all over America.  Large numbers of once thriving businesses are either shutting down or laying off workers.

Overall, the failure of Hostess is not that big of a deal for the U.S. economy.  But we may look back someday and remember Hostess as a symbol of the economic problems that were unleashed by the election of 2012.  Since November 6th, a wave of pessimism has swept over the economy and we are now seeing some of the worst economic numbers that we have seen in more than a year.  Many fear that we may have reached a tipping point and that things are only going to get worse from here.

Sadly, the reality is that Hostess is not the only iconic American company that is in a huge amount of trouble right now.  Sears just announced a loss of nearly 500 million dollars in the third quarter.  Sears has been bleeding money like this for a couple of years, and if they continue to do so it will just be a matter of time before Sears is headed for liquidation as well.

Can you imagine trying to explain the Sears catalog and Twinkies to future generations in a world where those things no longer exist?

Our world is changing at mind blowing speed, and the pace of change is only going to keep accelerating.

A few days after the election, I wrote an article about the huge number of layoff announcements that we saw after Barack Obama won.

Well, it has gotten even worse since then.  The following is a partial list of the layoffs and job losses that have been announced since November 6th...

Abbott Labs 700Activision 30Adventist Health 48Airlines SAS 6000AMD 400American Cotton Growers 110ArcelorMittal 20American Independence Museum 4Ameridose 790American Airlines 4400 + 800 leaving voluntarilyAmerican Coal 54Atlantic Lottery Corporation 16Assc Milk Producers 130Aveo Oncology 45ATI 172Bankia 5000Bechtel Power Corp 277Bigpoint Games 47Boston Scientific 1200Brake Parts LLC 75Brattleboro Retreat 31Bristol Myers 500Career Education 900 + Closing 23 CampusesCigna 1300Citigroup 100Commerzbank 6000Consol Energy in W.V. 145Covidien 595Crouse Hospital Syracuse NY 70Cummins 150CVPH 27DEP in Tallahassee FL 15DuPont, Co. 64Eagle-Tribune, Andover 21Emanuel Medical Cente 24Energizer Holdings 1500Ericsson 1550Exide Tech, Laureldale 150City of Findlay, OH 39First Energy 400Gameforge Berlin 20Gamesa Energy 92GenOn Energy Inc 33Glen Falls Hospital 29Groupon 80GT Advanced Tech 165Harris' Broadcast 17Hawker Beechcraft 400 + Facilities closingHill Rom 200Hills Holdings 300HMX Group 567Hostess 627Iberia Airlines 4500ICM of Colwich 25ING 2350Judson University 21Juniper Networks 500Kaiser Permanente 84Kinetic Concepts 427Kratos Defense Security 125Lackawanna County PA 11Lightyear Network Solutions 12+Lonza 500Majestic Star Casino/hotel 80Major Wind Company 3000Martha Stewart Living 70Medtronic 1000Mills Manufacturing NC 68Momentive, Inc. 150Monitor Group 235Montco Behavioral Health/Dev 58NBC 500Nebraska Medical Center 38Neovia Logistics Services 52New Energy 40Ormet 200Panasonic 10000PayPal 320Penn Refrigeration 40Penske Logistics 50Pepsi 4000Philips Electronics 218Pierce Mfg 325Pratt & Whitney Rocketdyne 100Research in Motion 200Rheem Manufacturing 50Sentry Foods 70Shaw's Supermarket 700Shawano foundry WI 90Smith & Nephew 770Smithfield Packing Co. 125Solel Solar Systems 140Southeastern Container 15SpaceX 100SRA Intl Inc 222St. Jude Medical 300Stryker 1170Sulake 60Sun Media 500TE Connectivity 620TECO Coal Corporation 90Texas Instruments 1700The Providence Journal Co 23TMX Group Ltd. 100Turbocare 220Turkey Point Nuclear Plant 277Oce North America, Inc. 135Turbocare OCE 220UBS 10000US Cellular 980UtahAmerican Energy Inc 102Volvo Trucks Pulaski County 300Wake Forest Baptist Medical 950Welch Allyn 275West Ridge Mine 102Westinghouse 50World Media Enterprises Inc 105WPS Health Insurance 600Wright Patterson AFB 115Wyodak Coal Mine 11Xerox 2500

Sadly, the list actually keeps going.  You can view the remainder of the list right here.

Even companies owned by Obama supporters are laying people off.  Just check out this excerpt from a report by CitizenLink...

A corporation whose part owner gave $2 million to a group committed to re-electing President Obama announced this week that it will be forced to lay off more than 1,000 employees in lieu of the financial hardship imposed by the president's signature health care law.

Overall, more than 100,000 job losses have been announced since the election.  It is almost as if the election was the straw that broke the camel's back.  Everyone in the business community that had been hoping for something different now realizes that no change is coming.

Meanwhile, Obama continues to pour on even more rules and regulations.  According to CNSNews.com, the Obama administration has posted a total of 6,125 regulations on its reguations.gov website during the past 90 days.  Our politicians are clueless and they simply don't understand what they are doing to the business community.

But of course this goes for politicians from both sides.  For decades we have been consuming far more than we produce and spending far more money then we bring in, and most of our politicians seem to be under the delusion that this can continue indefinitely.

The other night my wife had me watch a documentary entitled "The Queen of Versailles" that followed the lives of time share mogul David Siegel and his wife Jackie.  I found it to be a perfect metaphor for what America is going through right now.  David Siegel built the greatest time share empire the world has ever seen on a mountain of easy money and cheap credit.  At the beginning of the movie, David and Jackie were living the high life and were constructing the largest house in America down in Florida.

Well, things dramatically changed when the financial crisis of 2008 struck.  Suddenly nobody wanted to lend to David's company and the house of cards started to crumble.  But even though they were facing massive financial problems, Jackie found it incredibly difficult to adjust her lifestyle.  She just kept spending and spending and spending.

It would be easy to pass judgment on David and Jackie, but the truth is that they are a perfect example of what this entire country is going through.  Thousands of businesses are failing, our economic infrastructure is being gutted, millions of jobs are being shipped overseas, our financial system has become a gigantic casino and we keep piling even more mountains of debt on top of the mountains of debt that we already have.  We have been living way above our means for so long that we don't even have any concept of what "normal" is anymore.

If you have not seen "The Queen of Versailles" yet, I encourage you to do so.  Don't watch it to laugh at the downfall of David and Jackie Siegel.  They are just trying to make their way in this world like all of us are.  Rather, watch for parallels between their lives and what the United States is experiencing as a whole.  As I mentioned earlier, I found their story to be a perfect metaphor for what is happening to this entire country.  You can find the trailer for "The Queen of Versailles" right here.

As the economy falls apart, it is going to be really easy to point fingers at one another and blame one another.  But what will really be needed is more love and compassion.  A lot of workers at Hostess and a lot of other good companies just lost their jobs.  The unemployment epidemic in this country is going to get a lot worse.  These people are going to need our love and support.

In the end, we are all in this together.  The coming economic storm is not going to be averted, but we can choose how we respond to it.  Hopefully the crisis that is coming will bring out the best in many of us.