Sun Microsystems, long time irrelevant, has announced it will cut 6,000 employees off their payroll in a massive layoff.
See what happens in a credit bubble? Irrelevant companies are able to continue serviving long past the time when they should. They just keep piling on cheap debt into perpetuity. This can occur since safe vehicles such as treasuries and certificates of deposits are earning negative real rates of returns after counting real inflation. Instead of a sure loss, some people make a decision to take a flyer on a fairly hopeless business. Last time we saw some really cheap credit and investors taking a leap of faith was the dot com bomb. I can tell you this was still going on from the 2004-2008 timeframe. The bill is now due and these companies are going to have to remove the bloat and compete with real and relevant products and services.
Sun Microsystems is headquartered in Sillicon Valley at Santa Clara, CA.
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