Hard Times?

uh, plenty of folks are buying the cheap coffee at Starbucks instead of $5 lattes. No shorter the lines, though.

#1 Phil on 2008-11-19 16:05 (Reply)

Impossible to tell but it's awfully hard trying to fight the tape. After listening to the Barney Frank committee today one can't help being a little pessimistic. Bloviating, grandstanding, bullying political hacks with little to no understanding of business, economics or the pressures faced by American manufacturers. I wouldn't be looking for leadership from those jokers.

#2 Tom c on 2008-11-19 16:15 (Reply)

This is the beginning of a depression. I say this as someone who lived through the Japanese "Lost Decade" which also sucked Hawaii down the tubes in the Nineties (unlike the rest of the U.S.). This one is worse, and it's the whole country, not just Hawaii. We are already starting to see the deflationary spiral. My wife lost her job three weeks ago (attorney and commercial escrow officer). There are no jobs out there. In my firm we now try to do damage control as deals go under, generally because the lenders won't fund because of the drops in asset values or cash flow. I worry whether we will make payroll till the end of the year. This morning I heard an employee asking the business manager whether the firm will make its required retirement contribution this year, which shows that the employees know what's going on.

I stopped going to Starbucks a month ago. I drink green tea in the office and eat peanut butter sandwiches for lunch. I don't sleep much.

#3 Jim on 2008-11-19 16:26 (Reply)

It's a nasty downturn with a triple whammy.

1. We were due for a recession - it just happens.

2. The financial crisis - thanks Barney, Sarbanes, Oxley and the rest.

3. The Democrats just won complete control of the federal government. The business world is holding it's collective breath to see how much more damage these guys do. Meanwhile, everyone is sitting on cash or sending it abroad so no recovery for a while.

If the Dems can control themselves, it will blow over in a few months. If Obama wants to impersonate FDR, he'll get his chance with another depression.

#4 NJSoldier on 2008-11-19 16:31 (Reply)

It's like a depression for banking and finance, but nobody cares about those folks.

#5 BD on 2008-11-19 16:35 (Reply)

Ya know BD, you cease to amaze me. Just because there's a few bad apples out there in the banking industry, no one cares about the rest of them. Do you bear any resemblance to Pugsley of the Addams Family? Are you having the Maggie's farm Christmas party at your house? I like ya. I really do, but when you put your foot in your mouth, you put it in all the way.

Long and protracted down turn. High possibility of a Depression. I like Jim am not sleeping well. Wife is snoring non stop. Did anyone think we would be in this position in May , or June of this year?

#5.1 jappy on 2008-11-19 18:08 (Reply)

All driven by fear, Jappy, my man. Irrational but effective fear.

That makes it real. No matter reality.

#5.1.1 Luther McLeod on 2008-11-19 21:11 (Reply)

Bad but not the end of the world.The media drives this story just like any other 'disaster' and the chickens squawk...for some who as is always the case invest and spend wildly trouble looms, but for others new opportunities arise....all in all 3 years will see us moving on with our lives.

#6 thud (Link) on 2008-11-19 16:39 (Reply)

Well, aside from the horror of watching our nest egg shrink, I guess we should consider ourselves lucky. We have two cabins here in northwestern Michigan that we rent out to hunters, hikers, fishermen, etc, and business has been steadily increasing year after year, including this year. We are retired, so no job worries - just pension & SS worries.

Our neighbor, an independent contractor/builder, has been in and out of work for several months. In previous years, he had a waiting list of projects. I hear locally that the food banks can't keep up with the number of families that need help. We're all pitching in. I hope things get better sooner than later, but today the Dow is down again..........

#7 Toad on 2008-11-19 16:53 (Reply)

That's Santa Ana winds. Santa Anita is a race track. Which is of course is a better place to take one's chances than the stock market.

#7.1 LaurieK on 2008-11-19 23:54 (Reply)

It is not a depression yet but there is still time before the New Year. The MSM is fueling the fire like the Santa Anita Winds and that is having an affect on commerce and attitudes. Cash is king but no one has as much as they thought including the middle class. No one will hire because there is no credit and thus we are coming to a slow and grinding halt. Time to break out a good scotch and dream about better days ahead!

#8 opie109 on 2008-11-19 17:11 (Reply)

I know it's corny- but watch the beginning of The Road Warrior, as the leaders talk and talk, and the machine slowly grinds to a halt. The stuff of sci-fi is come to life.

#8.1 Phil on 2008-11-19 17:26 (Reply)

Boy took the presidential election pretty hard, and as much as I try, I can not seem to keep my big mouth shut... always letting slip with some "Damn socialists" type comment while he is within earshot. But I have determined to face this thing head on.

With winter coming on, we look forward to long snow storms during which we hunker down for movie marathons. I am preparing to expose Boy to the entire Mad Max series. Also, in the event that we have to play an overtime film - The Quiet Earth.

#8.1.1 Pajak on 2008-11-19 18:29 (Reply)

How are things at Fort Courage? I'm going to hunker down and build me a fort too. Going to call it Fort Dago. Maybe Jephnol, and Green Mt punter will build one to. Then we can send each other smoke signals, cause were all surrounded by blue injuns.

#8.1.1.1 jappy on 2008-11-19 18:48 (Reply)

Things at Fort Courage are well, considering all things. Thanks for asking! I'll bone up on my smoke signal skills. I love the idea of life imitating art imitating life.

Smoke signals, canned goods, ammunition, trapping, candlemaking, distillation of alcohol... all will soon be back in vogue.

The Wife sent me this link the other day from way over in the other room, with orders to study it. (Maybe when the Internets collapse we can learn to talk again!)

All that's left is setting up the bicycle to power the TV/DVD/stereo rig. That and the still!

#8.1.1.1.1 Pajak on 2008-11-19 19:23 (Reply)

This is about how susceptible we are to the media. I don't buy the gloom and doom scenarios, and after watching Jeff (James) Schiff on the video BD put up last week, I won't be listening to any financial 'gurus' again. Stuart Varney did say this morning that buyers were beginning to trickle in, and that does make sense. As far as Starbucks going down - hell yeah. What kind of moron society pays eight bucks for a cup of coffee? That they've bought the farm is a sign we might be okay because good sense has come back. Twenty-four-hour news: Who'd have thought they could determine who our president would be and then turn around and scare the daylights out of us? They should be fined for massive fear mongering. The bank mess and the politicans who fostered it need this shakedown. The Stars Buck Effect. And the UAW - I hope they lose big time. We should just relax and wait.
`

#9 Meta on 2008-11-19 18:08 (Reply)

Exactly, Meta. There's still 6 billion people to feed, clothe and house. The numbers shift, but not the need.

Unless everyone just throws their hands up in the air and says 'screw it'.

#9.1 Luther McLeod on 2008-11-19 21:20 (Reply)

Bambi and the Dems are looking all the way back to the 30s with ideas of infrastructure projects to jump start the economy. Billions of dollars pumped into roads and bridges will make nicer roads and bridges...And, a handful of construction companies will get rich. But, it is a very different world now. We are not going to employ millions of laborers in these construction projects. The equation has changed and these jobs now require a fraction of the manpower as in the 1930s...To make matters worse, much of this kind of construction now imploys immigrant labor, much of which is of the undocumented variety. I'm not an economist but I'm pretty sure this is an empty rabbit hole.

#10 Scott on 2008-11-19 18:21 (Reply)

It is a long, empty rabbit hole. I wish I had the link to the study that showed public works projects take too long to implement to have a real impact.

#10.1 Barrett on 2008-11-19 18:37 (Reply)

Here in Waco (just down the road from the Bush Ranch) things seem to be doing a bit better than in some parts of the country. We're losing our Linens N' Things, like everywhere else, but downtown construction is booming and the major employers (Baylor University, aerospace) seem to be holding their own.

As a top spins and gradually loses power, it starts to wobble just a little from side-to-side before instantly falling over and skittering across the floor. Let's hope all this financial wobbling doesn't end the same way.

#11 Muley (Link) on 2008-11-19 18:26 (Reply)

There's nothing like a six part, overlapping, complex economic question that needs to be answered in a soundbite for drama! (I'll apologize in advance for being soundbite deficient.)

I work in corporate banking and finance in New York. (Before you stone me, my practice has always been the stuff that adds to the economic pie. I have not been involved in the mortgage backed securities, CDOs, CLOs or SIVs.) Needless to say, my life has been tumultuous for the past 18 months and it is unlikely to get better quickly. (In fact, I told a friend of mine that it is presently about having a job and maybe someday we can think about having a career again.)

The bottom line is cash. Recession, depression or recovery depends upon how many companies and how many consumers run out of cash before some sort of normalcy returns to credit and equity markets. Ultimately, Wall Street and Main Street need each other.

Everyone (corporations and consumers) needs to view themselves as corporations with assets, liabilities, net worth and cash flow. You may have a great idea, a great business or great assets. If you can't turn those assets into cash quickly enough to meet your obligations, then you are up the proverbial creek. Assets that used to be relatively liquid are less so today. How long that will last is unknown.

Credit markets are open to the best investment grade borrowers at wide spreads that have shown modest improvement over the past couple of weeks. In fact, several BBB (the lowest investment grade rating in simple terms) issuers were able to access the market in the 8% to 9.5% range.

The good news is that BBB issues actually occurred. The bad news is that credit spreads are very wide. The only recent high yield issue had a 13% coupon and carried an OID.

This activity is in the bond market.

Banks are lending as little as possible. Banks worry if borrowers can pay back obligations and worry about capital constraints because reserves and write-offs have not yet peaked. The increase in loans reflects draw downs on existing credit facilities and not new extensions of credit.

When (i) non-investment grade public and private companies can raise debt capital in public or private (including bank) markets and (ii) consumers can obtain credit on reasonable terms, then the deleveraging process will have reached its conclusion.

The challenge in assessing when the bottom occurs is that the process is dynamic. The more cash flow falls or the more assets are sold at any price to raise cash, the lower the degree of financial leverage.

The more corporations slash jobs (and some of this is justifiable because you have to live to fight another day), the longer the pain lasts.

Government intervention will only extend the period of pain. For example, the Big Three in Detroit have been failed by both management and labor. There are structural cost problems, product deficiencies and investment requirements that need to be addressed if Big Auto is to be competitive long-term. A bail-out will just be good money after bad because it will not address the fundamental problems that the current economic crisis has brought to the fore. Nevertheless, the bankruptcy of Detroit today will add to the short-term pain and the depth of the current problem. Therein lies the conundrum!

The fourth quarter is toast. People in stores is different than people carrying bags out of stores. Retail results seem skewed towards the former.

My hope is that we are nearer to the bottom than what now seems like the distant top. But I don't think we have seen the big barf yet where down volume and new lows exceed 90%. I think one reason is that many believe the government has an ace up its sleeve and will effectively bailout everyone. Given what has happened so far (e.g. the bastardization of the TARP plan), I would not get my hopes up that the government will get it right.

Tonight, I will hug my wife and kids and thank God for what we have. Tomorrow, I will go at it again and with skill and a little luck, I may be able to help a client solve a problem that adds value and makes all of this come to and end sooner rather than later.

I wish all the readers and writers at MF the best.

#12 Barrett on 2008-11-19 18:32 (Reply)

Thanks, Barrett, your penultimate paragraph actually cheered me up. You're right, we just have to keep on plugging away. But I have to say, most mornings these days I don't want to get out of bed, let alone go to work.

#12.1 Jim on 2008-11-19 20:48 (Reply)

Good wishes back to you and yours. You would have made a fine Secretary of the Treasury, under the Larson, Mc Leod, Wife ticket. Do you follow the Baltic Dry index? If so what do you think?

#13 jappy on 2008-11-19 19:02 (Reply)

Jappy,

I don't "follow" the BDI as a matter of course. It is more of a general indicator of international trade for me and can be looked at in conjunction with the CRB index.

For our readers who may be unfamiliar with the BDI, it is an index (i) that directly measures the demand for shipping capacity versus the supply of dry bulk carriers and (ii) that indirectly measures global supply and demand for commodities such as coal, iron ore and grain shipped aboard dry bulk carriers.

The BDI has dropped from roughly 11,770 in May to 815 on November 4 and closed at 859 as of today. The BDI is essentially at historical lows from its inception in 1998. It seems hard to believe that international trade is down as much as the index and that the index is primarily reflecting a decline in shipping rates.

The optimist in me says it is unlikely to fall to much more in absolute terms because these levels are very close to the operating costs of the shipping lines. I also know that ships have trimmed cruising speeds to save fuel.

The entire shipping industry is facing the same challenges as all capital intensive industries. The credit crisis has also disrupted trade credit, which is an essential component of getting cargo loaded onto ships.

I do have clients who are operators in various ports around the US and Canada. I can tell you that TEUs are down significantly.

China, in response to the decline in trade, announced a $585 billion stimulus plan. China has to grow GDP at roughly 8% just absorb new entrants into the workforce - which is one key for political stability not lost on the Communist Party elite.

Certainly an increase in the BDI would be an indicator that trade flows have recovered (although it could also mean that capacity declined and raised shipping prices - but that would take some time.)

It is one of the teas leaves to read!

#13.1 Barrett on 2008-11-20 00:37 (Reply)

The solution for Detroit is to receive a cash infusion subject to filing for Chapter 11 bankruptcy reorganization, and I nominate Mitt Romney to be appointed trustee. To inject more cash without being tied to the bankruptcy filing would merely prolong the agony.

Once the Big 3 are in Chapter 11, with adequate working capital, the trustee can move swiftly to do what we all know must be done first: Re-negotiate all management salaries and union contracts, everybody shares the pain; the only alternative is to call the unemployment office.

Then sub-contract purchasing to Wal-Mart's top management who can show them how it's done in profit-making enterprises. And rev up the design departments in a re-tooling mode so they start producing products the consumer wants to buy.

I hear that the Gov of Michigan and former Rep David Bonoir, both part of the problem, are signed on as economic advisors to Obama. I can hardly wait to hear their plan for saving ol' Motown.

#14 greenmtnpunter on 2008-11-19 19:22 (Reply)

Thanks for that sober comment...all the best to you as well.

#15 thud (Link) on 2008-11-19 19:26 (Reply)

Are we headed for a 3-year global recession?
Nobody knows.

Are we headed for Dow 7500?
Probably. And probably also headed for a 10500 as well. Nobody knows.

Are people buying things where you live?
Yes.

Is this a hyped-up ordinary recession, with great stock market buys that will make you wealthy in a few years?
Nobody knows.

Are we headed towards a long global depression?
Nobody knows.

Is this all an emotional reaction?
Not all. Some.

Is this all a Dem/Obama effect?
Not all. Some.

#16 lenf on 2008-11-19 20:03 (Reply)

My husband and I were harder hit by the supposed good economy under Clinton than we are now. And to boot al, I lost my job 4 weeks ago because I worked for a company heavily reliant on business from one of the banks that failed. I realy was not surprised by the bank failure or the job loss. Dear old man also says I let my appalachian scruples and work ethic keep me from playng ball with team shady accounting and buisness practices and I was run off.

Regardelss, and my point - I found nearly 100% replacement income stream with similar benefits, hours and such, in a similar business within a week and am still looking at potential new opportunities. I discussed with my new collegaues today a marketing okabn for new business and we are pretty sure we will be able to get it to take off with some quick success.

So personally, I welcome the correction to the market, the overinflated vaues and expectations hurt my family for many years (long story) and we are the kind of people who can succeed better on a more level playing field.

I hate that some people will be hurt, but I think some self inspection at services or goods provided, skill(s), and an outward look at who is buying what and what has real value will lend itself quite well to the hard workers. Yeah sure, and with true compassion, there will be some real hurt. But, for the most part, I think that once all the wheat is sifted, what will emerge is a much improved work force and a higher value line of goods and services that will be a fordce world wide. How long? That depends, like many said in otehr comments, on the media feeding frenzy that is thriving on the raw meat of personal irresponsibility and group think.

#17 Heather Gilliam on 2008-11-19 21:04 (Reply)

Good perspective, Heather. And a perspective that will outlast what ever temporary pain we will suffer as a country, or world, for that matter.

#17.1 Luther McLeod on 2008-11-19 21:31 (Reply)

we are paying for the Clinton years.
So much money given out ...in cahoots
with Greenspan, who was dumb enough
to believe that we believed in Y2K.
Now it's "global warming".

Just ways to spend others money.

Obama will look good to those getting
checksin the mail...but the end will
be ugly.

#18 j reacher on 2008-11-19 21:20 (Reply)

As a child of the Great Depression, who is now 80, I think that the [if it bleeds it ledes] media are complicit in this present situation. They are hyping up the panic, without doing a thorough research job on the details of this uncomfortable situation. And if they can possibly get most of us to panic, they will do so. They think maybe they can win a Pulitzer for doing so. So don't expect them to behave well. In this present tightening market, some businesses will falter and fail. Food prices will go up, housing prices will go down, and there will be panic selling of luxury items like boats, clothing, planes, time shares and other luxuries.

I hope and pray that GM, Ford and Chrysler will have to take bankruptcy, because then they can renegotiate their expenses, like the ruinous union contracts, and get rid of some of the silly-ass management types who were stupid enough, when they were going to Congress to beg for money, to fly to Washington in multi-million-dollar private jets. Jeez Louise! How stupid do they think we are?

We're paying for more than the Clinton years here. It goes further back, to Jimmy Carter's administration and the Community Reinvestment Act, which was later expanded in the Clinton Administration. In a very real way, the Democrats own this recession/meltdown whatever you want to call it.

I wish we could just all sit down and think for a minute here. Yes, it's awful. People are in pain, worried for their futures and their children's futures. But take time to look around you, around your home, around your children's needs, and assess what is absolutely necessary and what you can do without. I had my 18-year-old Volvo completely overhauled in June and its running beautifully. I don't need a new car. I need a car that functions well, and now I have one. I don't have to keep up with the Joneses. They're all dead and I'm alive.

My husband and I took stock last week of where we are financially. Our food costs can be reduced somewhat and we already eat at home far more than we go out to eat. That saves money. I know how to mend clothes and darn socks. Most women out there no longer learn this useful skill. When I was in grade school, girls all took Home Ec and we learned stuff like that. If a 9 or 10 year old girl can learn how, you can. Actually, it's rather soothing to do it, kind of like knitting. For many years I made some of my own clothes, and I looked better than most folks -- at least my husband says so.

I guess what I'm trying to say is, I have the greatest of faith in Americans, in their innovative, make-do skills, in their creativity and toughness. The only thing that can weaken us and spoil our good judgment is panic. So, do a reasoned assessment of your current strengths and weaknesses, things you can alter and improve. We all have those. And implement improvements, whether they are financial or habitual. Get your kids involved in helping. They have more energy than we older folks do anyway. They can offer to do chores around the neighborhood for money. We used to. Next, take note now of the troublemakers in Congress, who they are and what they want to do with your money. And remember, so you can vote against them in the next election.

Most of all, be of good cheer. Remember, what goes down must come up. It just takes awhile.

Marianne

#19 Marianne Matthews on 2008-11-19 22:03 (Reply)

Sorry to comment jack, but Kipling offers some advice about what our demeanor ought to be as there is so much panic about us in the market and the media.

If you can keep your head when all about you
Are losing theirs and blaming it on you,
If you can trust yourself when all men doubt you
But make allowance for their doubting too,
If you can wait and not be tired by waiting,
Or being lied about, don't deal in lies,
Or being hated, don't give way to hating,
And yet don't look too good, nor talk too wise:

If you can dream--and not make dreams your master,
If you can think--and not make thoughts your aim;
If you can meet with Triumph and Disaster
And treat those two impostors just the same;
If you can bear to hear the truth you've spoken
Twisted by knaves to make a trap for fools,
Or watch the things you gave your life to, broken,
And stoop and build 'em up with worn-out tools:

If you can make one heap of all your winnings
And risk it all on one turn of pitch-and-toss,
And lose, and start again at your beginnings
And never breath a word about your loss;
If you can force your heart and nerve and sinew
To serve your turn long after they are gone,
And so hold on when there is nothing in you
Except the Will which says to them: "Hold on!"

If you can talk with crowds and keep your virtue,
Or walk with kings--nor lose the common touch,
If neither foes nor loving friends can hurt you;
If all men count with you, but none too much,
If you can fill the unforgiving minute
With sixty seconds' worth of distance run,
Yours is the Earth and everything that's in it,
And--which is more--you'll be a Man, my son!
----------------------------------

Words to live by - especially the ones about treating triumph and disaster both as the imposters they are.

#20 Al Maviva on 2008-11-19 22:34 (Reply)

Don't look now, but China has just displaced Japan as the leading holder of U.S. Treasury debt.

The latest numbers show China now holding $585 billion in Treasury paper — about 20% of all Treasury paper in foreign hands, and 10% of the total both foreign and domestic. And since Treasury doesn't keep tabs on who holds its paper domestically, China is likely Uncle Sam's biggest creditor, period. (In fact, those percentages might be higher still since rumor is that China buys additional Treasuries through other countries.)

So there you have it: Beijing is financing no small portion of the $700 billion bailout.

Sort of puts things in a different perspective when you hear the new president saying essentially, "Damn the deficits, full speed ahead." If someone like David Walker can't convince him a trillion-dollar deficit is a problem, the Chinese certainly will if they decide they don't want to keep financing that trillion-dollar deficit at record-low interest rates.

At that point, the new president will learn the same lesson Bill Clinton did, when he hissed in disbelief, "You mean to tell me that the success of the [economic] program and my reelection hinges on the Federal Reserve and a bunch of f—–g bond traders?"

As long as the power elite remains in thrall to Alexander Hamilton's notion that a national debt is a "national blessing," yes.

#21 Desidooru Saloon on 2008-11-19 22:36 (Reply)

So we and China are joined at the hip? We finally got them right where we want them. :)

#21.1 Luther McLeod on 2008-11-19 22:40 (Reply)

Yep, they got us right where we want 'em --a business partner who has plenty incentive not to go back to Inchon with the Marine Corps -

#21.1.1 buddy larsen on 2008-11-19 22:51 (Reply)

Yes indeedy, Luther ... As Admiral Chesty Puller once said in the midst of battle, "the enemy are in front of us, the enemy are behind us, the enemy are to the right and left of us. They can't get away now!"

Marianne

#22 Marianne Matthews on 2008-11-19 22:50 (Reply)

MM, that's just too weird that we'd both at the same time cite the same highly obscure reference from so far afield. Gen'l Puller's famous comment was made in the Korean War, i think at Inchon. tho maybe at the frozen Chosin --but even so, it's still a piebald co-inky-dinky --

#22.1 buddy larsen on 2008-11-19 23:03 (Reply)

A great... "piebald co-inky-dinky". Fantastic.

It was an advance to the rear comment from ol' Chesty. At the frozen Chosin.

We've spirit left... lot's of it. We can't afford to sell ourselves short, not now. Nor ever.

The world does depend on us. No matter the nay-sayers.

#22.1.1 Luther McLeod on 2008-11-19 23:28 (Reply)

Amen. we can stand fast. not really sure what that means, other than, i don't plan to go bananas.

#22.1.1.1 buddy larsen on 2008-11-20 00:38 (Reply)

Fed Credit:

If you do actual research you can see the credit rise and thus can tell us that this increase by the FED in Fed credit made it rise "to a record $2.198 trillion, with a historic 9-wk increase of $1.310 trillion. Fed Credit has expanded $1.325 trillion y-t-d (171% annualized) and $1.332 trillion y-o-y (154%)."

I gasp in amazement that the total sum of Fed-supplied credit to the banks, accumulated bit by bit since the Fed was founded in 1913, totals $2.19 trillion, more than half of which was added in the last 9 weeks alone! Hahaha! We are so freaking doomed! Hahahaha!

I notice that nobody else was laughing with me, as the Hollow Laugh Of The Damned (HLOTD) is not widespread enough yet, as first you have to get through the other "stages of shock", namely Denial, Anger, Fear and Bargaining before you reach Acceptance of the situation and you realize that, yes, we are freaking doomed because we overly expanded money and credit, just like all of history and the Austrian school of economics long ago proved, and which has now been proved again. Thus the HLOTD.

And if yin equals yang, and if karma has to level, then the bust that follows the expiring boom of the last whole third of a century ought to be One Big Mutha Fkr.

But creating staggering sums of money is not just what we Americans are doing, but everybody else is doing it, too! For example, the Wall Street Journal reports that the $586 billion Chinese have their own "Social Stabilization" stimulus plan, which "will go toward building highways, railroads and airports."

This, in case you are wondering, is in addition to the massive infrastructure spending that "had been increasing by an average of 20% annually for the past 30 years", and which has resulted in a "national highway system that is scheduled for completion this year" after "30,000 miles of expressway were built in the past decade."

Now, the new plan is for the highway system to "stretch 53,000 miles by 2020, surpassing the 47,000 miles of interstate roads in the U.S currently", which is comparable since "China has roughly the same land area as the continental U.S."

I bring this up because it is said to be part of president-elect Obama's plan to also increase infrastructure spending as part of a big stimulus plan, and when you add it all together, I can't help but figure that the one sure-fire investment for the Whole Freaking Next Decade (WFND) is obviously cement and inflation.

#23 Mogambo on 2008-11-19 22:51 (Reply)

Are we headed for an DOW of 7500? Probably. Are prople buying things where you live? I live in Texas. We read about this and watch it on the news programs. Each person is making this sound and look worse. May be to get a few more viewers or readers. Locally, you can't see anything about a recession. Real estate is doing better than last year this time. There are a few more repo's than last year, but they are being snapped up. I myself am closing on a new home tomorrow. Had no problems getting a loanat a decent fixed rate for thirty years.

Questions 6 and 7 are a little more complicated. All economics are based on emotion to some extent. Prices are based on desire, greed, perceived need, or fear. Has this anything to do with Obama? To some extent, yes. He has sold himself on the "hope of change." But what kind of change and to what effect. I have never seen stockholders who felt comfortable with uncertainty.

#24 Crippled Gnome on 2008-11-19 22:59 (Reply)

Texas has created over half of all new jobs in the last decade, some talking head said recently --Detroit ought to move here --not much union lunacy, low-low taxation, lihght regulations, not many leftists outside the Univ of Texas' Austin campus. Michigan is just the opposite, and is apparently, like the Star Trek crew or toilet paper, circling Uranus looking for Klingons.

#24.1 buddy larsen on 2008-11-19 23:12 (Reply)

SAY GOODBYE TO CITIGROUP, HELLO MASSIVE INFLATION

The market is losing confidence in Citigroup. In the wake of some planned balance-sheet maneuvers, it isn't tough to see why.

On Monday, Citigroup Chief Executive Vikram Pandit gave a presentation on the firm's financial condition during a town-hall meeting. This followed an announcement that job cuts this year would reach 50,000.

Largely overlooked in presentation materials released to investors was a disclosure that this quarter the firm would reclassify about $80 billion in assets. Those assets wouldn't have to be marked to market prices. Or they could be held in a way that keeps such losses from hitting earnings.

That has unnerved investors, especially since the holdings involved aren't garden-variety assets. Instead, they include risky holdings such as collateralized debt obligations -- structured securities that have already led to billions in write-downs.

Mr. Pandit's rationale for the move: The assets could eventually bounce back in value. Investors have heard that one before and don't believe it. If anything, the move has only made investors more skeptical about Citigroup's ability to withstand mounting losses. The bank says it is sufficiently capitalized.

By reclassifying assets, Citigroup will avoid some mark-to-market losses, at least for some loans. Securities such as CDOs will be marked, but gains or losses will be quarantined in shareholders' equity.

True, losses quarantined in this way still lead to lower shareholder equity. But they generally aren't counted in key measures of regulatory capital.

That may help improve Citigroup's Tier 1 ratio. But jaded investors rightly want the bank to actually strengthen its books, not pretty them up.

*************

Dow @ 6300
Don't look for your standard of living to return to previous levels in this lifetime.

I steadfastly say that neither the Federal Reserve, nor the federal government, are going to sit still when people are whining about "shrinking day care, collapsing retail sales, rising unemployment, record foreclosures, massive credit card defaults, bankrupt insurers, collapsing auto sales, sinking commercial real estate, plunging commodity prices, and dozens of other things" when they have a fiat currency that they can instantly create, with unlimited abandon, which they promised to do, will do, and are already doing.

Thus, with a staggering, unbelievable amount of money being created, these and many more deflationary problems will soon be just a quaint memory as voluntary fiscal and monetary restraints around the world are being thrown wholesale into the dumpster even as we speak, and humongous "economic stimulus plans" financed by massive increases in fiat money are being trotted out across the globe, all meaning that inflation will rise and rise.

As if to prove me right, the article went on to note that Professor Steve Hanke, formerly with Credit Suisse and now a senior fellow at the Cato Institute in the United States, said that this month, "Zimbabwe's annual inflation had soared to 2.79 quintillion percent", which is the inevitable result of the moron government of Zimbabwe spending decades literally printing all the paper money that makes such inflation possible!

In case you were wondering, "a quintillion is a figure with 18 zeroes and is a rung above a quadrillion", which I will helpfully write out as 2,790,000,000,000,000,000%!!!!!

you should still need no explanation as to the significance of inflation that is measured in quintillions of percent, or even inflation measured in quadrillions of percent, or inflation measured in trillions of percent, or inflation measured in billions of percent, or inflation measured in millions of percent, or inflation measured in thousands of percent, or inflation measured in hundreds of percent, or inflation measured in tens of percent, or Any Freaking Inflation At All (AFIAA) that is more than zero, because what it means is that Bad, Bad Times (BBT) are a-coming as all of this money starts chasing a static supply of goods and services and people get Very, Very Upset (VVU).

And besides the fact that inflation in the USA is already running between about 5% and 10% (depending on your source), it is going to get worse and worse, and thus a BBT and a VVU are a-coming.

#25 David Reilly on 2008-11-19 23:19 (Reply)

Where do you get inflation stats at 5% to 10%?

#25.1 Barrett on 2008-11-20 00:41 (Reply)

Barrett - these guys are trolls. They're having fun.
`

#25.1.1 Meta on 2008-11-20 00:45 (Reply)

You are probably right. I just don't like incorrect or questionable information to go unchallenged. It can create an illusion that such claims are factual if repeated enough and it plays into the whole fear thing. It sounds like the MSM.

#25.1.1.1 Barrett on 2008-11-20 00:53 (

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Wednesday, November 19. 2008