Bits Bucket For December 12, 2008
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Ruh roh Shaggy. Futures down big on auto deal collapse.
Nice to see the banks can get money licketly-split, but a real product-producing industry can’t get squat after months of effort.
Hmmm, maybe that’s why Willy Sutton went after banks instead of GM or Ford.
If the auto makers don’t have money a lot of people are screwed. If the banks don’t have money everyone is screwed.
Except you, since you have lots of cash, right?
if most of the banks don’t have money I doubt that (dollar) cash has any value either as a result of a system breakdown…
the government is also very dependent upon the banking cartel (the Fed) to finance its debit
yes, very telling that only the really big criminals can get support.
But EU policy is not much better, with most of the bailout money going to the big speculators (banks, insurers, homeowners etc.) and dinosaur industries (some car companies are getting big money over here). The new EU environmental legislation (for CO2 reduction etc.) just got slashed in favour of the big polluters as well, they now can pollute freely until about 2025, and of course by then the reckoning will be postponed again.
Maybe it would have been better to not sign the Kyoto treaty at all like the US does, that at least makes it clear to everyone that they don’t give a damn about the environment. Now the CO2 taxes only result in more tax money for the government, and support money for dirty industries (creating unfair competition, as other industries have to start paying pollution fines in 2012).
“”I dread looking at Wall Street,” said Senate Majority Leader Harry Reid in anticipation of Friday’s stock market reaction. “It’s not going to be a pleasant sight.”
WTF? Is the senate now just a bunch of day traders? I’m sorry the market is down today, how about all the people who lost their jobs and can’t afford healthcare. Could you please have some vision and outlook that extends beyond 24 hours.
http://biz.yahoo.com/ap/081212/meltdown_autos.html
Good point. It does seem that some of the legislators talk a lot about what their actions do to the markets on a day to day basis. Then again, they are elected, and if that is what their constituents care about, they have reason to at least pay lip service to it.
I wish there were a way to move the whole culture away from looking at everything short-term: corporate earnings, jobs, school test results, etc. But it seems a monumental task. It took a long while to get to this level and anyone who tries to favor long term over short term will get severly punished for doing so.
By the way, Steve Pearlstein’s column in the Post is outstanding today.
http://www.washingtonpost.com/wp-dyn/content/article/2008/12/11/AR2008121103277.html?hpid=topnews
“One thing we know about leadership is that it rarely involves using excuses such as “All the other kids were doing it.” That’s only a slight oversimplification of what we’ve heard from the masters of the financial universe in explaining how things could have gone so wrong.”
And it gets better. Way better.
Harry M. Reid like the rest of his cronies, don’t give a flying crap about the masses. He’s got to hang with buds that fork out his dough.
Oh yeah, there’s an agenda behind all this fearmongering.
Is the senate now just a bunch of day traders?
They realize that the majority of voting americans have pensions and 401K’s invested in the stock market. That a collapse of the market based on event in the senate does not bode well for elected officials, especially when many of their constituents are at risk of losing or have lost their jobs…
When constituents are losing their retirement savings, their jobs, and their homes can the events in Greece be far behind for the US?
Remember during the dot com boom when they proposed fixing Social Security by putting the money in the Stock Market!?
If you think it looks bad now, imagine the horror if W’s plan to privatize social security had gained traction. In that case, everyone would be even more under the bus than they already are.
“If you think it looks bad now, imagine the horror if W’s plan to privatize social security had gained traction. In that case, everyone would be even more under the bus than they already are.”
Exactly! I nearly lost it when those hamheads suggested privatizing SS.
DOC
Yeah, because all my SS savings would have been lost. Thank god it’s still safe.
That depends. My stock account is up. I would have been happy if SS had been privatized, as long as they gave enough investment options.
Ideally I’d like if they just went all the way and gave me all my money back, and let me invest it myself.
But wait - they can’t do that. It’s already been spent.
Doh!
It’s already been spent.
Exactly. It’s hard to see how I can do any worse than turning my own SS contributions to zero.
Lots of ‘buzz’ on the net this morning, of a huge bankruptcy being filed between now and Monday. No clue as to who it may be?
GM or Chrysler
Why is it nice that banks can get money?
I was being facetious.
I know, but giving money to one group of rich people doesn’t mean we should give more money to another group of rich people.
Agree. I wasn’t really proposing the auto bailout as a good thing - just showing the contrast between the two; trying to lead the reader to a proper but sad conclusion.
The auto industry is in dire straits because it cannibalized future sales with cheap financing, HELOC money, leasing, etc.
People couldn’t get money from a bank or CU to buy a used car but could get long term (7yr) financing through auto dealers for a new car purchase or lease. No amount of bailout money is going to move product. This is the difference between the bank bailout and the auto bailout. The bank had to clear up paper to allow money to flow while the auto dealers will have to move a product in a down market with high inventories sitting on the sideline (both new and used product).
BTW I saw on the news that GMAC financed dealer stock to the tune of 80% of inventory.
The credit bubble caused oversupply in many markets (like housing and autos and “candle shops”).
Unfortunately, everything pushed up during the credit bubble will be hit during the credit contraction. I wish there could be another way.
I wonder if it has anything to do with the integrity of the banking system being maintained at some basic level being vital to our economy v. the integrity of a product producing industry that can’t produce products competitively. That said, TARP did fail the first time. Albeit not for the right reasons.
Right. As much as many like to bash the banker men, MYSELF ESPECIALLY, the fact is we need a functioning financial apparatus more than we need these three particular individual companies.
Every night on the evening news during the 1981-82 recession I remember the pictures of the shuttered mills and factories. There was three decades of warning for these guys.
The U.S. does need industry, but to pin recovery hopes on the backs of those three particular companies would only lead to the cruelest of disappointments.
Bankruptcies of incompetent banks causing a loss of “financial apparatus” is a scare tactic - nothing more. There are thousands of banks out there - most of which could do a better job of managing our finances than the biggies. The biggies are big not because they do a good job, but because of their political influence.
Tell that to my clients that are otherwise profitable but are facing bankruptcy in light of the Lehman collapse due to expected money flows being cut off and amounts owed in connection therewith. With respect to banks, given the FDIC insurance, the government pretty much has a first loss position anyway. To the extent there is no FDIC coverage, a lot of innocent ppl will be destroyed. This is not the case with the big three, where ppl understood they were dealing with poorly run companies and had the choice to go elsewhere. Banks are not as transparent.
Can you enlighten (seriously - not trying to be argumentative) about your clients’ problems with regards to “money flows being cut off”? Why are your clients’ revenues based on money flows *from* the banks?
Or are your clients’ revenues based on money flows *through* the banks? If so - then why can’t they find other banks to flow their money through?
I wa thinking the same thing…If you are dependant on the bank , you are not solvent…
I must be old school…
Banks dealt in derivatives such as interest rate swaps and various forms of repo agreements that have payments streams and deliveries due over an extended period of time, with either party paying the net based on changes in interest rates. Bankruptcy stopped the payment flow. Although under many contracts it does create an ability of the otherside to terminate, identical replacement hedges for various structures in today’s environment are impossible and huge settlement payments are due. Thus, the hedge is lost, and the present value of the future payment stream is immediately due by either side depending on who is in the money. I should note these are not just risky entities entering into these contracts. I do not know any big entities that did not hedge interest rate risk though derivative products. Therein lies the problem. It is not realistic to view banks as only have been making loans and holding deposits. The financial world was much more complex.
“I do not know any big entities that did not hedge interest rate risk though derivative products. Therein lies the problem. ”
I think you hit on it there. So IMO the solution is not to feed the banks money to avoid bankruptcy, but for commerce to quit using derivative products to hedge risk. That’s what insurance is for. I’m not talking financial insurance, but real insurance - e.g. crop insurance for farmers, fire/flood insurance for industrial buildings, etc. IMO financial insurance - i.e. using money to insure against losing money - is inherently a bad thing.
Sorry it sounds like that’s part of your business, but I call it like I see it.
That’s what insurance is for
The reason it is never called insurance is that insurance is actually regulated by the states and the people who sell insurance must actually have reserves (ie money) set aside to pay off the policies issued.
Companies that purchased “insurance” from businesses that had no assets made a huge mistake. These companies and management should not be rewarded for this mistake or we will be in the same boat in 10 years.
AIG I believe sold 32Xs the total assets of the company. Those same managers at AIG will be getting “retention pay” funded by the US Taxpayer.
Those autoworkers that pay taxes have a right to be furious.
“Those autoworkers that pay taxes have a right to be furious.”
Automakers aren’t the only ones who pay taxes. I’m furious too.
An interesting position for the lame-duck administration to take:
On Wednesday, Dick Cheney met with Senate Republicans and emphasized the importance of keeping the American automotive industry afloat. “If we don’t do this, we will be known as the party of Herbert Hoover forever,” the vice president said.
Re: your clients, tough sh@#.
Whatever financial decisions your client chose to make, those were THEIR decisions. Pushing that responsibility onto another party, such as the taxpayer, is the clearest violation of the other party’s freedom.
Sorry, Tim, but I have to agree with the OPs.
Interest rate derivatives (actually, derivatives of any sort) are considered more “sophisticated,” so the people making these investments should have done some due dilligence WRT the counterpartys’ ability to fulfill their obligations.
This is not the obligation of the taxpayers.
p.s.: I trade options, and have lost plenty of money on various trades. I would never claim that taxpayers should be responsible for my losses.
People need to realize that the auto bailout has very little to do with jobs and apple pie and all that crap.
It’s all about the CDS exposure the big banks have to a major ‘credit’ event, ie the filing of bankruptcy by GM.
I agree, but why not handle that directly by propping up the banks to the extent necessary when the hit comes? Doing it this way is less efficient.
You got to make things look good for the peoples.
I think the UAW showed their true colors, by refusing wage cuts. They brag about previous wage concessions, but those were for new hires or soon to be hired. Where are the cuts to save THEIR jobs? meaning senior employees. Bailout or no bailout layoffs are certain. The new hires will be layed off first therefore, no lower production costs. Cars, domestic and foreign, need to be made and sold cheaper. Leasing and 0% financing( i.e. GMAC problems) are not sustainable business models. MEWS are gone, so how are they going to continue selling $30,000 cars? The Dems in congress have their heads in the sand and their hands in the union pockets.
People who make $12 CANNOT buy high tickets items. Hell they can barely feed, house and clothe themselves. Everything past that is a luxury. News cars and home ownership are not even in their universe and never will be.
So you say that is a good thing for a 74% consumer driven economy?
Where are the pay cuts for the top brass, huh? Fair’s fair, right?
Go back to cars like my first 2 - stick shift, manual mirrors, manual windows, only options A/C and radio. The past few years you have had to special order that kind of car (Ford and GM no longer even offer a manual trans in their 1/2 ton trucks). By not even having them on the lots people just bought what would have been a completely decked out vehicle 20 years ago and paid for it by getting 6-8 year 0% financing. Well now they are stuck with those cars for that long so no more sales (all automakers are seeing this but the weakness of GM and Chrysler means that they will fall first leaving a void which will help the others).
My latest though is that if Chrysler goes down first it will allow GM and Ford to survive because almost all of the Chrysler loyalists that can buy a car will go to GM and Ford. I’m mostly a GM guy but I’d definitely buy a Ford or Chrysler or even Subaru or VW before I bought a car from Honda or Toyota. Nothing against Honda or Toyota but they make boring cars with the possible exception of the S2000 (if you like a car that gets worse mileage than a Vette with half the power and almost no weight penalty).
I’ve been a Chrysler loyalist for 35 years
No way IN HELL will I ever buy anything from GM, or from our Japanese or Korean so-called “friends”
The only thing I would think about from Ford is a Mustang.
Can’t afford German; either to buy, or to fix their overcomplicated/unreliable pieces of crap.
None of this matters…..if the shit hits the fan as bad as I think it is going to, about 90% of us will be taking the Buster Browns to work …..assuming there is anybody actually working.
cmon, GS… what about a Vette or 2010 Camaro?
I’d drive a Challenger SRT-8 any day!
RE: the 1981-82 recession I remember the pictures of the shuttered mills and factories. There was three decades of warning for these guys.
Yup…
Every recession from ‘74/’75 onward has always whittled away a more and more of the heavy industry and manufacturing base wrought by the advantages of being the last one standing after WW II.
And the demise has been insidious, almost imperceptable.
You’d look around and see a street or block where there would be one less shoe shop, leather factory, or paper mill.
But WTF we’re an Information Society now! Who cares…Manufacturing is for loser 3rd Worlder’s.
And all the nitwit kids with bogus “pass him and get his sorry azz outta here” HS diploma’s are gonna be NBA players anyway. No need anymore for kids to follow the ‘ole man into a big bad mill.
As bankruptcy kills the corporations and small biz boomer owner’s pack in the towel, the scorched earth employment landscape which will be left after this meltdown will be truly mind-boggling.
I have my doubts as to the need of a financial industry over a production industry. I agree that the big 3 have long ago ceased to be competitive, and that big changes need to be made to them, but they do employ an awfull lot of people, and have operations world wide. I also think that what made this country great was not its banking, but its industry, and we have lost a lot of that in the last 20-30 years.
Unless we start producing things that people want and need again, and not buying up every useless trinket made by the chinese, we will not have enough jobs and prosperity for us and our children. We can only use the credit card for that much longer before we are cut off.
Here’s an idea:
Take the dough that would have gone to those three companies and use it as seed money to develop new industries and help out small business.
A healthy economy is a flexible economy. For evidence just go see that photo essay of downtown Detroit over at the Time magazine site. Where is it written that for long as there is an America there must also be a Big 3?
I think that we have outsourced ourselves out of our prosperity.
Those Detroit pictures are scary, as that could happen in NY, (you do not need to be in NY for finance… It is just convenient, as there are 1.2 BBN chinese, and 1 BBN Indians willing to take guesses for far, far less) and it could be the future of this country. There are however a few steps that could help…
1. Produce better products, is easier said than done, considering the culture in the UAW, and Management. These 2 have to go.
2. Innovate… Gas is NOT the only thing that will make an internal combustion engine run. The adaptation to other fuels would be rather easy, and these are abundant (CNG, Propane)
3. Stop the tax breaks for outsourcing. Dumbest Idea Ever… Allow companies to deduct an outsourcing contract as an expense, while employees have a different discount ratio. What this does, is that it sends jobs to 3rd world countries, where the employee does not even pay taxes here. DUMB, DUMB, Dumbest move EVER… In essence we are getting a double whammy in that the company is allowed to write off the expense, and we are not even recovering part of the money with taxes on wages…
4. Bring back manufacturing… and the jobs that come with it. Service Economy is a myth, as it is the easiest economy to take elsewhere. Anybody can open a call center in Bangalore, and charge 2 bowls of rice a day!
on another note, if the shills at Capitol Hill would show some spine and demand that the Christmas bonuses for the (gov-owned) Wall Street gangsters are cut by 30% or so, they have all the money they need to bailout the big three for the time being. Maybe show some real spine and force the big three to start making really useful products (not something that happens overnight of course).
“4. Bring back manufacturing”
Here, here.
One of the dumbest things I’ve ever heard is, “it doesn’t matter if it’s made in America, as long as it’s managed in America.”
Nope, we gotta make it.
“One of the dumbest things I’ve ever heard is, “it doesn’t matter if it’s made in America, as long as it’s managed in America.””
That should frighten anyone who’s dealt with typical American management.
Notwithstanding the quality of American management or the near-term decline in energy prices, sharply higher energy prices and supply scarcity in the not-to-distant future will sharply reduce the global supply chain. It simply can’t function without cheap, available energy. Some manufacturing may be coming back, at least for items we still want, need, and can afford.
I will keep banging this idea into everybody’s head until you listen:
We need to offer tax breaks to companies that create 2nd 3rd shift weekend and Holiday jobs with health insurance…NO breaks at all for companies for hiring people from 9-5 M-F when we are all in gridlock on the highways and subway cars are jammed…..Prime time pricing.
====================================================
4. Bring back manufacturing… and the jobs that come with it. Service Economy is a myth, as it is the easiest economy to take elsewhere. Anybody can open a call center in Bangalore, and charge 2 bowls of rice a day!
“it doesn’t matter if it’s made in America, as long as it’s managed in America.”
You’re right, that IS dumb. Let’s look at a counter example. Toyota care are made mostly in America, but it’s managed mostly in Japan. (?) Suddenly all those Toyota jobs on American soil don’t matter? Of course they matter!
Take the dough that would have gone to those three companies and use it as seed money to develop new industries and help out small business.
It can be done by not picking the pocket of the taxpayers. How? Let the market work.
First rule of Free Market, there is no Free Market.
First rule of Free Market, there is no Free Market.
Shhhhhhh … you’ll give the Level 1 conservatives pooooopy drawers. They believe in it, religiously.
The Level 2 Old Boys realize the Free Market is a myth, and exploit that mythology for maximum profit — witness the current socialization of losses reaped by the Masters Of The Universe.
aNYCdj, “prime time pricing” is a great idea for addressing traffic problem. However, the incipient depression is going to do a great job of reducing traffic all by itself. Let’s dust off your proposal in, say, 6-8yrs. I think you’ll have a hard time getting anyone to care much about traffic for quite some time.
First rule of Free Market, there is no Free Market.
Shhhhhhh … you’ll give the Level 1 conservatives pooooopy drawers. They believe in it, religiously.
(sigh). I’m not conservative. I’m a liberal. Also you both are wrong. There is a free market. Any voluntary exchange without a busy body in the middle (your beloved government with a gun) is the free market. This includes anything in the black market, which was big in the drab gray soviet union, which I would think you two reminisce about.
Gosh, now I’m a Commie? Now, if you take out the pimp, truly the only free market in Amerika is prostitution– Voluntary exchange with a busy body.
Without the financial industry, there is no manufacturing industry, including the small 3, or most other businesses.
I was not in favor of the TARP or how it was handled, and agree its great to actually make something, but the big 3 argued about the trickle down effect of them failing. They would have been just a sliver/part of what failed if the banks failed. The big 3, parts, dealers, all segments of that industry (and sadly, most others) are COMPLETELY reliant on the finance industry to grease the wheels; without they were done.
When a big company goes bankrupt - what happens? Does it just completely disappear?
No.
Usually its parts are sold off - usually to more competent companies. Or it’s restructured to be leaner, including layoffs and salary reductions, and some investor losses - but business goes on. This includes banks.
There are thousands of banks out there. Let the big incompetent ones fail, and sell their accounts to the smaller more competent banks in court.
I know it’s not quite that simple - but the principle is true.
Too late for that though, unfortunately.
“Usually its parts are sold off - usually to more competent companies. Or it’s restructured to be leaner, including layoffs and salary reductions, and some investor losses - but business goes on. This includes banks.”
Thank you, packman. I would add that even if the entire banking industry failed (which will never happen), life would still go on. For that matter, life would go on without cars, airplanes, fill in the blank industry. People are adaptable. Nothing is indispensable.
Does the fact that ppl would survive massive layoffs and the bankruptcy of competitive companies and institutions that would have survived short-term market disruptions if the banks were thrown a life line (I do not include the auto industry in this class), and the inefficiencies created thereby, mean that it is the best route for our citizens? Sure innocent ppl adapt to pain, but I would not choose to inflict it if it can be avoided.
No pain, no gain.
Seriously - in the end that’s what it all boils down to. We’re doing our best to avoid short-term pain, not realizing that this short-term pain would have resulted in a stronger economy in the long run. Instead we reward the weak, and punish the strong (see article on Jim Rogers below).
RE: Those Detroit pictures are scary, as that could happen in NY,
Could happen?
I drove thru Gloversville, NY to visit Van’s HD dealership a couple of years ago.
According to exeter, this town use to be “Glove maker to the world”.
Man, talk about down and out.
Amsterdam
Schenectady
Troy
Glens Falls
Canton
Malone
Ogdensburg
Watertown……. Take your pick. Not to mention Bennington and Rutland VT. Dead.
Bankrupty with respect product producing industries doesn’t necessarily mean their deaths. Look at the airlines industry. Even if they file, they could attempt a massive restructuring allowing them to come back again free from overly burdensome contacts. If they can’t, their assets can be sold for pennies on the dollar to a new entity that can be formed to take them over and begin to use those assets to produce products competively. I agree we should focus on competitive product production as it’s lacking in the US right now. I don’t see that as the issue on the table, however. The issue on the table is whether we should spend money to keep F and GM surving despite the fact they wont commit to major change, or whether we should force them into a restructuring or asset sale scenario, where we can start fresh.
surving = surviving
Tim,
I agree with much of what you’ve said and your sentiments on this thread. With regard to bankruptcy, does there need to be a distinction drawn between service sector versus manufacturing? Airlines, bus companies, etc., are basically in the service of moving people around. They’ve come and gone pretty freely as you’ve noted. There are plenty of examples of aircraft manufacturers, automakers, rail manufacturers that are no longer in business. Particularly in situations of excess capacity in a sector, does bankruptcy accomplish much more than an orderly disposition of remaining assets?
My view is there’s excess capacity with the auto makers. I don’t see how you can restructure them unless you can restructure them in such a way that they are viable as much smaller companies. I’m not sure that’s possible. I do feel for the affected auto workers, but we may be better deciding what else we need to do in the future rather than supporting that which we may no longer need.
I agree with what you said. I am against bailing them out. My discussion on restructuring was not to suggest that they can and should emerge without drastic changes including reduction, but merely to point out that letting them go into bankruptcy is not that horrible because if ppl can run the industry competively, they can emerge restructured from the bankruptcy or someone will buy the liquidated assets cheap and keep them going under a different name. If building cars in the US cannot be done competively in the US at all, we need to look for something else to spend our money on.
I agree. I only meant to imply that if they can be run competively, bankruptcy does not eliminate that option because they can restructure out of bankruptcy or sell the assets cheap to someone more competent. I am against the autobailout. Although I am aware of the CDS exposure, this can be addressed more directly.
My view is there’s excess capacity with the auto makers. I don’t see how you can restructure them unless you can restructure them in such a way that they are viable as much smaller companies.
I certainly don’t want to put myself in the position of defending the Big Three — they’re deeply flawed, lumbering, inefficient entities that’re in need of some fundamental restructuring.
Having said that, there is something classist going on here, as incompetent white collar financial corporations are given preference and relatively wide latitude with bailout funds. These three incompetent manufacturing companies, on the other hand, have been flogged in front of Congress while begging for funds that’re a relative pittance compared to the largesse shown to the financial sector. Apples and oranges, perhaps, but it’s still illustrative to compare the two situations.
I’d also like to note an interesting regional divide developing: the Big Three and its affiliates are concentrated in the upper Midwest, highly unionized, and still receive very high wages and benefits. Much (though not all) of the congressional opposition to this bailout comes from the South / Southeast, which is now home to numerous foreign car plants that are generally non-union shops with lower (but still pretty decent) wages and benefits.
Yeah, kinda like how it worked for United, Northwest, USAir and Delta?
South / Southeast, which is now home to numerous foreign car plants that are generally non-union shops with lower (but still pretty decent) wages and benefits.
$12hr is not “decent.” Yep, that’s what they pay to the line workers. At most. Benefits? Most of those people are temps. That means NO benefits. Oh, and they start at ~$9hr.
$9-12hr will NOT support our 74% consumer driven economy.
True, that is the only way this country could rise up from it’s knees; by beginning to produce something of value.
We already produce stuff of value. But we need to throw aside the shackles of the FIRE sector and of overbearing gubmint regulation (such as the green sh!t the D-rats want to impose as part of the auto industry bailout) in order to produce more stuff of value.
No tears were shed in NYC and Washington financial circles when fly over country jobs were shed in the 80’s 90’s and 00’s; now as the final curtain on their masterful global finance and mfg oversight is about to plaster us all to the bottom, they wring their hands and mouth words like fairness and sacrifice while they shake their fingers at the few last vestiges of unionism for being greedy. Pack of useless eaters. They deserve the worst to come.
What do you mean “the TARP did fail”? It didn’t fail - it did exactly what it was intended - keep the big banks out of bankruptcy - i.e. line their pockets. It was never intended to prop up the stock markets - that was all lip service by the media.
Here’s a great article regarding Jim Rogers’ recent views on the banks. IMO he’s right on on this one:
http://www.reuters.com/article/InvestmentOutlook09/idUSTRE4BA5CO20081211
(I think when he uses the term “bankrupt” in the second paragraph, he’s referring mainly to moral bankruptcy)
I was referring to passing the first time around.
What is outrageous economically and is outrageous morally is that normally in times like this, people who are competent and who saw it coming and who kept their powder dry go and take over the assets from the incompetent,” he said. “What’s happening this time is that the government is taking the assets from the competent people and giving them to the incompetent people and saying, now you can compete with the competent people. It is horrible economics.”
This says it all.
That’s the because the incompetants are “too big to fail.” I was very young when AT&T was broken up, but I’m pretty sure they weren’t as big as Newscorpse or Citipoop. Where’s Teddy Trust-bustin’ Roosevelt when we need him?
The value of capitalism disappears when oligopolies emerge. No competition, and control of the markets via price manipulation and government intervention.
I fully agree with Jim Rogers, unfortunately it is exactly the same in ’socialist’ Europe: the big companies that are ‘in touch’ with politics will survive, no matter how inefficient they are and no matter if there is real demand for their products or services. And even if these companies finally are allowed to go under, their managers will escape with golden parachutes.
Many small companies that did well without help from politics and easy finance will go under in the next years, due to increased competition from the bad guys who will get even more easy money.
““What’s happening this time is that the government is taking the assets from the competent people and giving them to the incompetent people and saying, now you can compete with the competent people. It is horrible economics.””
Great quote. Going into my next round of poison pen letters to the powers that be.
The problem is that this $14 billion would/will only be the beginning of tax dollars for these industries. Once they got their hooks in to the taxpayer, they would be able to extract countless billions each year to remain uncompetitive and to produce inferior products. No politician would be able to walk away from the intitial $14 B ‘investment’, so they would continue to vote more money with the promise of changes in the future.
AIG is a good example of what the auto companies would become if they were allowed to feed at the federal trough.
The poor banks!
My thoughts exactly. AIG can follow a business model that is ” give me your money and we will protect you”, then when they need to pay up, they run like screaming girls to the US Government to bail them out. Unforntunately our congressman and senators oblige them and give them billions of dollars. This is hapening at the same time that they are rewarding their staff with US Taxpayer dollars for screwing up with “retention bonuses”. Excuse me, but exactly why do we need to retain them? I understand that US taxpayers now own 80% of the company… AIG can do as they please, just don’t do it with our Federal $.
But, alas, this this a housing blog and I would be remiss if I did not comment on such.
Don’t expect your offer of 50 cents on the dollar to be accepted. Banks don’t care. The deals will go to insiders, since you are not an insider, you will not be able to purchase on the half off sale…
Evaluate you wants and needs to buy. Best place if you decide it is in your best interest to buy is with the sellers that are parting with their property due to divorce, owning two homes, or relocation and they want to preserve their credit rating or must meet other needs (ie job requires good credit or no bankruptcies).
Hope this helps…
In interest of full disclosure, I have bought four houses since 1987 and have sold three. I have a made alittle on some, and lost alittle on some…. no home runs, no strike outs…
Trapper
Remember the $700 billion bailout vote? It failed to pass the House at first. Then it passed in a modified version, which was no less a ripoff of taxpayers. Same thing will happen about the Auto bailout. It will pass in a modified form. Over 60% of Congress will probably vote for another taxpayer bailout - this time of the auto companies.
Then in June there will be another big bailout of the auto companies.
The bailouts are going to bring America down. We know that.
It’s a phase that begins with the typical American - deep in debt, spending out of control, ending up with robbing the responsible savers to socialize the effects of J6P’s irresponsibility and incompetence.
The Atlas Shrugged part of this is lots of people parking their money in cash or even assets that will recover in value someday without taking any capital gain profit. I’m doing my best to cut my adjusted gross income. I’m not working any overtime anyway. This is my own personal war against the non-savers.
Plus, I didn’t hear the congress or Senate insist that all of the bank management and higher paid employees take mandatory pay cuts in order to be saved.
They hinted about golden parachutes, but that was the only protection against mismanagement of taxpayer funds.
Two completely different attitudes towards two very similar groups of inept beggars.
EU credit crunch update:
EU labor costs for the third quarter are up 4.0%, the biggest rise since Eurostat started tracking this number in 1997. No surprise, as labor union demands all over Europe have been outrageous lately, far outstripping official inflation.
It is interesting that Europe is following a different path up to now than the US (+UK), mortgage rates are declining, lending is still as loose as ever (except at the bottom of the pyramid), wages are up strongly so people who have a job should have far more purchasing power next year. If the housing market cannot show another price surge in these conditions that spells serious trouble ahead …
Of course, sooner or later the kleptocrats are going to take their share of the expected increase in real incomes. In my country some groups like people on fixed income, small business owners with lower incomes and probably also people in the lowest wage scales will see their real income decline strongly; but I’m not sure how that works out in other EU contries.
as a result, expectations for a new ECB ratecut are dimished, but I doubt if the ECB really cares about surging wages. Their ‘hawkish stance’ has proved to be little more than a smokescreen lately.
nhz, I was in Europe for a couple of weeks in November. Just got back at the beginning of Dec. I have to say that you seem the exception among your countrymen in the Netherlands. It was interesting for me how the economy wasn’t even a topic of conversation for most folks I talked to. In the US, people are very stressed, worried about losing their jobs/health care/etc., but in the Netherlands, Spain, Germany, people weren’t. It wouldn’t have been mentioned if I hadn’t brought it up.
I knew a little about the situation there (from reading your posts), and tried to talk a little about the housing market or economy, but people didn’t want to be bothered. Most seemed unaware that anything unusual was going on. When questioned, they attributed this lack of concern to the safety net - losing your job doesn’t mean you lose your health care as it does in the states, and unemployment benefits are more generous than in the states. One friend said that if he did lose his job, yeah he’d have to cut back a bit, but it wouldn’t really be a big deal. In the states, however, people are scared that getting laid off will mean they will be living under an overpass soon after.
While this is hardly positive, I have to say I’ve been surprised at the amount of economic literacy I’ve witnessed among Americans when discussing economics of late…
spot on observation, most people here are still partying to the band on the Titanic; check the article below, same story (no, most of it is not about cars …)
http://www.timesonline.co.uk/tol/driving/jeremy_clarkson/article5292547.ece
Yes, I think the safety net makes a difference; most people here cannot go bankrupt because of health problems etc. as can happen in the US. Especially those who work for the government ‘know’ that the government will always be there, you get a pay raise every year even if you hardly work and even if you are no longer needed they will ‘arrange something’. Same for the home: if everything goes wrong there is the National Mortgage Insurance that will pay off your debt, so why worry?
However, reality is a bit harder and the safety net is quickly getting thinner with huge holes in the fabric. e.g. unemployment benefits in Netherlands are quickly being downscaled (of course, they were far to generous). But most people will find about these changes when it is too late. I think Americans are often clueless when it comes to history and geography; just the same, most Europeans are clueless when it comes to basic economics (I have lots of well educated family members who don’t understand one bit of economics or market action: they have been telling me I was crazy for years, but they are getting pretty silent now).
Madoff, 70, head of Bernard L. Madoff Investment Securities LLC, was arrested today at 8:30 a.m. by the FBI and appeared before U.S. Magistrate Judge Douglas Eaton in Manhattan federal court. Charged in a criminal complaint with a single count of securities fraud, he was released on $10 million bond guaranteed by his wife and secured by his apartment. Madoff, wearing a white-striped shirt, dark-colored pants and no tie, looked down as he left the courtroom with his wife, declining to comment.
Madoff Charged in $50 Billion Fraud at Advisory Firm…
“It’s all just one big lie,” Madoff told his employees on Dec. 10, according to the government. The firm, Madoff allegedly said to them, is “basically, a giant Ponzi scheme.”
Madoff faces as much as 20 years in prison and a $5 million fine if convicted. His New York-based firm was the 23rd largest market maker on Nasdaq in October, handling a daily average of about 50 million shares a day, exchange data show. It specialized in handling orders from online brokers in some of the largest U.S. companies, including General Electric Co. and Citigroup Inc.
‘One of The Pioneers’
“He’s one of the pioneers of modern Wall Street,”
http://www.bloomberg.com/apps/news?pid=20601103&sid=a91j6qGRfE3k&refer=us
That is it in the nutshell: Wall Street=Ponzi scheme,
I understand that lots of hedge funds lost money.
Ponzi schemes losing money on Ponzi schemes? Ponzi-squared.
You don’t want to know about the CDS-squared and CDS-cubes then.
What would that be? Ponzi-to-the-fourth-power?
I already know. Unbelievable.
5 million fine for his part in a 50 billion fraud ???
5 billion fine seems more appropriate for a start …
pauperize him.
put him out on the street with nothing but a pair of pants and the shirt on his back.
And no head.
That’s what many countries would do.
put him on the street with nothing but a pair of pants and a lynch mob on his back.
The last thing this guy tried to do before the Feds took him away was pay the BONUS! Despite plundering his clients he felt bad about not paying his employees a BONUS!. It’s truly indicative of the mindset on Wall Street. It’s all about the BONUS! Buy and Sell like your bonus depended on it. Booyah!
I suppose I should be grateful that there’re finally some efforts at prosecuting the rampant fraud of the past few years. However, using Enron as a guide, it always seems those that are harmed suffer much more than any that are eventually prosecuted.
Would there be any prosecutions at all if our financial system wasn’t collapsing around us?
Look like someone Made-off with a lot of $$.
(Someone has to fill in for alad while he’s gone.)
“He’s one of the pioneers of modern Wall Street,” “It’s all just one big lie,” Madoff told his employees on Dec. 10, according to the government. The firm, Madoff allegedly said to them, is “basically, a giant Ponzi scheme.”
bail him out
“It’s all just one big lie,” Madoff told his employees on Dec. 10, according to the government. The firm, Madoff allegedly said to them, is “basically, a giant Ponzi scheme.”
This is so absurd I actually laughed out loud. I think this is the icing on the cake, as far as this meltdown goes. This SOB should be stripped of every penny he has, and thrown in a cold damp cell for the rest of his short life. $5M fine for $50B? Where do I sign up?! (Not really, because I have a conscience and a moral compass)
Instead of giving billions to the car manufactures, why don’t they give 5 or 10 grand to the end user. More people would buy and the profits could “trickle up” to the big three.
My sister’s husband designs car parts for GM. Should be a fun sit around the Christmas table.
I assume you were being sarcastic. We need to let everyone that messed up fail and save any government assistance money only for essential targeted efforts. I am not really seeing the auto bailout as essential. That said, it’s just like TARP. They are just hoping to get more unrelated and unnecessary concessions that they feel are in their best insterests (as opposed to the Country’s) before they will sign. It’s not that they are opposed to bailouts per se, it’s more that they are trying to use this to their own advantage at the expense of our Nation.
“Instead of giving billions to the car manufactures, why don’t they give 5 or 10 grand to the end user. More people would buy and the profits could “trickle up” to the big three.”
I believe this is the only solution. Add a zero to the last rebate of $600 and there’s a start to restarting the economy. And keep on sending out additional $6000 checks until it gets the nominal GDP rising 3% again. Obviously, long term interest rates will eventually skyrocket, but what is the alternative? Eventually the other fiat countries will follow suit, and since everything is relative, should benefit commodities and cause hyperinflation for a few years, which can be dealt with down the road (think Volker). It’s more fair than reducing mortgage balances (which doesn’t help renters) of the FBs, or giving money to banks via TARP. Let all insolvent entities enter bankruptcy and sell carcasses at auction to highest bidder so that the idiot managements are all swept out.
The sooner we do this the quicker we can get back to some sort of productive activity.
PortlandHomedebtor
My guess is this will hapen at some point. I find it hard to believe that we can get inflation by flooding banks with cash. When the customer gets a cash infusion and starts to understand that if he doesn’t spend that cash it’s value will shrink that’s when things will start to turn.
“Instead of giving billions to the car manufactures, why don’t they give 5 or 10 grand to the end user. More people would buy and the profits could “trickle up” to the big three.”
This law is allready in place now. There is both a tax credit and a tax deduction for buying a hybrid. And yes the law is written in a way that benefits the big 3 more than Toyota and Honda.
The tax credit on Hybrids is for people that can’t do math; the non-hybrid equivalents are almost always cheaper to own when you figure in the higher price and depreciation. For example, a $30000 car that holds 60% value after 5 years costs you the same as a $24000 car that holds 50% of its value, and thats if you pay cash or get 0%; the numbers are worse if you finance at interest.
Myself and many others have been burning our ‘lawmakers’ ears off regarding all these damn bailouts, at least Jim DeMint has been 100% consistent from the very beginning. He has voted NO from the start, he actually knew who Andrew Mellon was.
GOP Senator Warns of ‘Riots’ if Automakers Are Bailed Out
Sen. Jim DeMint says unfair union influence and the bailout culture will anger many Americans.
In an interview following a Dec. 10 press conference where he and four other senators aired their opposition to the proposed bailout deal struck by congressional leaders and the White House (and approved by the U.S. House of Representatives 237-170 that evening), Sen. Jim DeMint, R-S.C., warned that the perception that some industries are being bailed out and some aren’t could lead to violence.
“We’re going to have riots. There are already people rioting because they’re losing their jobs when everybody else is being bailed out. The fairness of it becomes more and more evident as we go along. The auto companies may be hurting,” he said, but “there are very few companies that aren’t hurting and they’re going to hurt. We don’t have enough money to bail everyone out.”
http://www.businessandmedia.org/articles/2008/20081211131911.aspx
This was a way to make the UAW scape goats. Its all a smoke screen.
Even at $100/hr, the 21 hours needed to build a Cadillac Escalade only amounted to $2.1k out of a sticker price of $50k. A sales tax holiday on autos would be a more effective way of reducing the price.
Even $2.1k off of a $17k Ford Fusion isn’t exactly going to save the Ford Motor Company.
The new starting wage at the big 3 is now $12/hr.
In the mean time - more bonuses for AIG management!!!
BINGO
Goebles is alive and well at the AEI and on the floor of Congress.
I should state that I’m all for a structured bankruptcy, wages are only one part of the problem though. The big 3 wasted money on CEO’s, dividends, and lobbying. They pissed off a lot of their customer base crushing electric cars and reneging on building hybrids after taking gov money. I want to see management in the unemployement line.
I guess job banks is a sustainable business model? makes the big three totally inflexible in a market that has to remain flexible, in order to survive. BTW, the UAW has not denied that non-working union members get paid 95% of their wages. They also did not agree to give up the job banks, only postpone them. Big difference, give them up and they’re gone for good, postpone and they must be negotiated away at a later date. I’ve negotiated contracts for a 1200 member union, so I know union strategies.
Paying retiree medical is no longer a sustainable business model either, but I didn’t hear any proposals to eliminate it.
GM has eliminated retiree medical for Management starting Jan 1st. Eliminating it for UAW retirees would save more money than the 2,000 people in the jobs bank.
I’m sure the UAW retirees are too old to grab torches and pitchforks and march to DC anyhow.
Another question that’s never asked is at what age are UAW workers eligible to retire? what % of their former salary? are medical benefits reduced to a supplement when in medicare age? are there COLAS? Unions will do everything possible to protect their pensions, Reason? it’s the main reason they took the job to begin with. They will also protect their senior members, at all cost, because most of the union reps are senior people. That’s how they get elected. Other than some police unions, I have never seen a stronger union than the UAW and I don’t mean that in a good way.
The AMA is much stronger than the Teamsters.
UAW - U Ain’t Workin
In the auto industry, the factories shut down once a year for retooling. The shut down varies with each year and mfg. but is at least 1-2 months
How many people will put up with being out of work for that long of time every year? How many people can AFFORD to be out work for that long every year? Would you rather they collect unemployment? (and granted, those who cannot participate in job banks, do)
They are NOT the only industry who does this.
Retooling is 2 weeks, not 2 months.
Workers are eligible for unemployment during this period.
Teachers are out of work for 3 months EVERY year.
That’s what I was going to say, Cassandra.
Do what the teachers do. Take the 10 month (or whatever time they are working) pay, and divide it over 12 months. Voila! Problem fixed!
To Paul, my apologies. I reread our exchange from last night. You’re correct, the time take defensive action for w00ters is now.
To GS/PB:
RE: Last post in bits last night.
You summed it up nicely. Sure its the end of the postwar paradigm, and sure these are uncertain and even scary times. But let’s face it, a lot of parties with power in the postwar era have grown stale.
This week alone we’ve several examples of why it is a good that change is inevitable. Bring in new ideas, bring in new blood, bring in new investment - the postwar era is dead.
I will feel much better if the NAR goes under as a consequence of the current episode.
That will be up to the likes of you and me.
FSBO
It probably was dead in the 90s when fantasy was accepted as reality, i.e., those insane valuations of dot coms.
Yes, but not many folks knew it was dead. It’s different this time.
That’s true. The new zeitgeist is “What’s going to happen?” Now history will start to make itself.
If the White House was prepared to do this anyways, why even bother putting up with a vote in Congress?? Just be done with it already.
http://money.cnn.com/2008/12/11/news/companies/whitehouse_warning/index.htm?postversion=2008121123
After getting some caffeine the chicanery is becoming a little clearer.
Those senators and the decider have cut a back door deal whereby the decider makes the move that would otherwise outrage his party’s base.
Those senators have to think about 2010 and 2012, the decider is headed for retirement and already has a reputation that everyone in his party wants to forget.
Dec. 12 (Bloomberg) — For General Motors Corp., the question is no longer whether it will get a government loan or if Chief Executive Officer Rick Wagoner will be replaced. It’s whether anything can prevent the largest U.S. automaker from sliding into bankruptcy.
Each day brings more bad news. Last night, the Senate rejected the government bailout plan. On Dec. 10, GM’s 49 percent-owned affiliate, GMAC LLC, said it didn’t have enough capital to become a bank holding company. That means it won’t be able to access the Treasury Department’s $700 billion rescue fund and get the money needed to finance auto loans to help sell cars.
GMAC may now have to file for Chapter 11 protection, with or without a loan, joining GM’s biggest parts supplier, Delphi Corp., which is already in bankruptcy. The Detroit-based automaker, leaking $67 million a day — enough to buy a fleet of 1,800 Cadillac CTS coupes — may soon be sucked into the vortex.
“GM already is bankrupt and should file for bankruptcy,” said David Littman,
http://www.bloomberg.com/apps/news?pid=20601110&sid=ai5KpbywxqiQ
GMAC deserves to die, if only because of its role in the worldwide housing bubble (even in my country they were one of the worst debt pushers).
GMAC is 51% owned by Cerebus. Cerebus has billions of dollars sitting on the sidelines looking for opportunities.
Why didn’t they just let GMAC hold a few billion? You know, enough to qualify as a bank holding company.
Because last night Chrysler VP Jim Press let something slip that I’m amazed nobody else in the media has picked up on, including Larry Kudlow, who he said it to. The following is almost word for word, I believe:
“It would be irresponsible for Cerberus to ask it’s investors to put any more money into Chrysler.”
These guys aren’t putting in another penny, but then why is it ok to fork over taxpayer dollars in???
Cerberus is the 3-headed dog which guards the gates of hades to prevent the dead from escaping. If the modern Cerberus owns parts of GM and Chrysler, all they need is another “head” i.e. Ford to prevent the UAW escapees from escaping from the hell of Detroit.
I think your question might show how little faith they have in GMAC.
As the not so proud owner of a POS 2005 GMC Sierra purchased new, I think it’s best if GMC just goes bankrupt. What’s really haunting them is that they built garbage. They know it, which is why they delivered a public apology to their customers. They advertised “Like a Rock”, and “We Are Professional Grade”, and delivered some of the most poorly engineered and constructed vehicles ever seen. I have no way of calculating, but I’ve got to believe that the warranty work for which they pay dealers is eating them alive. My truck, when the failing transmission is repaired, will have easily seen $10k in work. Multiply that by god knows how many people and the figures could be mind numbing.
World currencies should be devalued overnight. (?)
(Terrible idea floated by Forbes magazine.)
“It can be done on a country-by-country basis, but a coordinated devaluation would work best. A devaluation of 30% would raise the dollar value of all assets by 43%. A $200,000 home with a $230,000 mortgage would become a $286,000 home with the same mortgage. Presto! The homeowner who was $30,000 upside-down now has $56,000 equity and a good reason to make his payments. Both the homeowner and the bank are immediately better-off.”
(Antique notion. An illusion. Fraudulent and totally unfair to creditors. FDR devalued the dollar sharply in 1934 by 41 percent and the nation was still languishing economically five years later.
http://www.forbes.com/finance/2008/12/09/dollar-devaluation-gold-pf-ii-in_fb_1209soapbox_inl.html
Devalue against what?
If everyone devalues 10%, you still have the same relation between currencies and all real goods become 10% more expensive. Solves nothing.
You’re gonna get the ol’ “competitive devaluation” (= beggar-thy-neighbor) going soon. It’s gonna be entertaining.
BTW, I forgot to mention that a serious amount of derivatives (= insurance) have been written against exactly this kinda behavior.
So when they do something like that, the other side is gonna go kaboom, and they are going to have to bail them out.
No easy way out of this one.
I bet he actually wants to devalue savings, kick the War on Savers a few gears higher. Sounds like the Argentina solution: introduce a New Dollar, convert all debts to the new currency taking the devaluation into account (good for the banks), while savings on bank accounts and under the mattress remain in the old dollar currency (that should teach those stupid savers a lesson). I guess the author has already positioned himself accordingly.
Devalue savings against what, kimosabe?
I guess a devaluation of cash against some hard(er) assets like food, gold and foreign currencies. Again, check what they did in Argentina, although I’m not sure if this is what the Forbes article is suggesting.
Against which foreign currency?
Euro? Don’t make me laugh!
BRIC? They’re too busy devaluing their own.
Argentina devalued against the USD and EUR. What will the USD devalue against?
It’s not as easy as the “print money” crowd thinks.
Making it harder for households to pay the mortgage so even more walk away?
Bzzzzzzzt… wrong answer, try again!
yes, I think they have to do something about the walk away problem first. Is that inconceivable?
Yes.
I think you just need to fly coast to coast over the US in daylight with clear weather once and look down.
That’s all. It’s really quite easy.
Ie. inflation. Everyone’s wealth goes down by 30%, 30% of debts are wiped away, wages fall 30%, pension obligations fall as well. Universal deleveraging.
One of the two ways out. I think we will see it, but as an unplanned outcome rather than a planned option.
The winners? Social security, certain public employee wages and pensions, are adjusted for inflation.
Doesn’t work.
A huge amount of derivatives have been written against them doing exactly that.
So when they do it, the other side will go kablooie, and then they will need to bail them out.
makes me think … how much additional money does AIG need if the big three go bankrupt? Probably a lot more than 15 billion?
Buddy, it’s not just AIG.
Everyone and their sister’s pension fund got in on underwriting this mess.
Coming soon to a European pension fund near you.
I’m self employed and I have already written off my private pension; so I don’t really care what happens to the EU pension funds. In fact I think I might be better off if they all go bankrupt, otherwise I am in a very disadvantages position relative to all those gov workers.
Most of the big Dutch pension funds are not indexing next year; as wages are rising quickly this means pensioners will get hit hard (especially if this continues for a few more years). Our government just increased taxes on all pensions this year, so it is going to be a double whammy for pensioners.
Gee, my wealth has already gone down by 30%. I shudder to think of the pot shrinking by yet another third.
Not sure about other public employees, but federal employee wages are not indexed to price inflation. The yearly increases are supposed to bring us closer to private wages. This is very imperfect because of the level and grade system that puts lots of people who do very, very different work in the same pay bands, but the main point holds - no adjustments for price inflation at all, only wage inflation and for that, always a year or two behind the private sector. Also, the adjustment that is calculated by OPM or OMB or whoever does it, is never implemented - it is always lowered to about a third or even a quarter of what the real adjustment would be. That is why there is an adjustment every year. They never let it catch up to the real number.
Retiree penstions are adjusted for price inflation, but that is the old version of pensions. The adjustments for the new system are related to prices, but are much less robust than the adjustments on the old system. People around here call it COLA-lite. Of course, there are many, many more retirees on the old system since the new one started in 1986 or thereabouts.
Very few public employee pensions are adjusted for inflation. OTOH, the federal gov’t pensions may be and not one word about the UAW pensions. If they are, that would explain the huge legacy costs. Full COLAS or cost of living adjustments are extremely expensive.
In NY State, they are partially indexed for inflation.
Worse, there is a guaranteed minimum 1% inflation adjustment every year no matter what — even in the case of deflation.
I don’t know what NYS pension are you’re refering to. The largest has a cola adj. of 0% to 3% on the first $18,000. It’s a couple of hundred dollars a yr. I have never heard of a 1% adj. no-matter what, for pensions that are more than $18,000/yr.. There is a COLA adj. of +/- 3% after age 62 on a fairly small group hired between 1979 and 1982.There are NYC pension systems ( police, fire, teachers etc.) I know a little about city pensions, but again, never heard of the 1%.
How would they devalue the currency?
Aren’t you talking about printing more cash. I agree with the premise that at some point they are going to rain cash down on Americans in order to get the ship moving. Handing it off to banks won’t fix the problem. Spending based on euphoria isn’t coming back, now we must have spending based on fear of inflation.
At the risk of getting buried in the avalanche of comments regarding the markets today, a question for the more experienced traders and investors among us…
I’ve been trading actively with my speculative account for 5 years, ‘05-’08. In each of those years I have roughly doubled my percentage gain. Each year end I reset my capital to the base amount by skimming off the cream and putting it somewhere much safer. This year the amount to be skimmed is more than the base figure.
In light of “Reminiscences of a Stock Operator”, can I reasonably expect to continue these outsize gains, or am I just benefiting from being a bear in a bear market? Additionally, given my situation outlined, what actions would you take going forward assuming 40 YOA and stable day job in bioengineering?
Thanks much, I’m in the reflective mood today.
Oh, and OG, I know that the real answer is to harrumph through the forest picking mushrooms and licking toads. Let me assure you that is high on my list of possibilities, LOL!
Event-driven stuff rarely lasts.
I think most of the bears here are having record/near-record years. I have doubts that this benign state persists. It never has in the past.
OK, I understand that, so if you were me would you just go forward working the plan? Believe me, I’ll be content with a 24% year, just not as content as I am with a 124% year.
Post-bubble economics will work differently than your glory years.
I doubt even the baseline benign situation persists but that’s just my opinion.
Dude,
Sounds like you already have a reasonable plan in place. Me personally, my goal is to quit being a desk jockey, but if you’re happy with what you’re doing, continue on.
Re: 24 vs. 124, as I mentioned the other day to someone, there’s a rate of return called “good enough” that should not be ignored either.
“Any profit is a good profit, don’t look back”
from my father who weathered the depression.
Which is why the taxation comments always get me.
I always say, “My goal in life is to maximize my taxes under the current taxation.”, and most of the audience goes, “Huh?”
People never think these things through.
Agree 100%, FPSS.
I LOVE paying taxes. It means I’ve made money.
And also agree about this being a particularly good year for the bears.
After four years of being a short-seller, I closed all my positions (long and short) in mid-October. The easy stuff is over, IMHO. From here on out, I think a lot of traders (long and short) will get their legs ripped off.
When Bill Fleckenstein closed up shop, I knew I was in good company.
“Event-driven stuff rarely lasts.”
That was my first thought as well. I’ve done well also (up about 50% this year), but certainly don’t expect it to last.
That being said - we’re in for a lot more years to come of “event-driven stuff”. It’ll just be a lot harder to predict the events, than it was with the popping of the housing bubble.
So no dude - I wouldn’t expect to continue the outsized gains. You might though, if you pick the right event to base your future investments on
E.g. one might be tempted to think hyperinflation is coming, and buy heavy into PM’s and/or other commodities or something crazy like that ;). If we continue in a deflationary state though you’re screwed.
I hate comments like this.
It was always hard to predict them. And if you didn’t have a sleepless night or two with your bets, maybe you’re not betting enough.
It’s ALWAYS hard. There was never a time in history that it was easy.
I think there were very little bears left after last summer, many of them lost huge amounts of money betting against the market (buying put options etc.) in the previous years.
Believe it or not, I was shorting all the housing-related sectors starting in late 2004, and actually made money on most of my trades…eventually.
Lots of gut-wrenching moves and “unrealized” losses for a while, but it worked.
Like FPSS said, though, there were sleepless nights and a lot of wondering if I was all wrong about everything.
It was NOT easy.
‘Oh, and OG, I know that the real answer is to harrumph through the forest picking mushrooms and licking toads. Let me assure you that is high on my list of possibilities, LOL!’
Glad to see that you’ve retained valid priorities, good sir.
Dude, you’ve hit on a really important theme here: reducing visibility.
Two years ago, we all had a strong opinion of how things were going to play out with the bust, and our opinion was very definitely in the minority.
Now, our opinion about the state of affairs two years down the road is relatively grim (ranging from severe recession to stock-the-bunker). But what is new is that our opinion is becoming more and more mainstream.
Two years from now, will I be confident that I can see the future better than the market? I have my doubts.
Make hay while hay is in the fields!
Thanks to all for the responses. I’m sure I’m not alone in feeling that on issues such as these there really isn’t anyone in the “real world” that can give feedback.
The great majority of the people I talk to on a daily basis go blank when I say “short”, even the short ones!
Her Majesty Queen Elizabeth II this month asked a simple but fundamental question posed by many millions of Americans and people around the world. Visiting the London School of Economics, the queen asked why it was, if the looming economic crisis was so large, that no one saw it coming.
Forsooth, your Highness! Lots of people warned of the trouble that would result from creating so many monumental debt balloons, but their voices were smothered by the general excitement that came from creating money from thin air and calling it “wealth.” The detestable Mogambo Guru, for instance, has been shrieking at the top of his lungs about all this for years.
To Queen Elizabeth’s question the Guru reponds, “Hey, Queenie! I saw it coming, and everybody who is even passingly familiar with the Austrian school of economics saw it coming, and everybody with any familiarity with math or history saw it coming, too, and in fact the only people who did NOT see it coming were lowlife poseurs like these London School of Economics halfwits and most university professors of economics around the world, all of whom share an economic theory made of some bizarre mishmash of unbounded equations based on neo-Keynesian gibberish!”
She’d stop listening as soon as she heard him say, “Hey, Queenie!”.
One observation I’ve made over the years is that that when someone begins a statement with, “Listen, you stupid so and so-” the person that they’re addressing stops listening to everything after the word stupid.
Listen, you stupid so-and-so, doesn’t any sense make you everything sayin’ are wobbly listening stop don’t read will not googly woogly.
You would thing someone who’s PICTURE is on the MONEY would have seen it coming! She’s looking out at you from every pound!
“…the queen asked why it was, if the looming economic crisis was so large, that no one saw it coming.”
Awesome question! Hail to the Queen!!!
” if the looming economic crisis was so large, that no one saw it coming. ”
Of course the proper answer would be something to the effect of, “Well your majesty, we were a might bit too busy creating this mess to be able to see it.”
“Would your majesty like some TUMS?”
UAW won’t budge, and automaker bailout bill is stillborn overnight…
And in related news this morning, The M&M/Mars Company shelved plans to launch its new Gettelfinger candy bar citing uncertain market conditions…
Gettelfinger must have armed guards. He’d have been dead long ago if he didn’t.
He’s just a politician. That’s all union officials are. Pander for votes at the next election.
What’s that have to do with the topic? Gettelfinger is management posing as a labor leader.
Just hope he has different bodyguard than Hoffa had
On a related note, the M&M Mars Company announced this morning they are cancelling plans for their new “Gettelfinger” candy bar due to unfavorable market conditions…
Looking like a lengthy recession will be the least of our problems. Four more houses entered foreclosure this month in my Arizona neighborhood, and I watched this past week at around 10 pm as neighbors down below my house finished loading a Penske cargo truck before they vanished into the night, and I bet they are jingle mailers in the season of jingle, jingle, ho, ho, ho. I count my blessings I’m not employed in housing, small retail, or the auto industry and ancillary businesses that feed them. Maybe a good idea to have skills that make you employable to big federal infrastructure project HR managers?
New paradigm: shredding your unopened 401K/investment mailing and making sure the Prozac script is refilled on time.
That’s pretty funny Ria.
A thought regarding the auto makers’ plight.
Here’s a graph showing auto sales figures over the long term.
http://research.stlouisfed.org/fred2/series/ALTSALES
Note that auto sales didn’t really significantly start to weaken until January of this year .
What kind of incompetent companies go into bankruptcy just one year after a downturn in sales? And it’s not like sales went away - they’re only down by 1/3.
It’s called “cash reserves”. Look into it.
Sorry, but IMO the big three need to just go away, and be replaced by new auto companies. Yes there will be pain in the short term, but we’ll be better off for it. It’s not like there aren’t other alternatives already (Toyota etc) - both for jobs and for consumers. We’ll still be able to drive - trust me.
Their sales were tied to home equity money. There was a “CNW Marketing Research” survey (google it) that showed that 30% of new cars in 2007 were purchased with Home Equity funny-money.
Now sales are down by 1/3! It’s really that simple.
And it shows something else…people were buying cars they didn’t really need to have.
Giving them a few billion couldn’t possibly save them. They need to figure out how to run with, say 50% fewer sales.
It’s not like the bailout is guaranteed to save them. In fact, it’s all but guaranteed to be flushing money down the toilet. You can be opposed to be bailout and still want to save the US car industry; it just needs to be done by different means.
“It’s called “cash reserves”. Look into it.”
The biggest problem in our economy is that everyone moved from a “cash reserves” basis to a “debt reserves” basis.
The biggest structural change in our economy of the next few years of this de-leveraging evernt is that everyone will have to change back.
Switching from cash to debt: easy. Switching from debt to cash: hard and painful.
Avoiding the ride? Priceless.
Agree with all except “priceless”. This will definitely come at a big price
But they told me debt was weath!!!!
/sarcasm
wealth, not weath.
$17B Madoff hedge fund collapses on the same day that the $14B automaker bill is stillborn.
So, can you imagine the irony if the Treasury kicks in $17B of TARP funds to “make whole” the losers in the Madoff collapse? I”m not saying it’s going to happen, but if it does can you imagine the public’s reaction?
Good timing — now we get to see a double financial tsunami generated from separate sources. It should be most interesting…perhaps Professor Bernanke’s laboratory can conduct an analysis of the wave propagation.
“Good timing — now we get to see a double financial tsunami generated from separate sources. It should be most interesting…perhaps Professor Bernanke’s laboratory can conduct an analysis of the wave propagation.”
Unconfirmed reports indicate the following preliminary analysis:
“Economically speaking, we have one dead pooch; screwed, blued, and tattooed”.
It’s all contained, mon. Here smoke some ganja.
It’s called quantitative easing, mon.
But it _is_ contained, FPSS: to the bloody globe, that is.
One of my favorite memories of my HBB re-education campaign is way back in Sept ‘06, when I tried to explain it to a good friend of mine. When I got to the part where the housing bubble burst, and the related recession would be global in scope, he burst in with “now I KNOW you’re crazy.”
Nothing to see here, folks. It’s all contained. Move along.
Well, I hope you dropped by in your favorite Ferrari with a bottle of wine (or three) and asked him about the performance of his stock portfolio/401(k)/pension plan.
This country will never progress until people learn how to rub it in properly.
With all the attention today focused on the auto makers and such, another question, how does one make money from the anticipated default of states? Is there a municipal bond market short etf?
You’ll bleed to death before they default. You’ll have to pay the interest on those suckers while you short them.
Not recommended.
Then again, if he wants to make 124% a year, he’ll need to do SOMETHING crazy…
It’s not “wants to make”, it’s “did make”. Nothing crazy, just shorting banks and such…
Some are buying CDSs on municipal debt.
Yep, they’re still at it.
(not me, though I’ve long wanted to short municipal bonds)
Goldman and others have started derivatives to allow bets against state and local governments.
However, if one goes, they all do, so even if you win you lose, as the counterparties will not be able to pay. That’s the beauty of derivatives — bet with nothing to back it up, bonus if you win, TARP if you lose.
Gosh, dude, you’re a bit ghoulish. I though great capitalists made money on innovation and ideas, not carrion feeding and grave dancing.
Have you been in a cave the last 30 years?
Plenty of innovation. Investing in investments that invest in other invests was the most innovative thing to come out of the 20th century!
Ooops, my bad. Madoff went my brain.
My day job is innovation and ideas, by night I’m a ghoul and dance on graves.
BWAAHHHAHHHAAAAAAAHHHHHAAAHAHHAHAAAAAAAAAAHA!!!
(How did I do FPSS?)
You rocked!
Thanks, it means a lot coming from the master.
WASHINGTON – Drivers clocked 9 billion fewer miles on the nation’s roads in October even while gas prices were dropping, suggesting a downturn in driving that began a year ago is attributable to more than just energy costs.
Federal Highway Administration data released Friday show the number of miles driven dropped 3.5 percent in October compared with the same month a year ago. Between November 2007, when the driving decline began, and October, Americans drove 100 billion fewer miles. That’s the largest continuous decline in driving the nation has experienced.
Gas prices averaged $3.15 a gallon in October, down from a high of $4.09 in July, according to the Energy Information Administration.
“The fact that the trend persists even as gas prices are dropping confirms that America’s travel habits are fundamentally changing,” Transportation Secretary Mary Peters said in a statement.
The data show the region it describes as the South Atlantic — a block of eight states and Washington, D.C. — experienced the biggest decline in October of any region, 5 percent fewer vehicle miles. Montana’s 8.4 percent driving decline was the largest of any state, followed by Utah with 7.4 percent, and South Carolina with 6.7 percent.
The highway administration collects the driving data from more than 4,000 automatic traffic recorders operated around-the-clock by state highway agencies.
While driving declined, subways, buses, commuter rail and light-rail systems have reported record increases in ridership. Amtrak, the nation’s intercity passenger railroad, said it carried the highest number of passengers and brought in the most revenue in fiscal 2008 in its 37-year history.
My gas mileage has gone up while my fuel consumption, commute time and carbon footprint have all decreased ever since the hoards of used home sales people and real estate infestors left the freeway a couple of years ago. The housing bust is a boon for global warming mitigation!
that may be, but I think in total the effect is less beneficial.
Europe slashed new legislation regarding CO2 pollution etc. yesterday, because the big polluters are under some stress as a result of the credit crunch and we don’t want to harm them, do we? In its current form the legislation is totally ineffective and there is no way Europe will meet its Kyoto obligations (unless of course the crunch gets so severe that most of the big polluters get permanently eradicated).
It is interesting to see how wrong projections about energy use prove to be. In the late 1980’s the IEA warned Netherlands that the lights would go out around 2000 if they didn’t install at least 100.000 megawatts of electricity power plants (mostly nuclear reactors, of course). Shortly after 2000 (with about 10.000 MW installed, and everything fine) the government warned that capacity had to double or the lights would go out (again), so they started building many big new power plants. We seem to be heading for a huge overcapacity if things continue on the present course …
I know I’ve posted this geeky link before, but this weeks analysis is right up your alley and post.
http://tonto.eia.doe.gov/oog/info/twip/twip.asp
My guess is the decrease is due to
#1 people have less money and economy is collapsing
#2 more people are starting to realize that the money we waste on oil goes to Saudi Arabia and then on to Taliban, Pakistan, Al Queda. It goes to Iran and then on to Hezbolah. It goes to Venezuela which undermines the US in S. America. It goes to Russia which undermines us around the globe. It was nice to see McCain on Letterman last night, off the campaign stump and still pointing out that US oil consumption supports our enemies.
On #1, seems like a lot of people I talked to last year were riding the bus because they couldn’t afford to fix their car, or they were saving up the money to do so.
Used to be people would ride the bus for a day and be back on the road…
yeah, i sold my v8 thunderbird because i got tired of $60 fillups and bought a used toyota with a 4 cylinder and i won’t go back to a v8. i used to get 17mpg and now get 29mpg…and i love that i now put in a $20 and i get change back. gas may stay low for a couple years but i won’t get stuck with $4@17mpg ever again. I want a new car but it must be a euro style car that gets close to 40mpg before i spend cash on a new car. i cut my driving becasue i hated paying $4, now i’m used to not driving as muce and even though gas is cheap i don’t drive more! i am thinking it is time for cheap road trips now though!!
Funny how these declines occur in bubblicious areas. First the realtors were out of work, then the subcontractors, then the homebuilders…
Mortgage workouts appear to be easier said than done.
My personal hunch is that eCONomy.com’s estimate of 10m foreclosures in the next five years will prove low through the lens of the rear view mirror, as the perceived seriousness of this recession is steadily increasing even as I type.
FDIC leader draws fire
Bair’s push for plan to help homeowners contributes to discord
By Charles Duhigg
NEW YORK TIMES NEWS SERVICE
December 12, 2008
…
More than any other administration official, Bair has publicly called for using billions of taxpayer dollars to finance the modification of loans threatened by default. But her advocacy has contributed to a battle that is pitting White House and Treasury officials against the FDIC and lawmakers in Congress. The discord has led to programs that have so far proven insufficient to stem a tide of foreclosures that Moody’s Economy.com expects will affect 10 million homeowners over the next five years. And it is drawing personal conflicts and animosities into the policymaking process.
…
behind the infighting, there is also the genuine difficulty of designing a policy that can quickly aid millions of homeowners at a reasonable cost. Bair unveiled a program to help the 65,000 borrowers who are more than two months delinquent on their mortgages at IndyMac, the giant failed bank taken over by her agency this summer. But so far, that program has benefited only 7,200 people. A spokesperson for IndyMac said that many of the overdue loans turned out to be ineligible for the program, and that some borrowers had not yet responded to the bank’s modification offers.
Other efforts have also stumbled. A $300 billion foreclosure prevention program passed by Congress this summer to help up to 400,000 homeowners wound up larded with requirements, such as requiring background checks and restricting eligibility for mortgage relief to people at risk of foreclosure as of March 1. As a result, fewer than 200 people have applied for the program since it opened in October, said officials from the Department of Housing and Urban Development, and no loans have been modified.
…
“such as requiring background checks… As a result, fewer than 200 people have applied”
Cheers to us boring law-abiders!
Maybe they should waive them background checks, given the current weakened state of the U.S. economy.
OK, so they’ll get another 200 qualified applicants. After that, what?
And 100 of those will (re)default.
“Maybe they should waive them background checks, given the current weakened state of the U.S. economy.”
Florida tried this as a state and it’s not working out so well. I’ve met some really nice felons and drug dealers though.
“I’ve met some really nice felons and drug dealers though.”
Were they members of the Ownership Society?
I doubt it.
The serious felons, etc. didn’t get where they were by being the “born and bred dopes” that is so much talked about over here.
This is no joke: when the Sheriff arrested a man for attempted murder at my last townhouse complex, he was yelling at everyone, “I own 3 condos in Miami! F— you guys!”
Freakin’ awesummmmmmmmm!!!
Got a link?
Yeah, I found it (gotta love the net). I’ll email it if you’d like; I’m completely paranoid about revealing my location on the net. I don’t live there any more, still…
cba DOT fed AT gmail.com
Or you can just post it here.
CBA FED PAC !???
OMG, puss. That’s either hysterically funny or HYSTERICALLY FUNNY.
I wish they’d waive the drug checks at Lowe’s and Home Depot so you could get somebody in there who knows something about construction.
“I wish they’d waive the drug checks at Lowe’s and Home Depot so you could get somebody in there who knows something about construction.”
LOL! Anyone like the band Primus? Here’s an appropriate song:
“Those Damned Blue Collar Tweakers”
I’ve seen them out at Soco
They’re pounding sixteen penny nails
The truckers on the interstate
Have been known to ride the rails
The sweat is beating on the brow
Can’t keep these fellas down
‘Cause those damned blue-collared tweekers
Are runnin’ this here town
I knew a man who hung drywall
He hung it mighty quick
A trip or two to the blue room
Would help him do the trick
His foreman would pat him on the back
Whenever he would come around
‘Cause these dammed blue-collar tweekers
Are beloved in this here town
Primus sucks!
Where did the money go if only 200 people got some help?
Lady, there was never any money in the till. It’s all posing until the hard questions are asked.
Show me the money, show me the money.
none of it will work because these people were in it for the profit…no profit no reason to stay. It was never about owning a home or the “american Dream”…it was about making a 100k or more in a year or two. only a principle reduction would get some to take the bait and i’m glad that has not happened so far…but it will be the last major place. cuts the home loan 30%….but then everyone will stop paying wanting in on the deal!! I love the fact people have one year(dec 2009) to walk so the loss to the bank will not count as income to the homedebtor…huge IRS tax avoidance bill! watch the forclosures accelerate into summer!
“I love the fact people have one year(dec 2009) to walk so the loss to the bank will not count as income to the homedebtor…huge IRS tax avoidance bill! watch the forclosures accelerate into summer!”
I wonder if the NODs drop off a cliff starting 9/09 with a drastic uptick 1/10, so the banks can “return the favor” (so to speak) to the FBs.
Perhaps W does not want this bailout failure to be among the last historical moments on his watch?
White House considers using TARP for auto bailout
By Rex Nutting
Last update: 9:16 a.m. EST Dec. 12, 2008
WASHINGTON (MarketWatch) — The Bush administration will consider its options to save the auto industry, including using the $700 billion funds under the Troubled Asset Relief Program, White House spokeswoman Dana Perino said Friday. “A precipitous collapse of this industry would have a severe impact on our economy, and it would be irresponsible to further weaken and destabilize our economy at this time,” she said.
“…That was the message Vice President Dick Cheney brought to a closed-door Senate GOP lunch Wednesday, reportedly warning that it’ll be “Herbert Hoover” time if aid to the industry was rejected, according to a senator familiar with the remarks.”
Remember when Cheney-Shrub were…”re-elected”…”I have political capital and I intend to spend it”
I haven’t seem a Cheney-Shrub bumper sticker in a long while. Maybe there is one on eBay?
http://news.yahoo.com/s/politico/20081212/pl_politico/16515
I remember
“Deficits don’t matter” Cheney
Someone posted a link yesterday, a top 10 of statements that have proven to be wrong. I think this one has to be up there.
Little known fact: he added “to me” under his breath
Bloomberg: Treasury stands ready to prevent failure of automakers.
BWAAAAAHAHHAHAHHAHHHA!!!!!!
This is just turning into a Gong Show.
Where is Gene, Gene the dancing machine?
Your comment from last night about a 2PM-3PM announcement that will send the markets soaring might show up a bit early today.
Looks like there was a breakdown… guess this market doesn’t want to rally after all.
Dec. 12 (Bloomberg) — The Bush administration would consider using money from a fund intended to rescue U.S. financial markets to prevent the collapse of the nation’s auto companies, White House spokeswoman Dana Perino said.
“Under normal economic conditions we would prefer that markets determine the ultimate fate of private firms,” Perino told reporters aboard Air Force One. “However give the current weakened state of the U.S. economy we will consider other options if necessary, including use of the TARP program to prevent a collapse of troubled automakers.”
The last time I saw a news clip of Cheney-Shrub, he was driving across his ranch in a Ford F-450 Super Duty… following in toe where some smart dressed men in black on quads…gophers there must have high anxiety.
I love this country. Never before has it been possible to rip off the citizenry all day long, have the government be on the side of the looters, and even have the entire professional economic class cheering on the looting.
I feel a real Jas-like rant coming on.
Must resist, must resist ….
just let it out…. it helps.
Resistance is futile
Tell me about it.
Is it Safe?
“I love this country. Never before has it been possible to rip off the citizenry all day long, have the government be on the side of the looters, and even have the entire professional economic class cheering on the looting.”
And have the taxpaying servile class who are funding this fraud feeding on and attacking each other.
It’s unimaginable.
And have the taxpaying servile class who are funding this fraud feeding on and attacking each other.
Please exeter
gay marriage
school prayer
ect ect
are what we should be focusing on at a time like this.
Gays, God and Guns. The wealthy elite Nixonians favorite distraction for the servile class.
Amen and amen.
When can we dispense with the blue vs red distraction? (proly not in my lifetime, and I’m still young)
Well if you agree, you’ll acknowledge the class warfare imposed on the working class.
I guess the professional economic class knows their incomes depend on the looting …
–
No need to resist. Express your true feelings. Let it on! It is theraputic.
Jas
I agree with you about the “born and bred dopes” but I think:
(a) you overstate your case just a tad, and
(b) screaming doesn’t help (at least on slightly more intelligent forums.)
Hyperbole is a great figure of speech (heck, my favorite too) but it’s not conducive to rational debate.
Oh well! I think one should always be “long” rants on this particular forum.
The professional economic class plans and executes the looting.
And a small sub-class here (Jas included) tags along in the whale’s slipstream.
(Just thought I’d throw that out there.)
“I love this country. Never before has it been possible to rip off the citizenry all day long, have the government be on the side of the looters, and even have the entire professional economic class cheering on the looting.”
We prefer the term “financial innovation”. It’s shorter.
Rule No. 1 for the Bushies:
We do as we please, and are not bound by rules.
Took a $1,000 flyer on some F at $2.50 hoping the PPT and Bush intervene…. Or not…..
I’m in at 2.40 thinking the same.
try some DEC UYG six dollar calls at 20 centavos, or not.
for a Yen, you can get the 7
Sold F yesterday morning for a nice 60% ROI. I’m content to sit on the sidelines for a while and watch it play out.
Riddle me this. Why is the auto bailout so political?
Why does it seem like it’s the white house against the UaW? I am so confused. I thought it’s up to the other houses.
Perhaps because, as I saw posted elsewhere this morning, the Sun Belt is still in its ascendency while the Rust Belt continues to wither.
All week Red State business owners must have been burning the phone lines to their senators - asking them why in the world they would take an action that would benefit a large Blue State voting bloc.
We are witnessing a showdown of sorts between Right to Workers vs. the unions. This has been a long time coming.
Bush’s reign is long over.
BO is the man now, how can anybody blame the white house? They are gone right?
It’s socialism vs. capitalism; gov’t subsidized industry vs. free markets; pensions vs 401k’s; union’s vs. right-to-work. You could also drag in the environment since, the dems have hitched up the bail out to green cars. Which, I believe, will make the big three permanent wards of the state.
Right to Work states…… FOR LESS.
It’s more Senate vs. UAW IMHO.
Per news reports some of the GOP Senators losing their seats did so in part because of UAW money. Unions vs. non-unions. As one local reporter said in an article here today, it’s payback time.
As edgewater says, it’s been a long time coming. But the Bushies are going to give them the money anyways, so any “victory” will be short lived.
To Ben & Bugs:
Sarcasm may be the lowest form of wit, but Australian scientists are using it to diagnose dementia, according to research published on Friday.
Researchers at the University of New South Wales found that patients under the age of 65 suffering from frontotemporal dementia (FTD), the second most common form of dementia, cannot detect when someone is being sarcastic.
Sarcasm finds medical use in dementia detection:
http://news.yahoo.com/s/afp/20081212/hl_afp/healthaustraliadementia
Oh, a sarcasm study. That’s a really useful study.
Hahahahaha!
Nice.
I don’t understand what you are trying to say..oh, wait…
LOL…
Geez, I think I’ve fallen into that ol’ depression hole:
George Carlin…Bernie Mac…
Pin-up Legend Bettie Page Dies:
http://www.people.com/people/news/category/0,,personsTax:BettiePage,00.html
Consider the source:
“Though she was quoted as never having quite understood why she was so influential, it’s readily apparent to the rest of us. There was something about her look and her poses that walked the line between bad girl and good girl which is universally appealing. Needless to say, many hot rodder’s garages and military barrack had her pinned to the wall during her heyday in the ’50’s and ’60’s.”
Ha, I still have it/her hangin’
http://blogs.hotrod.com/6380420/miscellaneous/rip-bettie-page/index.html
I’ve been reading the HBB on a WiFi HP-IPAQ 2790c with Windows Mobile 5 from a hotel conference room for the past few days. I got it for free when the previous owner moved to a $100/month smart phone. It’s a great way to stay awake when the lecture becomes boring. Now I know the reason for the narrow format used here.
We’re #1 !
One of every thirty-one Americans is now behind bars (not counting the ones who answer to: Senator/Congressman/Representative, most are in minimum incarceration facilities ), imagine the taxpayer expense involved in that.
maybe the start of a new bubble?
Regardless, prison management been a steady growth industry here for quite some time.
Mandatory sentences will do that for ya.
And yes, the prison industry DID lobby for them.
Newbie question here for you stock wizards:
Is one able to purchase foriegn stocks (the kind Peter Schiff is advocating like CMPNF, PGWFF, PMGYF, SPCJF, TOISF, etc) as easily as american stocks? If they are not listed on the Dow Jones are they inaccessible from the average day trader accounts US citizens may maintain? I’m beginning to wonder why I should give Europac 3% commission….
Those are funds not stocks. And they all seem to be OTC pinksheets.
And if you don’t know what I’m talking about, I suggest you not wade into that particular pool.
Garrett –
I second FPSS’ comments. Peter Schiff wrote an interesting book (something like “How to profit from the economic collapse”) that details the “why” of what’s happening in the markets now. He also discusses the options for buying into foreign stocks, gold, etc. I’d recommend you read his book (it’s a quick read) before risking any money…
BTW… I don’t agree with his endgame strategy, but it’s still an interesting book.
He hasn’t been right about anything.
If you invested with him (someone here on the HBB complained a month ago or so), you’d have bone-crushing losses.
He’s dead wrong on the middle game and the end game. He’s just sensationalizing stuff to drum up business. The gold world is full of these charlatans too.
i agree with schiff that inflation is inevitable.
the fellas over at itulip have several explanations of the inflationary “endgame” as well.
time will telll.
Ultimately, sure.
But you gotta get the timing right. It’s not enough to predict something “eventually”; you gotta get it right in the current and intermediate term too.
“Eventually” you will die. So whoop-dee-doodle-doo, what happens between now and that date?
Eventually could be 15 years from now, who knows.
But FPSS - don’t you know - “You can’t time the markets!!”.
Yeah, well, mostly you’d have trouble.
But inflection points are all too clear, and when you’re at the mother-of-all-inflection points, well then, what can I say?
Thanks, and you are right — I don’t know what OTC pinksheets are. I recall him mentioning that in this book, but it has faded away from memory after too many aspartame-laden Diet Dr. Peppers…
anyone care to enlighten me?
If you don’t know what pinkies are you are not ready to stock pick.
If you really believe that foreign stocks will go up your best bet would probably be an ETF, which is essential an index traded as an issue.
Go to yahoo finance and in the spot where you enter a symbol put in the name of the world region or large country you want and you should have some ETFs pop up for that region. PUA, PDQ, for example for Asia.
Only play those funds with purely speculative $$$. If you can’t afford to lose it, don’t “invest” there. Don’t know them, but the pink sheets are not for the uninitiated and I stay clear of them
anyone care to educate the newbie on what are OTC pinksheets?
When in doubt (like I was), wikipedia it!
http://en.wikipedia.org/wiki/Pink_sheets
OTC is over the counter markets. Meaning rather than a regular exchange it’s trades between two folks. Before the era of computers, they were listed on pink paper hense the pink sheets phrase. Things get listed there that don’t meet SEC or exchange rules for listing, including very small companies (pump and dumps, new firms, some small business etc), foreign firms that don’t care to meet US listing requirements or have an ADR (Nestle NSRGY is probably the best known firm listed on the pinksheets in the US), and bankrupt firms that used to trade on the exchange. Since the vast majority of the firms are rather dodgy, the pink sheets largely a haven for all sorts of scum, but there are some large foreign firms that are traded there.
Quick definition:
What is the OTC Pink Sheets?
The Pink Sheets s a centralized quotation service that collects and publishes market maker quotes for OTC securities in real time. Companies that trade on the Pink Sheet exchange do not have to report to the SEC or any other regulatory body. The Pink Sheet exchange does not list bid and ask prices of securities.
The Pink Sheet exchange hosts a website that provides price quotes, financial news and information about OTC companies to investors. Designed to democratize information on OTC companies and OTC markets, pinksheets.com offers free quotes with a fifteen-minute delay.
The mission of the Pink Sheets is to create greater transparency in the OTC markets, by using state-of-the-art Internet technology to give investors the information they need to make informed investment decisions. The Pink Sheets is not a stock exchange or a regulated entity. Price quotations are provided by OTC market makers and company information is provided by the OTC companies. ”
My casual observation is that the lack of oversight, regulation and transparency makes it a hotbed for scam and manipulation (sort of like the NYSE). I stay away from them as I am an amateur and am not smart enough to figure out if I am the screwer or screwee
Another (posting) newbie here. I’m pretty illiterate when it comes to financial jargon but have gotten what looks like helpful information by doing google searches. Thefreedictionary has a financial dictionary which does have an entry on pink sheets.
It took me a good long time to figure out what FB was… had to google ‘fb real estate’ before I figured it out.
http://www.investopedia.com/dictionary/default.asp?viewed=1
Useful link for that sort of query.
Unregulated, opaque markets, often used to pump and dump lightly traded, easily manipulated stocks. If you ever got an e-mail or fax about the next great up and comer, it was likely a pink sheet company. I am sure there is money to made there, but I am not smart enough to play that game. I tried to post a real definition but it has been held up for quite a while.
Cheney-Shrub working on the final polish of their”Legacy”, …an Amtrak VP,…Home “ATM’s” being dis-carded and left by the trash curb,…sailboat prices dropping like a rock,…geez, I’m climbing out of that Iraq/Afghanistan 6 year funk!
Bugs: “eh, them Amish, they grow carrots just the way I like’em!
“…O’Brien says the Amish are less risky debtors than people with access to all the tools of modern banking. The Amish live well within their means — no splurging on iPods or HDTVs, no dinners out that they really can’t afford. The Amish think that missing a payment brings shame — not just on them, but on their whole family, their whole community.
“We’ve never lost any money on an Amish deal,” he says. “So, I’ll stretch my neck more for with them than maybe I will somewhere else.”
A Mortgage Broker In Amish Country:
http://www.npr.org/templates/story/story.php?storyId=98156907
I heard that story and loved it — especially the bit about the Amish kids getting their first buggy cart, complete with cupholders carved out of the oak…
Obama has plans for large public works projects - bridges, roads etc. The problem with his plan is that it appears to hand over the money to insolvent state and local agencies, which will either spend it elsewhere or hire illegals. I think the money would be better spent getting solar panels on the roofs of as many homes and businesses as possible. This would create employment in high tech, skilled labor and at the same time solve our energy problems. A thought, but we need to really rethink what we are doing and where our solutions will be found.
Did you know that solar panel mfgs are (well, were) booming? Guess what their market was.
Overseas sales. Yep. EXPORTS!
Stop and think about this folks. The rest of the world really is passing us by.
SAN FRANCISCO (MarketWatch) — General Motors Corp. said Friday it plans to cut production by about 250,000 units in the first-quarter as the automaker struggles to remain liquid….
Their sales will go down by millions, so they cut by a quarter million?
This is how they ended up in this mess.
Their sales projections for next year are too optimistic, if anything. Their cars are too expensive without 84 mo no-down loans, and their cheap cars are awful.
Ford should import Opels and kill ‘em dead. Too bad they’ve got DOT stuffed with the “heavier is better” school–they kept furrin cars out for years that way–who will make it costly to just bring over cars with R&D already paid for…
“He hasn’t been right about anything.”
———————————————————–
If you’re referring to Peter Schiff, I have to call BS on this statement. Schiff is one of the very few who got it 90% right despite being ridiculed by any number of “experts”.
His funds have bone-crushing losses (= didn’t get it right.)
He’s a one-trick gold pony with no understanding of how fractional-reserve works or the consequences of the “carry trade”. Plus, he totally discounted how badly the rest of the world had leveraged, and how badly the “other” central banks were likely to behave.
But I don’t need to talk too loudly. His performance (which you can get off his webpage) speaks louder than me.
I don’t think you can call Schiff a one-trick gold pony, but I agree he was wrong about the markets (e.g. about buying the euro as insurance against dollar devaluation).
I don’t know any people who have predicted correctly how all things would pan out, especially regarding timing (of course some win big time in the markets, probably by pure luck). And even if they were right up to now, they could still be wiped out in the endgame.
I’m mostly in cash (plus some gold) myself and as a result my capital has been stable over the last years (but I didn’t make any real gains either). And even that is difficult to be certain about, because the yardstick (euro/dollar/gold etc.) is changing every day. I think it is a very dangerous time to play the markets, except for experienced traders who probably have the best time of their live.
There are only two ways of making money:
[1] Either you are right, and you do it for your own. In that case, you don’t tell anyone or at best, a selected few.
[2] You “manage” other people’s money, and take the fees. In that case, you can bray about anything on any medium you feel like.
No prizes for guessing where I think Mr. Schiff lands on that spectrum.
“His funds have bone-crushing losses (= didn’t get it right.)”
I’m reading his book now. I agree with your assessment, FPSS. There is a plug for his fund near the end, which kind of cheapened his point a bit. Its a good read on how we got to where we are, but his “what to do about it” chapters missed “deflation”, which you’ve been calling correctly for a long while.
As has Ben, I might add. As have a plethora of others.
It all comes to the same thing every single time: where is the freakin’ income?
Walkaways are powerfully deflationary (= debt default.) Mortgage reworkings are powerfully deflationary (= marginal debt default.) Food prices rising causes more people to walk away (= debt default.)
(Side bonus: who on earth are they going to sell all these houses to? And they’re deteriorating by the day!)
We’ve pretty much analysed the livin’ cr@p out of this.
“And they’re deteriorating by the day!”
= loss of massive amount of aggregate real real estate investment. Too bad the banking industry’s fire protection squad is so utterly fixated on paper wealth. Otherwise, perhaps they would recognize how current policies are destroying a fortune’s worth of real wealth by failing to allow Mr Market to match up vacant houses with potential owner-occupant/maintainers at affordable prices.
“We’ve pretty much analysed the livin’ cr@p out of this.”
Sure we have–it’s fun.
FPSS, how are _you_ investing in response?
I will not be “investing” until this is all over. Most likely, mid to late-2009 is the first time we will see some true long-term opportunities.
I do “trade” but this is not for everyone, and I wouldn’t recommend it to anyone.
So FPSS, does “not investing” mean all-in on Treasuries? What is your strategy for preservation until it is time to invest again?
I’m in the “preserving now, investing later” camp myself, with some short-term trading with a small %age of asset-base.
It’s kind of ridiculous, it was hard for me to finally admit to a friend that I am now a “short term trader” , because I’ve always considered myself a long-term investor by nature. It took a bit of a mental shift to come to terms with it and call it what it is. But it’s what I am for the moment.
I anticipate in a couple of years I might well be back into nice, boring index funds. Or at least, at some point I hope to be.
Imagine I told you: Either I will have friends for the rest of my life, or I will have no friends at all.
Or: Either I will live in the same house for the rest of my life, or I will kill myself.
I think it’s pretty safe to say, you would call me mad.
Now compare with: Either I will invest forever, or else I will trade.
There are NO permanent investments. Not even for Buffett.
Any good Austrian economist could’ve told you this.
This is the “unseen” portion of the problem. RTC-Redux can’t be far behind.
Ah yes. The old RTC. I remember the S&L disaster.
Very WELL.
When I read his book, I concluded the same thing: right on the how we got here, very wrong on how to invest in response. His belief that foreign stocks would do well had an implicit assumption of decoupling, which never seemed likely to me.
Are Schiff and our poster Watcher the same person? I note that Watcher has been missing in action as of late…
I’ve never even seen this mythical Watcher.
Did I miss a troll? I feel slightly sad and dejected at that thought.
Just for you, pal…here is a prototypical Watcher post from just before Uncle Buck stood up and kicked him in the crotch…
Comment by watcher
2008-07-31 07:13:56
Uncle Buck doesn’t look so good today.
Anyone know if the is a live web cam for the “Lost Wages” Strip?…especially the parking lot @ Circus Circus
I want to see if SEC Chairman and Fascist Island booster Crissy Cox is still laid over in Sin City with his Mercedes SUV & U-Haul trailer.
“…Andrew M. Calamari, associate director of enforcement in the Securities and Exchange Commission’s New York office, said the SEC had filed a civil securities fraud charge as well and was alleging “a stunning fraud that appears to be of epic proportions.”
“The SEC said it was seeking emergency relief for investors, including an asset freeze and the appointment of a receiver for the firm. A hearing was scheduled for Friday.”
http://biz.yahoo.com/ap/081212/wall_street_arrest.html
Cheney-Shrub will turn out to be the most “Brilliant” Dynamic Duo political team in American History…bar none!
U.S. Plans to Sign Nuclear Pact With U.A.E.
http://online.wsj.com/article/SB122904102094400097.html
The auto industry is in dire straits because it cannibalized future sales with cheap financing, HELOC money, leasing, etc.
People couldn’t get money from a bank or CU to buy a used car but could get long term (7yr) financing through auto dealers for a new car purchase or lease. No amount of bailout money is going to move product. This is the difference between the bank bailout and the auto bailout. The bank had to clear up paper to allow money to flow while the auto dealers will have to move a product in a down market with high inventories sitting on the sideline (both new and used product).
BTW I saw on the news that GMAC financed dealer stock to the tune of 80% of inventory.
Let’s take any bailout money and give it to a start up company that can build a cheaper car for the masses; somewhere around $10K.
There’s an interesting phenomenon that probably started with the last bubble: we’ve lowered our standards of what passes for “wealthy”
I’ve seen a lot of stories about how the “wealthy” are having to cut back; for example today’s Times
http://www.nytimes.com/2008/12/13/nyregion/13teens.html?hp
You would think to be considered “wealthy” your ability to afford things wouldn’t depend on something as mundane as employment. It was the notion that we all can be wealthy that, in part, led us into two bubbles.
I survived the Crash of 2008!
ask me how now!
but … that was only a test, will you survive the crash of 2009?
McConnell is Shelby’s Corker!
Gm / Ford workers & retirees: Sqqqqqueallllllllllllllllllllllll Sqqqqquealllllllllllllllllllll.. like a pig!
“Now you “Gentlemen” Southern bankers can have all the TRAP $$$$$$$$$$$$$$ dollars you desire, just leave your shoelaces with Hank.”
I’m still pissed that they let Studebaker die! They started by making Prairie Schooner”covered wagons” for Bejibbes sakes!!!!!
Singing Neil Young’s “Southern Man”:
http://www.youtube.com/watch?v=jB_qmRjetdE
“The band of mostly Republican Southern senators who form the heart of the opposition — it also includes Senate Minority Leader Mitch McConnell of Kentucky and Sen. Bob Corker of Tennessee — share Mr. Shelby’s principle and circumstances. Kentucky is home to a major Toyota factory. The corporate headquarters of Nissan Motor Co.’s North American operations are located in Tennessee, and Volkswagen AG recently announced plans for a $1 billion, 2,000-worker plant in Chattanooga, Tenn.”
“Foreign auto makers have favored the South in part because of its nonunion, low-wage tradition, and these senators argue that if the Big Three’s labor relations more closely resembled those of the Southern plants, they wouldn’t be in such trouble.”
Shelby, South Lead Resistance to Rescue:
http://online.wsj.com/article/SB122904130349800105.html?mod=rss_Politics_And_Policy
I wonder what type of car Senator Shelby drives? Is it mandatory to have car insurance in Alabama?
Why AIG Gets Billions, GM Gets Scorn:
“..Let me see if I’m getting this right: AIG, the huge insurance company, has so far gotten $173 billion worth of federal aid, because traders at one small division made bets on exotic securities that were so calamitous they threatened to bring down the whole company. So far, the amount of money the feds have pledged to this one firm equals nearly one-third of the nation’s defense budget.”
http://finance.yahoo.com/news/Why-AIG-Gets-Billions-GM-Gets-usnews-13819339.html
Sarah “The Barracuda & Jeb Shrub in 2012! …or… Cheney-Shrub: “How we destroyed the Repubician Party” ?
Florida chad excrement:
Madoff fraud scandal chills Florida wealthy:
“I expect to get back zero,” Susan Leavitt, an investor in Tampa Bay, Florida, said on Friday. “When he tells the Feds, he has $200 million to $300 million left out of billions, what can you expect.”
“…Many clients of Madoff, a former chairman of the Nasdaq Stock Market, were recruited at New York and Florida country clubs, such as the Palm Beach Country Club, where Madoff has been a longtime member, according to news reports.”
“…Leavitt, 46, said in an interview that she had recently added $500,000 to a Madoff fund in which she invested substantial amounts since the early 1990s.”
“…A friend introduced Leavitt to the Madoff fund, which had been shut to new investors for many years and produced strong, reliable returns, she said.”
“He had a closed fund, which is why people put more money into it, instead of diversifying,” said Leavitt, a full-time mother and former newspaper writer. “You couldn’t just come in off the street and plunk down a hundred thousand dollars.”
In addition to personal investments, Leavitt said the Madoff fund also managed money for a family philanthropy she helped run.
“We had a foundation that we had a lot of money in, a charitable foundation,” she said. “That is gone. We were very philanthropic, Those days are over.”
“Leavitt … said, “He is a crook.”
“I used to say hello,” Goldblum said on Friday. “But I never invested with him and I won’t say who did. I don’t like to spread rumors.”
Other members of the Palm Beach club, founded in 1917, also declined on Friday to identify club members who had invested with Madoff.
“At one point, he was the favored broker of Palm Beach,”… “Every big guy was his client… There are a lot of people who lost a whole of money with this guy. But no one will admit to it in public.”
Florida, 1926, it’s time to revisit.
It’s just a jump to the left
And then a step to the right
Put your hands on your hips
You bring your knees in tight
But it’s the pelvic thrust
That really drives you insane
Let’s do the time warp again!
Let’s do the time warp again!
It’s makes me shiver with antici……………………………pation!
Never has x1 Wall Street Pig oinker taken so much… from so few:
“…Madoff’s investment advisory business served between 11 and 25 clients and had a total of about $17.1 billion in assets under management.”
“Now that’s what I call high net worth individuals! And then you read the indictment, and you think you know what to expect”
“Yep, $50 billion. In other words, that $17.1 billion is only the beginning: presumably Madoff’s clients had invested much more than that, and Madoff was sending statements to them, on the one hand, while reporting different numbers to the SEC, on the other — none of which were true.
If the total losses are really $50 billion, that means that the average loss to Madoff’s clients is a minimum of $2 billion, and perhaps as much as $4.5 billion. After all, in a Ponzi scheme, everybody comes out fine, except the last people out: the 11 to 25 clients still with Madoff to this day.”
http://finance.yahoo.com/news/The-Worlds-Biggest-Ever-portfolioblog-13817029.html
Fools and their money are soon parted.
Which always begs the question: How do fools get that damn money in the first place?
http://www.nizkor.org/features/fallacies/begging-the-question.html
USA: It’s ours!
Germany: Is Not!
USA: Is So!
Germany: Is Not!
USA: Is So!
Germany: Is Not!
USA: Is So!
Germany: Is Not!
USA: I’m telling Dad!
USA: bennnnnnnnnnnnnnnnn, Germany won’t give me back their money! ” They just grabbed it out of my hand!
BERLIN (Reuters) - Germany has seized 163 million euros owed to a Lehman Brothers’ unit in an attempt to recover at least part of the 300 million euros state lender KfW transferred to the U.S. bank the day it filed for bankruptcy.” :
http://www.reuters.com/article/innovationNews/idUSTRE4BB5IA20081212
Cheney is fiddling with the “Predator” joystick…his eye is a twitching erratically, his thumb joint is popping, his brow is furrowed, he has his As$ kicking game face on…his but is sweating on the “Shadow VP toilet”…poor, poor Ecuador.
“Ecuador, which received record income from oil exports for much of the year, has enough funds to make the payment. But the nation’s policy is driven by Correa’s ideological rejection of such debt deals with foreign investors, Wall St. economists say.”
Ecuador defaults on foreign debt:
http://www.reuters.com/article/worldNews/idUSTRE4BB6C120081212
As long as there is no inflation in my rental, I should survive 2009. If I have to live thru one more housing bubble then all bets are off.
Off to pick up more propane canister minis for my single burner dinner maker. Who likes dried fruit?
BWAAAAAHAHHAHAHHAHHHA!!!!!! (Famous FPSS HBB quote!)
I guess this means he is upside down…down under?
Gambler sues casino over $900 million binge:
“…At the time in 2007, property developer Kakavas had been barred from every casino in Australia.
But the Supreme Court in Victoria state was told that Crown’s management did not “give a monkey’s” about a prohibition in place since 2004, the Age newspaper said.
Supreme Court documents said Kakavas wore a concealed recorder that captured Crown managers allegedly attempting to lure him back to its riverside baccarat tables.
Crown is owned by Australian billionaire James Packer, who also operates Crown Macau and is developing a second casino project, The City of Dreams, in the Chinese territory. Last year the company reported profits of A$370 million.”
http://www.reuters.com/article/oddlyEnoughNews/idUSTRE4BB5R320081212
He “only” lost A$37M.
They are talking about the total size of his bets or some such.
Ecuador has decided to halt payment on its debt
A debt commission Correa formed last year said in a 172- page report in November that the global bonds due in 2012 and 2030 “show serious signs of illegality,” including issuance without proper government authorization. Correa invoked the 30- day grace period on the interest payment last month, saying he wanted to analyze the commission’s findings.
“Ecuador is a serial defaulter,” said Arturo Porzecanski, an international finance professor at American University in Washington. “They defaulted in the 1980s, 1990s and this decade. A lot of other countries have had one or two defaults, but Ecuador tops them all.”
HAHA maybe Ecuador can get a better interest rate now that everyones doing the bail out.
Sooner or later, you should find most of these bond bagholders will be Italian pensioners.
Somehow the Italians always end up getting screw*d on these bonds. They are like Swiss cuckoo clocks on getting the short end of the Lat-Am bond stick.
Every freakin’ decade. Like a perfectly tuned Swiss watch.
Maybe they still have lead pipes in those old buildings in Wopland?
Lead poisoning will make you look and act retarded even if you aren’t, and make you even more so if you are.
From Seattle Times:
Quadrant homes in trouble:
http://seattletimes.nwsource.com/html/localnews/2008499416_quadrant12.html
Just when we need them the most! More kids to be home alone:
http://seattletimes.nwsource.com/html/nationworld/2008500385_apafterschoolcuts.html
Costco sales down:
http://seattletimes.nwsource.com/html/businesstechnology/2008499071_costco12.html
On the ground report - one of my neighborhood’s grocery stores has cut back business hours. They now close at midnight. They also cut Customer Service hours and it now closes at 8. I couldn’t get my raincheck on flour and sugar Tuesday at 9. Fortunately, they honored it the next day.
http://www.superiorsilverco.com/data/inspect.asp?Item=412&Filter=Information&Name=Hitler%27s+Home+Equity+Gets+Hosed
Hitler’s home equity gets hosed - priceless.
Out grouse hunting today trying to get some of those errant jets. Getting slower - 3 birds for 62 shells. Its a lot easier just to shoot them as they sit, oh well.
In the meantime it wasn’t just Tribune this week.
Atlanta Journal-Constitution
Atlanta, GA
The Atlanta Journal-Constitution said Wednesday it will slash 156 jobs and reduce its circulation range to 27 counties around metro Atlanta in the latest round of cuts at the daily newspaper. The subsidiary of Atlanta-based Cox Enterprises Inc. said it would shed 22 counties from its circulation range and cut the equivalent of 56 full-time positions and 100 part-time jobs as it restructures its circulation department. “Like many other media companies, the AJC faces unprecedented economic challenges,” Robert W. Eickhoff, AJC senior vice president of operations, said in a news release. “We are committed to making our operations as efficient as possible, and these changes support that goal.”
Atlanta Business Chronicle - December 10, 2008
Brainerd Daily Dispatch
Brainerd, MN
The Brainerd Dispatch said it laid off 10 workers this week. Publisher Terry McCollough says the layoffs came after cuts to a number of other expenses. It isn’t clear how many newsroom employees were among those cut at the Dispatch.
The Associated Press - December 5, 2008
CareerBuilder.com
Chicago, IL
Scottsdale, AZ
Atlanta, GA
More than 300 employees of the nation’s largest online center that helps locate jobs for the unemployed, CareerBuilder.com, have been laid off, including 20 from the firm’s Scottsdale office. Most of the laid-off workers are from the company’s corporate headquarters in Chicago. However, some have also been let go from the Atlanta offices. The company’s public information office in Chicago refused to answer questions about the layoffs, although a telephone call by the Tribune to a branch office near O’Hare Airport confirmed that the layoffs were made Friday morning. Also, a former employee from the Scottsdale office who asked not to be identified said he was laid off along with others from the office in Old Town Scottsdale. The layoffs also were a topic of conversation at Cheezhead.com, an information and chat website related to careers and employment.
East Valley Tribune - December 9, 2008
Cox Communications Inc
Atlanta, GA
Baton Rouge, LA
Lafayette, LA
Cox Communications laid off an undetermined number of employees in Baton Rouge and Lafayette on Monday, part of a move to cut about two dozen positions. The reduction is part of the Atlanta telecommunications company’s bid to reduce its nationwide workforce of 23,000 by 2 percent through attrition, voluntary departures and layoffs. Cox employs 12,000 people in Baton Rouge and Lafayette, 2 percent of which would be 24 workers. Cox spokeswoman Sharon Kleinpeter said she could not specify how many positions were eliminated or how many of those had to come through layoffs. She said she could only cite the company’s overall goal of 2 percent. Kleinpeter said all of the affected workers would receive severance packages, the benefits of which depend on their length of service. All of the workers will remain on the payroll through the end of the year, she said, though some will stay on a few months longer to aid in transitions.
The Advocate - December 9, 2008
KSTP-TV LLC
St Paul, MN
KSTP-TV is expected to layoff up to 18 newsroom staffers. Employees at KSTP-TV were preparing for an all-station meeting Friday, where station managers planned to detail the layoffs. Investigative reporter Kristi Piehl confirmed she’s one of 18 newsroom employees being laid off at the ABC affiliate. “We knew that we were in rough economic times, but I don’t think anyone expected 18 people to be laid off in the newsroom,” Piehl said. A message left by The Associated Press for KSTP news director Lindsay Radford was not immediately returned Thursday.
The Associated Press - December 5, 2008
KWWL Television
Quincy, IL
Waterloo, IA
KWWL announced “a few layoffs” Thursday. Channel 7’s station manager Kim Leer declined to cite the number of cuts and from which departments, but she added this isn’t the first wave of jobs lost in recent weeks. Layoffs were seen company-wide. “We aren’t really saying a specific number at this time,” Leer said. “And we’ve had some (layoffs) previous to yesterday, within the last month.” Also, some vacant positions are not being filled, Leer said. Leer blamed the slimmer work force on this year’s economic downturn and on a hazy outlook for 2009. “We want to head off any problems before we get there in 2009,” she said. KWWL Inc. is part of the family-owned company Quincy Newspapers Inc., based in Quincy, Ill. Jena Schulz, director of human relations for Quincy Newspapers, did not return a call seeking comment Friday afternoon.
Waterloo Courier - December 6, 2008
National Public Radio Inc
Washington DC
Culver City, CA
Faced with a sharp decline in revenue, National Public Radio said Wednesday it will pare back its programming and institute its first organization-wide layoffs in 25 years. Washington-based NPR said it would lay off about 7 percent of its workforce and eliminate two daily programs produced out of its facilities in Culver City, Calif. The shows are “Day to Day,” which was aimed at younger listeners, and the newsmaker-interview program “News & Notes,” which NPR hoped would attract African Americans. The cutback of 64 of NPR’s 889 employees is designed to close a $23 million shortfall in the operation’s current fiscal year, Dennis Haarsager, NPR’s interim president and chief executive, said in an interview. The cuts will affect all departments, including reporters, producers, researchers and digital media employees.
The Washington Post - December 11, 2008
NBC 7/39 TV
New York, NY
San Diego, CA
Local NBC outlet KNSD / Channel 39 (Cable 7) has cut three local-news programs and is laying off about 12 employees. A drop in advertising led to yesterday’s program cuts and layoffs, which will not affect KNSD’s on-air talent. The TV station, which broadcasts from downtown San Diego, is cutting “Noticias Mi San Diego,” its early-morning Spanish-language newscast; the weekend “NBC 7/39 in the Morning” newscasts; and “Street-side San Diego,” the Friday morning lifestyle show. The station would not comment on the number of layoffs, but sources familiar with KNSD say the cuts involved at least 12 employees, including editors, photographers and production staff members. “We just had to look at where our priorities are, and if we can’t do everything, let’s do fewer things well,” news director Greg Dawson said. “In this economic environment, that was the necessity, unfortunately.”
The San Diego Union-Tribune - December 6, 2008
Newsday Inc
Bethpage, NY
Melville, NY
New ownership hasn’t stopped the bloodletting at Newsday. The daily newspaper on Friday announced plans to lay off 5 percent of its staff, or 100 workers, which includes a handful of workers in its editorial department. The announcement represents the first downsizing since Cablevision’s ruling Dolan family in May purchased the newspaper from Tribune Co. for $650 million. Prior to that, the newspaper had announced several rounds of layoffs. Newsday Publisher Tim Knight, in an internal memo acquired by Long Island Business News, blamed the ongoing troubles in the newspaper industry for the decision. “When we began our 2009 budget process, we were anticipating a tough year, and since then, the newspaper advertising market has continued to decline,” Knight wrote. The fired employees will likely be offered a buyout package, which they have up to 3 weeks to accept.
Long Island Business News - December 5, 2008
Philadelphia Inquirer LLC
Philadelphia, PA
The Philadelphia Inquirer and Daily News plan to eliminate 35 jobs by year’s end, a spokesman for the Newspaper Guild said Tuesday. Cuts would be spread across the newsrooms, particularly on the copy desk and among photographers, and would also include advertising, said Stu Bykofosky, a Daily News columnist and spokesman for Local 10 of the Newspaper Guild, which represents non-management newsroom employees. The newspapers’ owner, Philadelphia Media Holdings LLC, plans to ask for volunteers among the staff of 320. If it cannot find enough volunteers, it will lay employees off. Volunteers would get full severance, unemployment, unused 2008 vacation-and-personal days and COBRA health insurance coverage up to 18 months, according to a memo released by the Guild. They would be eligible for recall for a year. The same applies for any employee laid off involuntarily.
Philadelphia Business Journal - December 9, 2008
Red Bluff Daily News
Denver, CO
Red Bluff, CA
The Daily News laid off four employees, about 15 percent of its workforce, this week adding to the growing list of newspapers forced into downsizing measures. Publisher Greg Stevens said the moves were necessary to mitigate the effects of the current economic downturn’s impact on retail, real estate, employment and automotive advertising. “For community and smaller dailies, the current financial difficulties are almost entirely due to a perfect storm of concurrent negative economic effects, which have reduced advertising revenue, which represents 85 percent of our revenue stream,” Stevens said. The affected employees, whose last day was Wednesday, were paid for the duration of the work week, any accrued vacation time and offered a separation agreement that included one week’s pay for each year previously worked and three months of continuing employee contribution to health care under COBRA.
Red Bluff Daily News - December 6, 2008
South Carolina ETV Commission
Columbia, SC
South Carolina Education Television is laying off 43 people to deal with a $2.3 million state budget cut. The network, which has 214 full-time employees, will lay off 15 of them. Another 28 of the network’s 40 part-time and contract workers will be let go. The layoffs take effect Jan. 1. The state has cut ETV funding from $16.5 million to $14.2 million. About 70 percent of that is for salaries and benefits. ETV’s annual budget is about $21 million; the difference between state funding and total budget is generated through donations and grants. “We’re trying to be as thoughtful as we can as we go through this to minimize the impact,” said David Crouch, interim president of ETV. Although layoffs are taking place in every area of ETV, except radio, viewers should not notice any changes in programming, he said.
The State - December 5, 2008
The Toledo Blade Company
Toledo, OH
The Blade is laying off 23 workers due to declining ad revenue and the newspaper’s ties to the auto industry, Assistant Managing Editor LuAnn Sharp said Wednesday. Most of the layoffs will be in the newsroom, Sharp said. Five of the employees work part time. After the layoffs, The Blade will employ 425 company-wide.
The Associated Press - December 11, 2008
WAVE-3
Montgomery, AL
Louisville, KY
Economic hard times have hit television station WAVE-3, which laid off seven employees yesterday. “Business is horrific,” said general manager Steve Langford. “This is strictly a case of everybody in the economy is connected and … we’re having to adjust so we can maintain the strength of our station through difficult times. We have to make do until advertisers feel confident enough to bump up their advertising revenues to normal levels.” Those who lost their jobs at the Louisville NBC affiliate were employed in various departments. The layoffs took effect immediately.
The Courier-Journal - December 10, 2008
Winston-Salem Journal
Richmond, VA
Winston-Salem, NC
The Winston-Salem Journal reported on Wednesday it had cut 12 employees as a result of lost revenue. The paper reported cuts across several departments, with the majority coming from employees who designed ads for local advertisers. “These types of things are the most difficult decisions that management has to make,” said Michael Miller, president and publisher of the Journal, according to the paper. “We can talk about product reductions. We can talk about cost containment in many areas, but when you talk about affecting people’s lives, it’s definitely the most difficult decision you have to come up with, and they are not pleasant.” Three of the cuts were effective immediately, with the other nine taking effect by February.
The Business Journal - December 10, 2008
WIS TV
Montgomery, AL
Columbia, SC
Columbia TV station WIS is laying off seven employees, the station’s manager confirmed Tuesday. WIS general manager Donita Todd would not identify the employees or their jobs. “The broadcasting industry and WIS are not immune to the current economic environment,” Todd said. “In order for the station to be appropriately positioned for the coming year, we had to take the difficult step of reducing our staff by seven positions. We don’t anticipate any further layoffs at this time.” Todd said these were “unprecedented” economic times. “I’ve never faced anything like this in my 30-plus years in the industry.”
The State - December 10, 2008
WMC-TV Memphis
Montgomery, AL
Memphis, TN
Citing increasing pressure on advertising revenues in a prolonged economic downturn, WMC-TV Channel 5 said Tuesday that it is reducing its staff. Weeknight anchor Donna Davis and midday anchor Bill Lunn are among the 15 employees being let go by the local NBC affiliate as part of wider cuts by parent company Raycom Media, said WMC general manager Lee Meredith. With about 150 full-time employees locally, Tuesday’s cuts account for 10 percent of the station’s workforce.
The Commercial Appeal - December 10, 2008
WNYT-TV LLC
Minneapolis, MN
Albany, NY
WNYT / Channel 13 have confirmed the layoff of 18 employees, including four on-air personalities. Stephen Baboulis, general manager of the Albany, N.Y. NBC affiliate, said the station was forced to eliminate the positions because of declining advertising revenue in the tough economy. Of the 18 employees let go, 16 were full-time and two part-time. A 19th full-time employee accepted an offer to remain on a part-time basis.
The Business Review - December 10, 2008
WOIO Channel 19 / WUAB Channel 43
Montgomery, AL
Cleveland, OH
Morning co-anchor Jeff Eliasoph was among as many as 13 employees of sister stations WOIO Channel 19 and WUAB Channel 43 whose contracts were not renewed Tuesday. Eliasoph did not give any other names. “I didn’t want to know,” he said. “The circumstances in our business are so dire that I can’t blame anyone,” said Eliasoph, who added both on-air and behind-the-scene staff was affected. Eliasoph, 52, and others were given the news in sober meetings with news director Dan Salamone. While Eliasoph won’t anchor any future newscasts, he was given time to clean out his desk and say goodbye to co-workers. His three-year contract expired in October, but station bosses kept him on in hopes that the budget would improve and he could be resigned, Eliasoph said. Channels 19 and 43 have a joint newsroom with about 25 reporters and anchors, and an equal number of behind-the-camera staffers, he estimated.
Plain Dealer - December 10, 2008
WTVM Channel 9
Montgomery, AL
Columbus, GA
Five WTVM employees, three full-time and two part-time, were laid off Tuesday, said Lee Brantley, general manager of the local ABC affiliate. None of those affected were on-air personalities, he said. “It was a business decision,” Brantley said today. “Obviously it hasn’t been a great year for anyone, so it was just some expense-trimming we did at the end of the year here.”
Columbus Ledger-Enquirer - December 10, 2008
WVIA Public Television & Radio
Pittston, PA
Facing a potential $200,000 budget deficit, WVIA announced Tuesday four full-time layoffs, one part-time layoff, executive pay cuts, overtime elimination and staff realignment. While memberships and donations to the public television and radio station have remained steady in 2008, anticipated state funding cuts required “proactive” budgetary slashes, according to WVIA President and CEO Bill Kelly. “If we hadn’t acted, I think we would have put the company at risk in the weeks and months ahead,” he said. The layoffs are effective immediately and reduces WVIA’s already-lean staff by 8.4 percent, said Kelly, whose salary will be cut by 10 percent.
The Citizens’ Voice - December 10, 2008
any rabid feline?
No, he didn’t shoot me.
Chicago’s biggest hedge fund, told investors Friday they won’t be able to withdraw money from its flagship funds until at least the spring. The funds have lost almost 50% in value so far this year…
The Citadel has raised the drawbridge. Pitchforks and torches have been sighted.
It’s all over for Citadel.
Guess Ken Griffin and the wife won’t be showing up for any art auctions anytime soon.
BWAHAHHAHAHHAHAHAHHHHHHHHHHHHHHHH!!!
National Public Radio Inc
Washington DC
Culver City, CA
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best filthy Amish punchline I heard today on NPR, “Thats not gonna get you a two holed corn picker for yer nubbin.”
Was the previous hedgfund selling a function leverage? Now, fraud commited by this Dreier fellow? Are we entering another phase of the hedgefunds collapsing?
Fraud, Leverage, too much concentrated money, bit of panic in the air….who is contaminated and what is the next leg of the fallout gonna look like?
potential entaglees:
Kosta Kovachev
Armando Ruiz
Robert Miller
Paulson & Co
Elliott Associates
Kempner Davidson
Baupost
DellaCamera
Sandell Asset
Fortress Capital or Fortress Investment Group
Perella Weinberg
Eton Park
GSO
Meyer Venture Partners
Concordia Partners
Enterprise Fund Ltd
Archery
MEA Properties
Four Winds
Bennington
Novatar
Verition
Who is about to panic?
Giant French bank BNP Paribas, Tokyo-based Nomura Holdings Inc. and Neue Privat Bank in Zurich are also exposed, according to people familiar with the matter.
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also linked to Dreier.