I'm the first one to comment? What to say... i've used Rosenberg as an indicator in almost the exact same way I've used CR. that is: a conservatively assessed yet open minded position on the economy. Whatever they are bearish about, you can ~roughly trust. And this becomes stronger every time they predict something and it happens. I think that by the summer 2008 a recession will be declared. Have a wonderful Saturday night!
Just had dinner with a woman who works in the cities of upstate NY with the working class. She said, "people are hurting...you don't understand...people are hurting".
If the recession isn't here yet, people are going to really be hurting.
The feel of this economy is recession. We would never know factually with the government raping the statistics as they are. Employment is contracting, money supply is going south with the commercial paper shrinkage, real decline in retail, and automotive in the tank.
I think we are there, the start of a long slide into 3rd world land!
Got some feedback from the mgt. of a local discount retailer (you know, the one we all track). They said they saw about a 3% increase in their same store sales for Black Friday. The question, of course, is margins. Did they sacrifice margins to keep their volumes up. We'll know more when the more upscale retailers report next week.
It's probably safe to say that Florida, Nevada and California are in a recession. Even though the housing market is a mess in Colorado, the employment seems to be strong. It's probably not in a recession. Cities like Cleveland and Detroit, on the other hand, may be in a depression. At this point recessions are most likely regional.
And the all important holiday retail sales are apparently off to a healthy start...
I'm going to make a prediction. I think the healthy start will fizzle quickly over the next week.
First, if people are hurting they'd be more likely to attend 4am sales in hopes of getting something at its lowest price. They'd camp overnight to be first in line to save money. They'd consider that "work" to be easier than the alternative in an ecomomy that's seeing rising unemployment.
Second, I didn't check the stock market until after it closed on Friday. I saw that the Dow was up 181 points and naturally assumed (as was almost always the case in the past) that my TIPS fund got temporarily slaughtered (giving back at least the previous day's gains). It was down a mere 0.07% though. I told my girlfriend (for what that's worth) that something changed and that I trusted Friday's stock market rally about as far as I could throw it. I believe that investors got too euphoric watching the 4am campers.
Third, people have all weekend to read the following.
Feds Forecast Weighs on Stocks The Fed projected reduced economic growth, higher unemployment and a continued threat from inflation. That report came on top of high oil prices and a weak dollar.
It might just as well say, "The Fed protjected stagflation, stagflation and a continued threat from stagflation. That report came on top of stagflation and stagflation."
I could be wrong on all of this of course. That's what makes a market.
I have less than full confidence in the ShopperTrak sales number, as it is a 'mark to model' projection based on video mining software counting bodies...time will tell.
Sitting in the relatively prosperous I-90/94 corridor in Montana (Billings to Missoula), I can say that retail sales these past two days have been steadily moderate (judging by the cars in the box store lots - what better econometrics?) but diffused. Diffused in that so many damn new box stores are popping up like mushrooms on overwatered Montana lawns. I think retail is way overbuilt as is housing and office space (5 pages of rentals and eight pages of sales in the local rag for this small burg). And, how can one ignore the for sale signs popping up on every block, insisting that it is a deal to pay $450,000 for what you couldn't pass off for a quarter of that price eight years ago. We'll see if the AZ/CA/FL downturn hits this place, which the savants of mortgagning insist is recession-proof.
What I mean to say is, this rather lends credence to the bear argument, doesn't it? Of course, one must always bear in mind that the situation is fluid, predicting the future is always difficult, etc. etc.
I still think we entered into a recession in May/June 2007. We shall see..interesting to note the the credit crunch (not "sub-prime issue") is becoming top of mind:
KAMPALA (Reuters) - Prime Minister Gordon Brown warned on Saturday that the global credit crunch would hit the U.S. and European economies, but said Britain could steer a stable course through the financial turbulence.
"There is absolutely no doubt that the American economy now will slow. It will have an effect on the European economy over these next few months," Brown told a news conference on the sidelines of a summit of the 53-nation Commonwealth in Uganda
Didn't you tell us last year that ShopperTrak counts footprints and not actual dollars, or was it Mish ? They convert footcount into dollar sales by some mumbo jumbo.
My analysis says that the economy is in recession. Mish is way better than CR in talking about the economy (based on past forecasts). CR's skills are in reporting the intricacies of the finance industry.
I don't see how California and Florida can't already be in a recession. With Detroit and Clevland being in outright Depression. I guess BFE Montana made up for these areas.
Just got back from Wally World and didn't see anything but food in peoples carts including mine.
Recession or no, the US is way over stored. Italy 1.2 square feet of retail space per capita, compared with 2.3 square feet per capita in the United Kingdom, 2.2 square feet per capita in France and 1.3 square feet per capita in Germany, according to Cushman & Wakefield Healey & Baker. (The United States has 21 square feet of retail space per capita, according to ICSC.)
That tells me that there hundreds of millions of square feet are ripe for adaptive reuse without any particular economic impetus. It equally bodes poorly for future new commercial construction.
She shared a story with me as well. She spoke of an online friend's husband who was seriously depressed at Thanksgiving. It seems he's a banker in Arizona and has recently realized that things are heading into the toilet.
But but but Sebastian said the stock market perfectly discounts all information and the high levels of the stock market guaranteed solid earnings going forward. There must be some mistake. Has the world gone mad.
Fry's on Friday was mad. Bought ~$600 of crap for $298. Sent in another $120 in rebates. They'll still count it as $298. Hollywood will count the 2@ $1.98, 3@ $4.94 DVDs as some unimaginable unit volume sales that have no reality to the $14 I paid. Crowded parking lot. Good sign. Lots of really big boxes going into little tiny cars. $897 50" HDTV plasmas will do that. The checkout line was near an hour. Still, I went back the next day for a few oddments and a return. Empty, quiet. 60+ checkouts running on Friday. 8, yes eight were running with no waiting on Saturday.
Anything you might hear about Friday is not going to follow through. Its become almost a game like the NAR sales adjustments.
But but but Sebastian said the stock market perfectly discounts all information and the high levels of the stock market guaranteed solid earnings going forward. There must be some mistake. Has the world gone mad.
BrantW
Sebastian said there would be a stock market correction due to the reduced earnings, but no follow-thru recession. This is as of now still the only valid conclusion we can draw from the current economic data. Contrast that with the many absurd statements about "going to third world status" or "Great Depression".
ECRI's leading indicator index is at annualized -1.5, signaling a slowdown with below-trend growth but no recession. In November 2000 it was at -5, correctly predicting the negative growth starting some six months later (I think the official start of the recession was later set to April 2001). Since then, ECRI never forecasted any recession. Now contrast ECRI's history of recession forecasts with that of Mr. Roubini or other perma-bears constantly predicting and then back-dating their recession forecasts. In conclusion: sorry bears; there will be no recession within the next 6 months.
Additionally, the RE bubble does not seem to be able to follow-thru to the general economy as the dot.com bubble did. From the burst to that bubble in Q1/00 to the first ECRI recession indication it only took 7 months (and that was without any external 9/11 shock already visible). The RE bubble burst between mid 2005 and early 2006, depending on what figures you look at. Until now, thus 18-27 months later, we still have no reliable recession indication. If there is no follow-thru within the next two months, the FED easing will work its way into stronger growth again and raising ECRI indicators. I currently cannot see any follow-thru whatsoever.
"There is absolutely no doubt that the American economy now will slow. It will have an effect on the European economy over these next few months," Brown told a news conference on the sidelines of a summit of the 53-nation Commonwealth in Uganda"
by the time the most public and political of the 'economists' steps up to the plate with a 'forecast' do you really think you can make money going in that direction?
O-Joe's exposition summarized: "Passing the 18th floor and so far so good."
Robert Coté
I'm not sure if this was a serious discussion about recession probability or god-old-bear anecdote story telling. If the later, then sorry for my interruption . I will look for a different CR post then.
Just had dinner with a woman who works in the cities of upstate NY with the working class. She said, "people are hurting...you don't understand...people are hurting".
Well, to be more accurate, people upstate have been hurting since, oh, 1981 or so.
I wouldn't know what to do without the CR blog bears. I find it so fascinating how (from my perspective) one's view on the economy, if not life as a whole, can be so bearishly distorted.
I must also say that unlike in so many other bear blogs I really learn something from CR and Tanta. If you go to Mish etc. there's only bear propaganda. At CR I actually learned a lot about past RE boom-bust cycles to better time my market entry.
The United States has 21 square feet of retail space per capita, according to ICSC.
what percentage of that belongs to walmart ?
some digging around in the WM annual report allowed me to calculate the number for the US.. 618.029 million sq-ft (supercenters + discount stores + neighborhood markets + sams clubs)
first glance says that walmart has 9-10 % of all the US retail space.
Funny you should mention Mish's blog. I've been kicking myself silly for not shorting the bond insurers & GSE's when he called them out months before they tanked 60+%. Would've made an absolute fortune. Bear propaganda? I'd called it pure prescience.
Additionally, the RE bubble does not seem to be able to follow-thru to the general economy as the dot.com bubble did.
I currently cannot see any follow-thru whatsoever.
I agree. All I see is a very unstable currency combined with parabolic energy prices, a stagnant stock market, weakening corporate profits, rising unemployment, dramatic weaking in the financial sector which represents some 30% of our economy, and dramatic weakening of a multi-decade long rising consumer import trend that accounts for some 70% of our economy. In fact, barring those minor annoyances, I see almost nothing.
And suddenly the hinges started to unhitch. - Dorothy describing the impact of falling homes, Wizard of Oz, 1939
And, oh, what happened then was rich. The house began to pitch. - Munchkins describing the impact of falling homes, Wizard of Oz, 1939
The last to go will see the first three go before her. And her little dog too. - Wicked Witch of the West's reaction to falling homes, Wizard of Oz, 1939
O-Joe,
It is quite interesting and valid to find statistics that support one's personal bias - both bulls and bears do this. However, to look at the current state of the economic system without looking at the systemic collapses occurring within some of the markets, is to be willfully blind of the direction that the market is going. Kind of like the picking of arguments the tobacco industry used 'cigarettes don't cause cancer' when it was painfully obvious to all those who thought independently or who didn't have a vested interest that they did. So then, what is your vested interest?
I would think from reading here that most people here are realists. I really don't care if I make money from PUTS or Calls. Right now is the time to be bearish. It is better to be bearish and wrong than bullish and wrong.
"However, to look at the current state of the economic system without looking at the systemic collapses occurring within some of the markets, is to be willfully blind of the direction that the market is going."
canuck man,
not trying to be snotty, but no one ever made any money in the markets looking at what is 'painfully obvious',the trick is to find what ain't so obvious. about 12 months ago the mainstream press, and virtually all the financial media were giving short shrift to the whole potential housing and credit debacle. CFC was north of 50, no one had even heard of NEW, and NFI. I remember well reading about the demise of OWNIT on ml-implode. It became clear to me after reading as much as i could about the company that there was no corporate fraud involved, no rogue traders, just a company in the wrong market space. since they had a pretty good size sampling, it was to me a good bet that the whole subprime mortgage space was going to be a mess of gigantic proportion and I made some bets accordingly and got paid. That horse race is pretty much over. The big question is, what's going to be the next one that isnt already on the radar screen?
"The big question is, what's going to be the next one that isnt already on the radar screen?"
China, basic metal, investment banker, big banks are all on the critical list where they can go either way depending on US recession (or not) and the impact to China economy.
OJoe, the ECRI guys are not infallible. They claim they've never gotten it wrong, but that's not true. When they were working at Columbia with Moore, they forecast a recession in 1996 using their prime rate indicator. It didn't happen. Their work was good. In fact, it was damned good, but it didn't happen.
ECRI can claim infallibility because they haven't been around as an organization for that long and haven't had to make that many tough calls in real time.
Now, I'm sure you're going to argue my point, and that's fine, but I'm not going to dig through my files or Lexis to find the documentation. You'll have to do that yourself.
not trying to be snotty, but no one ever made any money in the markets looking at what is 'painfully obvious',the trick is to find what ain't so obvious.
I don't think that's what Canuck was saying. He didn't say the entire market found it painfully obvious. If the entire market found stagflation painfully obvious, I'd probably be changing my name.
Where are the news articles talking about stagflation though? Even the bears can't agree on this topic, much less the bulls.
There are 68,360 "inflation" news articles.
There are 540 "deflation" news articles.
There are 263 "stagflation" news articles (and rising, known simply because I look for it daily).
I wouldn't say either deflation or stagflation was obvious, based on what's being written. Just my opinion of course (I'm full of them/it, and other things too more than likely. )
No need to worry about sounding snotty. Yes, the mainstream indicators won't find the next implosion (or explosion, that would be worse). The real question is what do the numbers behind the number say.
First, discount numbers/scientific papers/anecdotal evidence where the presenter (e.g. NAR, Paulson, anyone promoting a book) have a vested interest in the outcome of the presentation of their numbers.
Second, make sure the data passes the laugh test
Third, make sure the calculation of the estimates follows proper accounting and things haven't been hidden to make things look better (e.g. SIVs), or people aren't trying to cover things up (MLEC).
Fourth, what are the historic correlations to current trends. In Canada, when housing in the States went down in the past, the lumber industry here had a hard time.
Fifth, where has there been irrational speculation. Housing was (and still is) perfect for this, a lot of the commodities still have it.
Nothing beats talking to people and crunching the numbers. If something doesn't line up, you can bet eventually it will be shown out.
Sixth, find a way to get rid of one's personal bias as to what we may think is happening. Our worst enemy is thinking that we know better - this type of thinking lead to the quant models and putting far too much reliance on 'hero' CEOs who are self serving instead of serving the overall group of shareholders/investors.
p.s. Stag Mark was right that I wasn't saying that the market found it obvious: I was saying that it is now obvious
A great civilization will bear a lot of abuse, but there are dangers in the current situation that threaten anyone who swings for the fences. - Charles Munger, May 2005
For what it is worth, I expect an ongoing bear market in fence swingers, at least back to where we were in May of 2005 (adjusted for inflation).
Here's my anecdotal report: friends that own a hair salon in Orange County, CA, are reporting that their business has dropped substantially. Clients that would ordinarily cut their hair every 5-6 weeks are stretching it to 7-8 weeks, and clients needing color are doubling the interval between weaves and dyes.
On the other hand, we just returned from sushi. The place was packed tonight, busier than I've seen in 2 months. I attribute that to "sick of turkey" syndrome.
The big question is, what's going to be the next one that isnt already on the radar screen?
How about safety? We've been embracing risk so long many have forgotten what safety is. (Of course, people all seeking safety at the same time would most likely cause a recession.)
My sister tells me of a friend (in California) who is seeing her housing payment climb 36% and is now using the "b" word. To put it in my perspective, each future monthly payment would represent a full one third of my (rather frugal) annual living expenses! Why have people done this to themselves? As my sister puts it, "And she was caught in the impossible belief nothing changes!"
My sister starts a new banking job on Monday (in Washington State). She's been out of the workforce for a while (semi-retired) but felt it prudent to reenter. Since she accepted the job they have issued a hiring freeze. Her job is currently safe, but there won't be anyone coming in behind her.
Meanwhile, my girlfriend continues to look for work (also in Washington State).
As I walk around the neighborhood I see plenty of "price reduced" signs on homes for sale (one home has two such signs).
Something tells me Washington State is not going to be as immune as some once thought.
Fence Swinger's are protected under various single-letter to mulitple letter ratings, structured finance and quesi governmental organizations and institutions
Stagflationary Mark: Where are the news articles talking about stagflation though?
...
I wouldn't say either deflation or stagflation was obvious, based on what's being written. Just my opinion of course (I'm full of them/it, and other things too more than likely. )
Well, I've had a Google News trigger for stagflation for quite awhile (added it right after reading Economics of Worldwide Stagflation over a year ago). While it is not covered much, it has only been recently that I've been getting hits from "reputable" news sources.
My outlook is that Hilary wins in 08 and makes a lot of money available for Cleantech and green collar jobs. As much as I think inflation is cheating, a new New Deal to repair the environment and upgrade the nation's infrastructure with more sustainable, efficient systems is probably worth it. Let's hope the execution of the programs don't wreck the economy. Volcker might have to come out of retirement.
Also, as CR has noted, war spending has prevented the expected housing led recession.
Oh, and for those interested in getting in on the Cleantech gravy train... choochoo !
"Lots of really big boxes going into little tiny cars.Lots of really big boxes going into little tiny cars."
More anecdotals:
The most common new cars I'm seeing on the street these days in this California beach town are the Honda Fit and Toyota Yaris, new higher-quality sub-subcompact models that sell for around $13K. New trucks and SUVs, mid-sized cars -- not so much. Buyers seem to be both young single professionals and families (the Fit has a biggish cab).
Robert Coté-
Just a couple of comments about your observations -
1. Europe is completely in the thrall of urban planners - highspeed rail, high density development, numerous restrictions on building in green fields (Europeans retain the charming idea that food is grown, and that sufficient farmland to feed themselves is a wiser investment than exurbia), and an emphasis on walkable communities (has something to do with Euope's past, apparently). No wonder they don't have anywhere near America's bountiful retail space. Even worse, at least in Germany, Walmart had to go home - it couldn't compete in the brutal retail environment here, which includes unions - strangely, the world's largest exporter has industry wide unions which actually feel that they have an equal voice in various economic and social policies.
'Bought ~$600 of crap for $298. Sent in another $120 in rebates.' No, you paid 178 dollars for 178 dollars worth of crap, assuming the rebates are paid. Your accounting is as flawed as the examples you provide. At some point, reality will peek through - you didn't 'save' any money, you simply spent it. That you paid more or less money using some arbitrary standard is a perspective. Potentially a valuable or useful one, of course, but still a perspective. Personally, I like to think you spent about 120 euros, and in my terms, all your shopping is getting cheaper over time - except for oil, but since oil never runs out in exurbia, I'm sure that you can find some other perspective to explain its price.
Peakinese,
This is not the place. If rather than use an anonymous post to raise inflammatory issues you had read my post you'd see I agree that the US is very likely over stored although there is probably some unknown amount of understoring possible in those bucolic lands you praise so highly.
As to your opinion as to the crap I bought, no. Sorry, no. That is unless you are willing to sell me some gold at the lowest price recently, say the last 6 months. It is possible to assign common values to good deals higher than the purchase price.
Shiller- WE have to consider the possibility that the housing price downturn will eventually be as big as that of the last truly big decline, from 1925 to 1933, when prices fell by a total of 30 percent."
30 percent. Well, CR, Shiller said it. We need to start thinking about the unthinkable. We have to consider the possibility that virtually all of the equity in US housing could be vaporized.
If you don't think we are in recession yet, ask your friends who are car or real estate salesmen. Better yet, ask your friend the commercial banker. Ooh ohh I know, ask your local retailer!
Josh
Robert Coté: Crap or not, whether you "saved" anything is entirely a matter of perspective (well, it depends on how one defines the term). Would you have purchased the items at their "regular" price? If yes, then you did "save" the difference. If not, then you arguably didn't save anything, or at best the difference to your highest "acceptable" price.
But anyway that's hair splitting, you got it cheaper than sticker (with the caveat about the rebates).
Savings are not a matter of perspective, at least in our brave new financial world.
See, by spending 178 dollars (rebates paid in full - placing complete trust in people who owe us money to always pay the full amount, as is current practice in America), he saved ~422 dollars, which means he can now go out again, spend another 178 dollars, doubling his savings to ~844 dollars by only spending 358 dollars.
He can continue this process, buying crap while saving money, as illustrated per Citibank's managerial vision - 'When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, youve got to get up and dance. Were still dancing.'
As he still seems to be liquid, he can keep this sort of process going until the American economy restores itself to dynamic health, returning to its rightful place as número uno. No reason to save real money when you can save it by shopping. Which is just a matter of perspective.
Oops - the savings were larger than I thought - he actually spent 356 dollars. Luckily, I don't work in any responsible position in the financial industry, otherwise you would have to add a billion or two (or 10) (or 100) (or 1000) after my figures.
cote:
i agree you're living in a consumerist time-warp..getting hitched to things encumbering you even more perhaps not only forcing you to insure 'em but also to constantly worry about 'em like them not working as well as you thought..
And your rationalization that you saved something takes a cake.
I stayed home while the wife went shopping. It will be interesting to see whether Black Friday meets expectatons of Wall Street. I have puts on JCP, Macys, Dillards and a few other retailers. The JCP Jan puts are worth about $16 per share. They lost some on Friday, put my plan is to hold tight until January so they do not contribute to the 2007 tax bill. My guess is that high foot traffic for retailers may not offset weak margins and the lack of follow through after Friday. On the other hand, Abby Cohen and her colleagues at Goldman are predicting something like a 9% gain on the S&P before year end.
As I keep reading this blog (and occasionally contributing), one thing I keep noticing.. some people here expect the crash/recession (or possibly depression) to happen in very short order. True, there are some immediate effects visible now. I think various contributors have a compressed time-line.
Florida had a major land boom crash once before.. around 1925-26. It preceded the Wall St crash by 3-4 years. It preceded the depth of the depression by 7-8 years. It took a good 10 years before Florida started pulling out of this. More like 20 years (the end of WW-II) before things got back to normal.
Florida Land Boom wiki By January 1925, investors were beginning to read negative press about Florida investments. Forbes magazine warned that Florida land prices were based solely upon the expectation of finding a customer, not upon any reality of land value. New York bankers and the IRS both began to scrutinize the Florida real estate boom as a giant sham operation. Speculators intent on flipping properties at huge profits began to have a difficult time finding new buyers. The inevitable bursting of the real estate bubble had begun.
CR, the ShopperTrak data seem questionable on two counts
If stores are open a greater number of hours, as they were this Friday, foot traffic is naturally going to be higher -- so the numbers would have to go up. (ShopperTrak does count by foot traffic - see link below).
Deeper discounts to lure semi-desperate shoppers seemed to work, but I am wondering how many of those feet left in a hurry (and ran to other stores in more desperation) due to limited bargains.
I agree with Northern Cali - with the difference in store hours and mindset of shoppers, we need the hard data to really determine whether profits rose or fell this year - which is the only meaningful bit of data out of all this Black Friday hype.
Yes, it does. I quote "A Random Walk Down Wall Street."
On the mid-1920s Florida craze:
Easy credit terms added fuel to the speculative frenzy. "This market has no downside risk," the land speculators opined, as Dutchmen undoubtedly said to each other about the tulip-bulb market in an earlier time.
Here's a quote from the same book describing the stock market frenzy leading up to the Great Depression.
Unfortunately, there were hundreds of smiling operators only too glad to help the public construct castles in the air. Manipulation on the stock exchange set new records for unscrupulousness. No better example can be found than the operation of investment pools.
Unfortunately, that sounds even more familiar.
The Running of the Hedgehogs Theres a much simpler way of putting it, offered by one of the industrys luminaries. According to Cliff Asness of AQR Capital, Hedge funds are investment pools that are relatively unconstrained in what they do. They are relatively unregulated (for now), charge very high fees, will not necessarily give you your money back when you want it, and will generally not tell you what they do. They are supposed to make money all the time, and when they fail at this, their investors redeem and go to someone else who has recently been making money. Every three or four years, they deliver a one-in-a-hundred-year flood.
...
Both industries share an addiction to leverage, which is to say, borrowed money. They use it liberally to maximize the return of a good deal or a good trade. From the very beginning, in fact, hedge funds were premised on the notion that they could exploit minute profit-making opportunities by placing big leveraged bets. The hedge in hedge funds originally referred to the downside protection a fund would simultaneously employ by, yes, hedging. Typically, that would mean buying one stock and shorting another. While many hedge funds still employ actual hedging techniques, the practice has gone out of vogue. But leverage hasnt, and that means big bets with little or no downside protection. In a word, risky.
...
Ask any hedge-fund manager, and he will tell you that the easy money has already been made, and there are no obvious trades sitting around. A recent report by the European firm Dresdner Kleinwort points out that if 4 percent of assets under management go to fees, and another 4 to 5 percent is spent on trading commissions and interest, hedge funds would need to pull in 20 percent annually to justify their costs. That forces them to take ever greater risks.
...
Well, for one, the appetite for risk among investors seems to be at some kind of historical high. But paradoxially, its also a desire for downside protection. The popularity of hedge funds still has a lot to do with how they performed
Well, for one, the appetite for risk among investors seems to be at some kind of historical high. But paradoxially, its also a desire for downside protection. The popularity of hedge funds still has a lot to do with how they performed five years ago. Seriously. During the bear market of 2000 to 2002, when the market fell 40 percent following the dot-com collapse, the average hedge fund didnt lose money. With severe losses still fresh in their memories, pension-fund managers and other institutional investors are perfectly happy to shave a little off the top for that kind of downside protection. The question is in how many funds it still exists.
Florida Land Boom wiki
By January 1925, investors were beginning to read negative press about Florida investments. Forbes magazine warned that Florida land prices were based solely upon the expectation of finding a customer, not upon any reality of land value. New York bankers and the IRS both began to scrutinize the Florida real estate boom as a giant sham operation. Speculators intent on flipping properties at huge profits began to have a difficult time finding new buyers. The inevitable bursting of the real estate bubble had begun.
I tried to cross-check the Florida RE bust with Charles Ponzi (no luck, but I didn't try very hard). It seems at the very least the 1920s Florida RE boom/bust had his signature moves, mainly having the next buyer/speculator bid up the price, until it could no longer be sustained.
Setting aside the notion that the run-up of RE prices was fraudulent in nature, I would argue that this time the RE bubble is more systemic in nature, and therefore can have a more immediate impact on the overall economy. I don't know how the Florida regional economy is doing, however. The regional banks there sure got hit hard.
Robert Coté -
'...unless you are willing to sell me some gold at the lowest price recently, say the last 6 months.'
As I have no interest in buying or selling gold, what is its value to me? Its price is essentially meaningless as far as I am concerned. But if I understand your point, its price is important because of what someone else will pay for it.
How much do you think someone will pay for the crap you bought for $178? You apparently believe it to be worth more than you paid, which is fine. Do you think anyone will pay more for it than you? Do you honestly think there is a growing market for crap?
Welcome to America, which brought the world Ebay - where people show a profit selling crap while paying a commission. Shame that it is less than likely that any of the crap you bought was actually produced in America. And yes, I know, intellectual property is what makes America rich - the Communist Chinese find that particular capitalist delusion hilarious, I'm sure, along the Leninist lines of capitalists selling the roap to hang themselves with.
Just read the Shiller piece that FFDIC linked to . . . grist meet mill, worms meet can. I admire his pluck, I guess.
In any forum the legacy of those New Deal institutions are debateable by intelligent people of good will, even today. And for the life of me I cannot see our current political leadership assessing what's gone before, let alone recognizing where we're at and "what should be done about it". Oh yeah, then there's that intelligence and good will part to think about too.
But for this crowd: if even a sliver of those issues goes on-topic in this forum, we'll never get to work on Monday!
That's (yard sale, thrift store, auction) where you'll find all the made in the USA stuff too, how sad. It's not like you can give someone a used sweater for Christmas though!!!
"How much do you think someone will pay for the crap you bought for $178? You apparently believe it to be worth more than you paid, which is fine. Do you think anyone will pay more for it than you? Do you honestly think there is a growing market for crap?"
I understand your thinking -- believe me, as a dedicated garage sale enthusiast I see it at first hand. But it's only "crap" if you don't really need it. If your old TV is creaky and you buy a new one for half the going rate, that's not crap. Not if you use it a good long time. Same for laptops, a used coat, even a car which loses 25 percent of its value when you drive it off the floor.
If you buy the stuff to use it, and get your money's worth (there's an old term) out of it, it's valuable even if its market value isn't good -- largely because there isn't an organized market. Yeah, maybe you could only sell that $1000 laptop for $700. But if you needed it, how easy would it be able to find used, at that price? Not so easy.
Frankly, if we do have a serious recession, I expect the price of "crap" to rise again, and even the return of true second-hand retail.
You wrote "The JCP Jan puts are worth about $16 per share. They lost some on Friday, put my plan is to hold tight until January so they do not contribute to the 2007 tax bill."
Do you mean the puts are currently bid at $16 per contract?. When you say $16 per share you imply a bid price of 16 cents per contract.
The reason I ask is that if the market for those puts is truly $16 per contract then those puts are deep in the money with little or no time value left in the premium. (A good thing if you plan on holding until 2008 tax year).
On the other hand if you are saying the puts you own are 16 cents in the money (ex: Jan 40 puts and stock is trading at 39.74) then you own at the money puts with little intrinisc value and tons of time value.
This is key since theta or loss of time value due to the passage of time is NOT linear and accelerates as expiration gets closer.
Somewhat back on topic after being way OT on prior post.
From a local paper - an article on declining sales tax revenues in the land of conspicuous consumption AKA Long Island.
"In Nassau, sales tax revenue is running less than 0.9 percent ahead of 2006 figures, about a quarter of the county's original projected growth of 3.6 percent for 2007. Suffolk, which began the year with a more conservative sales tax projection, also will fall short of its initial target, according to budget officials."
My favorite quote
"Legis. Lisanne Altmann (D-Great Neck), chairwoman of the Nassau Legislature's budget review committee, said Nassau officials will have no choice but to raise taxes.
"I don't know where there is to cut," Altmann said. "There is no way that Nassau County can get away without raising property taxes if the sales tax keeps falling."
Woohoo - wage stagflation and increasing taxes - a lovely combo
During Great Depression unemployment rate skyrocketed from 3.4 (1929) to whopping 23.6 percent (1932) and it was close to 20 percent throughout the 30's.
I think US is about to experience something quite similar and that would mean 25-30 million people unemployed by 2010, instead of seven million now.
Next year probably will be like 1930, 8-10 percent unemployment rate but the real hellish year could be 2009.
To all who had nothing but snarky jabs at rampant consumerism and me personally:
Last night I billed $327 in parts and services using but 1 item purchased at Fry's $0 after rebate). In your haste to stereotype then excoriate you jumped to a false conclusion.
Additionally; If the US were adequately compensated for intellectual property there would be no trade deficit.
reread his first post on the matter: nowhere does he speak of "saving".
He states that he bought items for a certain price, that had a different higher price tag. he then got a rebate on top of that.
the point of his post: that the amount reported to the news agencies will likely be the PRE-rebate purchace price, and maybe even be the original sticker price of his purchases... thus the data will be skewed higher than the actual purchases.
the second part of his post was simply showing how traffic had noticeably slowed on Saturday compared with Friday.
where/why are you arguing SEMANTICS (yes semantics) especially when "saved" was nowhere in his post?
FWIW:
I have gone head to head vs Robert on his Exurban utopianistic viewpoints many a time (in another forum)... so it's not like I'm his groupie... he will see IMO the failure of an overspread populace in terms of infrastructure and global competitiveness...
however, to go go on diatribes about "spending to save" is rediculous.
especially when it's a construct of your own argument.
"Next year probably will be like 1930, 8-10 percent unemployment rate but the real hellish year could be 2009."
EADS chief executive Louis Gallois said the company may well have to transfer some of its production to the US if the dollar continues to remain weak, in an interview with Welt am Sonntag newspaper.
I don't think it will get all that bad the unemployment during the great depression was largely a result of Hoovers attempt to keep wages from falling.
CR has stated in the past that double digit unemployment is his standard for a recession.
I assume that is the reported unemployment rate as the 'real' rate that includes looking for work, discouraged and part time wishing for full time is about 9% now.
I use slick deals to shop my tech stuff. I used to do the black Friday thing and generally ended up with lots of stuff that was unused a year later.
Yearning,
Thanks. I appreciate the explanation. Peakinese was clearly baiting in the hopes of rehashing old issues in front of a new audience. It should be noted that that the name, "Peakinese" is a term I coined for the constant decades long yapping peak oil novitiates bowing at the altar of Hubbert. If it is any consolation I have recently changed my mind and now believe what the peakinese incorrectly term peak oil may be as close as 50-60 years away. Prior to this my position was that it was too far away to know.
As to the oft termed Cotean Nodaltopia aka Exurban Dystopia I think in an age of solar rooftops all those southern state sprawlburgs may have pulled the diamond from a pile of manure.
A friend that is a retail manager (children's clothing store) here in Florida said that although their Black Firday sales were up 5-6% from last year, she saw an enormous amount of declined credit cards and transactions being split between 2 credit cards. ($40 on this one, $30 on that one).
I love debate as much as anybody else... but productive debate.
also, I've always enjoyed your contributions regardless of whether or not I always agree with eventual conclusions... you tend to post well thought out ideas with factual support when needed.
And I do not dismiss "on the streets" anecdotal observations either... they "saved" me lots of money in San Diego Real Estate in 2005.
What is the sequence of events that gets unemployment from 5+% today to 8-10% in 12 months?
Just curious on how you see it unfolding. I think I know where we are going, but I am continually amused (and enriched) on how the events actually transpire.
Clyde: Almost all new jobs during last five years have been "consumption" based. New restaurants, malls etc etc.
After US consumers have finished maxing out their last credit cards (Christmas sales could be still quite strong this year), those consumption based jobs will start to disappear quite fast.
david_in_ct "not trying to be snotty, but no one ever made any money in the markets looking at what is 'painfully obvious'"
I beg to differ. Just over the past couple of weeks FRE & FNM lost around 1/2 of their rather substantial market caps. I would say it was a long time coming, given their positioning. In fact, there may be another 50% haircut in their uncertain futures.
They were the last man standing in the Own-It, NEW, NFI domino chain.
So to extend that easily visible uncontained cloud a little, to include credit in general, would seem to be a logical step. In that case pure-play credit card and auto lending should be the next shoe. I agree with the suggestion above - COF is a dead man walking. Walchovia and BAC still have some to give back too, if you believe the containment wall around Chernobyl still has some big cracks.
From the previous thread, I like energy-econ's postion in your little wager. It's been a while since tax loss selling has been a dominant force in the equities markets. I expect it'll have an impact through year end. That would suggest financials and builders could even give some more back here.
Robert Cote: Recession or no, the US is way over stored. Italy 1.2 square feet of retail space per capita, compared with 2.3 square feet per capita in the United Kingdom, 2.2 square feet per capita in France and 1.3 square feet per capita in Germany, according to Cushman & Wakefield Healey & Baker. (The United States has 21 square feet of retail space per capita, according to ICSC.)
RayontheFarm what percentage of that belongs to walmart ?
some digging around in the WM annual report allowed me to calculate the number for the US.. 618.029 million sq-ft (supercenters + discount stores + neighborhood markets + sams clubs)
first glance says that walmart has 9-10 % of all the US retail space.
So once Wal-Mart drives everyone else out of business we will be roughly inline with the UK and France (21*.1=2.1). Of course finding a new partner to play "peg that dollar" might slow them down a bit.
I wonder what the sales figures would be if stores decided to accept only cash, check or debit cards ? The fact that people are once again spending money they don't in many cases have is nothing new.
That's (yard sale, thrift store, auction) where you'll find all the made in the USA stuff too, how sad. It's not like you can give someone a used sweater for Christmas though!!!
Average Citizen | 11.25.07 - 9:57 am | #
At any other time in history, this comment would be false regarding the vast majority of humanity who lived in areas cold enough to require a sweater. There are times when people make a living off of rags.
I sat next to an Indian guy on a plane recently who says they've started outsourcing much of their IT work to the US because they just don't have the capacity.
EADS is thinking along the same lines. My one-man consulting operation is getting inundated with work because, in Euros or Canadian dollars, I'm a bargain.
Not sure what this does to the equation. I think we're in a recession, but also that a lot of professional types will do just fine working from home for Canadian, European, Indian and someday Chinese task masters.
first glance says that walmart has 9-10 % of all the US retail space.
So what? Unless you subscribe to the anti-walmart philosophy this is just another meaningless statistic.
American patent law is a putrid stew of xenophobia, nationalism, and greed. I applaud the many nations that violate these absurd laws.
My sister is an intl. patent lawyer and talks about her work a lot. Most of what I hear sounds pretty reasonable. Your wording sounds like you read a 2 paragraph cliff's notes on a very biased site and regurgitated it here. I welcome you proving me wrong.
From the Holiday spending good news is bad news Dept.: ANY INCREASES IN RETAIL SPENDING OVER THE POST-THANKSGIVING HOLIDAY IS ANOTHER NAIL IN THE COFFIN OF MORE DEBT-DRUNKEN US CONSUMERS FALLING FURTHER BEHIND IN THEIR MORTGAGE, CREDIT CARD, AND AUTO LOAN PAYMENTS AND PUSHING THE US ECONOMY INTO AN EVEN DEEPER RECESSION STRAIGHT AHEAD...(It is sad to witness the 4am "herd" running thru the doors of consumption heaven and over the cliff of bankruptcy & foreclosure hell)...
"That's (yard sale, thrift store, auction) where you'll find all the made in the USA stuff too, how sad. It's not like you can give someone a used sweater for Christmas though!!!"
You can if it looks new. I've got a half-dozen new-looking sweaters from the local Goodwill at $3-5 each; Shetland wool or Pendleton or similar, all of them. Might not fool a woman who wants to know "where you bought it" (so she can return it); but guys don't ask so many questions!
Because we're buying so much crap that we don't need, especially as presents for people who don't want them, there is a ton of good looking apparel out there.
but I don't ??? the U.S. economy is in recession - yet.
Believe? Think?? Grok??? What's the missing word, CR?
I'm the first one to comment? What to say... i've used Rosenberg as an indicator in almost the exact same way I've used CR. that is: a conservatively assessed yet open minded position on the economy. Whatever they are bearish about, you can ~roughly trust. And this becomes stronger every time they predict something and it happens. I think that by the summer 2008 a recession will be declared. Have a wonderful Saturday night!
Just had dinner with a woman who works in the cities of upstate NY with the working class. She said, "people are hurting...you don't understand...people are hurting".
If the recession isn't here yet, people are going to really be hurting.
I vote for "Grok" but CR has Level 3 vocabulary so who knows what it really means.
The feel of this economy is recession. We would never know factually with the government raping the statistics as they are. Employment is contracting, money supply is going south with the commercial paper shrinkage, real decline in retail, and automotive in the tank.
I think we are there, the start of a long slide into 3rd world land!
I believe we can all agree we are in the middle-end of Thanksgiving weekend... Cheers!
Got some feedback from the mgt. of a local discount retailer (you know, the one we all track). They said they saw about a 3% increase in their same store sales for Black Friday. The question, of course, is margins. Did they sacrifice margins to keep their volumes up. We'll know more when the more upscale retailers report next week.
It's probably safe to say that Florida, Nevada and California are in a recession. Even though the housing market is a mess in Colorado, the employment seems to be strong. It's probably not in a recession. Cities like Cleveland and Detroit, on the other hand, may be in a depression. At this point recessions are most likely regional.
The holiday sales question is not just margins, it's inflation. We get nominal data but what is the real data (I mean, the REAL real data... get it?)
And the all important holiday retail sales are apparently off to a healthy start...
I'm going to make a prediction. I think the healthy start will fizzle quickly over the next week.
First, if people are hurting they'd be more likely to attend 4am sales in hopes of getting something at its lowest price. They'd camp overnight to be first in line to save money. They'd consider that "work" to be easier than the alternative in an ecomomy that's seeing rising unemployment.
Second, I didn't check the stock market until after it closed on Friday. I saw that the Dow was up 181 points and naturally assumed (as was almost always the case in the past) that my TIPS fund got temporarily slaughtered (giving back at least the previous day's gains). It was down a mere 0.07% though. I told my girlfriend (for what that's worth) that something changed and that I trusted Friday's stock market rally about as far as I could throw it. I believe that investors got too euphoric watching the 4am campers.
Third, people have all weekend to read the following.
Feds Forecast Weighs on Stocks
The Fed projected reduced economic growth, higher unemployment and a continued threat from inflation. That report came on top of high oil prices and a weak dollar.
It might just as well say, "The Fed protjected stagflation, stagflation and a continued threat from stagflation. That report came on top of stagflation and stagflation."
I could be wrong on all of this of course. That's what makes a market.
I have less than full confidence in the ShopperTrak sales number, as it is a 'mark to model' projection based on video mining software counting bodies...time will tell.
Catastrophe in the UK economy!
BBC NEWS | Business | England failure 'may hit economy'
Sitting in the relatively prosperous I-90/94 corridor in Montana (Billings to Missoula), I can say that retail sales these past two days have been steadily moderate (judging by the cars in the box store lots - what better econometrics?) but diffused. Diffused in that so many damn new box stores are popping up like mushrooms on overwatered Montana lawns. I think retail is way overbuilt as is housing and office space (5 pages of rentals and eight pages of sales in the local rag for this small burg). And, how can one ignore the for sale signs popping up on every block, insisting that it is a deal to pay $450,000 for what you couldn't pass off for a quarter of that price eight years ago. We'll see if the AZ/CA/FL downturn hits this place, which the savants of mortgagning insist is recession-proof.
S**k it, Optimistic Joe.
ahem
What I mean to say is, this rather lends credence to the bear argument, doesn't it? Of course, one must always bear in mind that the situation is fluid, predicting the future is always difficult, etc. etc.
Cheers,
prat
(I'm just joshing o-joe)
I still think we entered into a recession in May/June 2007. We shall see..interesting to note the the credit crunch (not "sub-prime issue") is becoming top of mind:
KAMPALA (Reuters) - Prime Minister Gordon Brown warned on Saturday that the global credit crunch would hit the U.S. and European economies, but said Britain could steer a stable course through the financial turbulence.
"There is absolutely no doubt that the American economy now will slow. It will have an effect on the European economy over these next few months," Brown told a news conference on the sidelines of a summit of the 53-nation Commonwealth in Uganda
Business finance news - currency market news - online UK currency markets - financial news - Interactive Investor
Didn't you tell us last year that ShopperTrak counts footprints and not actual dollars, or was it Mish ? They convert footcount into dollar sales by some mumbo jumbo.
My analysis says that the economy is in recession. Mish is way better than CR in talking about the economy (based on past forecasts). CR's skills are in reporting the intricacies of the finance industry.
I told my girlfriend
Stag Mark, now that's got to be a strong leading indicator of,...I don't know, something,...confidence?...an understanding girlfriend?
Conjure Bag is pleased that Rosenberg agrees with him and his long-standing forecast:
Recession Q1-08
I don't see how California and Florida can't already be in a recession. With Detroit and Clevland being in outright Depression. I guess BFE Montana made up for these areas.
Just got back from Wally World and didn't see anything but food in peoples carts including mine.
Greenie,
That is exactly right, it is 'mark to model' sales based on their assumption of conversion rates of body count to sales receipts.
Recession or no, the US is way over stored. Italy 1.2 square feet of retail space per capita, compared with 2.3 square feet per capita in the United Kingdom, 2.2 square feet per capita in France and 1.3 square feet per capita in Germany, according to Cushman & Wakefield Healey & Baker. (The United States has 21 square feet of retail space per capita, according to ICSC.)
That tells me that there hundreds of millions of square feet are ripe for adaptive reuse without any particular economic impetus. It equally bodes poorly for future new commercial construction.
Robert,
Considering the size of the average American to the average European in size we probably need that extra space. Including myself.
Robert Coté,
Holy cow. You are like the Grinch that measured Christmas. (No offense intended.)
sdtfs,
Hahaha!
She shared a story with me as well. She spoke of an online friend's husband who was seriously depressed at Thanksgiving. It seems he's a banker in Arizona and has recently realized that things are heading into the toilet.
But but but Sebastian said the stock market perfectly discounts all information and the high levels of the stock market guaranteed solid earnings going forward. There must be some mistake. Has the world gone mad.
Recession? Big deal. The uber-wealthy got theirs, that's all that matters.
phew alls good. my muni bond underwriter told me that there is no insurance needed to place our issue. phew. the search for yield goes on.
my bond salesmen told me so
maggianos was packed tonight if that means anything
BrantW,
...the stock market perfectly discounts...
The Dow is currently sporting a 9.1% discount from its all time high.
How does it make money though? Volume!!
dc1000- "maggianos was packed tonight if that means anything"
Conjure and I miss the spooky crowd at Marco Polo's on Connecticut. It closed about 1970. The Alibi Club, last I heard, was still in business on I St.
Fry's on Friday was mad. Bought ~$600 of crap for $298. Sent in another $120 in rebates. They'll still count it as $298. Hollywood will count the 2@ $1.98, 3@ $4.94 DVDs as some unimaginable unit volume sales that have no reality to the $14 I paid. Crowded parking lot. Good sign. Lots of really big boxes going into little tiny cars. $897 50" HDTV plasmas will do that. The checkout line was near an hour. Still, I went back the next day for a few oddments and a return. Empty, quiet. 60+ checkouts running on Friday. 8, yes eight were running with no waiting on Saturday.
Anything you might hear about Friday is not going to follow through. Its become almost a game like the NAR sales adjustments.
It equally bodes poorly for future new commercial construction.
Yup. Wonder how many "months of supply" that'll work out too once the consumer retrenches. On second thought, make that "years of supply".
But but but Sebastian said the stock market perfectly discounts all information and the high levels of the stock market guaranteed solid earnings going forward. There must be some mistake. Has the world gone mad.
BrantW
Sebastian said there would be a stock market correction due to the reduced earnings, but no follow-thru recession. This is as of now still the only valid conclusion we can draw from the current economic data. Contrast that with the many absurd statements about "going to third world status" or "Great Depression".
ECRI's leading indicator index is at annualized -1.5, signaling a slowdown with below-trend growth but no recession. In November 2000 it was at -5, correctly predicting the negative growth starting some six months later (I think the official start of the recession was later set to April 2001). Since then, ECRI never forecasted any recession. Now contrast ECRI's history of recession forecasts with that of Mr. Roubini or other perma-bears constantly predicting and then back-dating their recession forecasts. In conclusion: sorry bears; there will be no recession within the next 6 months.
Additionally, the RE bubble does not seem to be able to follow-thru to the general economy as the dot.com bubble did. From the burst to that bubble in Q1/00 to the first ECRI recession indication it only took 7 months (and that was without any external 9/11 shock already visible). The RE bubble burst between mid 2005 and early 2006, depending on what figures you look at. Until now, thus 18-27 months later, we still have no reliable recession indication. If there is no follow-thru within the next two months, the FED easing will work its way into stronger growth again and raising ECRI indicators. I currently cannot see any follow-thru whatsoever.
O-Joe
"There is absolutely no doubt that the American economy now will slow. It will have an effect on the European economy over these next few months," Brown told a news conference on the sidelines of a summit of the 53-nation Commonwealth in Uganda"
by the time the most public and political of the 'economists' steps up to the plate with a 'forecast' do you really think you can make money going in that direction?
O-Joe's exposition summarized: "Passing the 18th floor and so far so good."
Here's anecdotal evidence at one mall.
Shoppers out again Saturday, but not in droves
Still, it was difficult to ignore the surprising calm and low mall attendance Saturday.
Love ya o-joe. Absolutely love ya.
Cheers,
prat
O-Joe's exposition summarized: "Passing the 18th floor and so far so good."
Robert Coté
I'm not sure if this was a serious discussion about recession probability or god-old-bear anecdote story telling. If the later, then sorry for my interruption
. I will look for a different CR post then.
O-Joe
Just had dinner with a woman who works in the cities of upstate NY with the working class. She said, "people are hurting...you don't understand...people are hurting".
Well, to be more accurate, people upstate have been hurting since, oh, 1981 or so.
Love ya o-joe. Absolutely love ya.
Cheers,
prat
praetorian
I wouldn't know what to do without the CR blog bears. I find it so fascinating how (from my perspective) one's view on the economy, if not life as a whole, can be so bearishly distorted.
I must also say that unlike in so many other bear blogs I really learn something from CR and Tanta. If you go to Mish etc. there's only bear propaganda. At CR I actually learned a lot about past RE boom-bust cycles to better time my market entry.
O-Joe
O Joe,
Look at ABCP and spin me that story as bullish...please!
The United States has 21 square feet of retail space per capita, according to ICSC.
what percentage of that belongs to walmart ?
some digging around in the WM annual report allowed me to calculate the number for the US.. 618.029 million sq-ft (supercenters + discount stores + neighborhood markets + sams clubs)
first glance says that walmart has 9-10 % of all the US retail space.
O-Joe,
Funny you should mention Mish's blog. I've been kicking myself silly for not shorting the bond insurers & GSE's when he called them out months before they tanked 60+%. Would've made an absolute fortune. Bear propaganda? I'd called it pure prescience.
O-Joe,
Additionally, the RE bubble does not seem to be able to follow-thru to the general economy as the dot.com bubble did.
I currently cannot see any follow-thru whatsoever.
I agree. All I see is a very unstable currency combined with parabolic energy prices, a stagnant stock market, weakening corporate profits, rising unemployment, dramatic weaking in the financial sector which represents some 30% of our economy, and dramatic weakening of a multi-decade long rising consumer import trend that accounts for some 70% of our economy. In fact, barring those minor annoyances, I see almost nothing.
And suddenly the hinges started to unhitch. - Dorothy describing the impact of falling homes, Wizard of Oz, 1939
And, oh, what happened then was rich. The house began to pitch. - Munchkins describing the impact of falling homes, Wizard of Oz, 1939
The last to go will see the first three go before her. And her little dog too. - Wicked Witch of the West's reaction to falling homes, Wizard of Oz, 1939
O-Joe,
It is quite interesting and valid to find statistics that support one's personal bias - both bulls and bears do this. However, to look at the current state of the economic system without looking at the systemic collapses occurring within some of the markets, is to be willfully blind of the direction that the market is going. Kind of like the picking of arguments the tobacco industry used 'cigarettes don't cause cancer' when it was painfully obvious to all those who thought independently or who didn't have a vested interest that they did. So then, what is your vested interest?
Dumb Canuck,
It is quite interesting and valid to find statistics that support one's personal bias...So then, what is your vested interest?
I probably shouldn't say this but I just can't seem to bite my tongue.
optimism: a disposition or tendency to look on the more favorable side of events or conditions and to expect the most favorable outcome
Optimistic Joe,
I would think from reading here that most people here are realists. I really don't care if I make money from PUTS or Calls. Right now is the time to be bearish. It is better to be bearish and wrong than bullish and wrong.
"However, to look at the current state of the economic system without looking at the systemic collapses occurring within some of the markets, is to be willfully blind of the direction that the market is going."
canuck man,
not trying to be snotty, but no one ever made any money in the markets looking at what is 'painfully obvious',the trick is to find what ain't so obvious. about 12 months ago the mainstream press, and virtually all the financial media were giving short shrift to the whole potential housing and credit debacle. CFC was north of 50, no one had even heard of NEW, and NFI. I remember well reading about the demise of OWNIT on ml-implode. It became clear to me after reading as much as i could about the company that there was no corporate fraud involved, no rogue traders, just a company in the wrong market space. since they had a pretty good size sampling, it was to me a good bet that the whole subprime mortgage space was going to be a mess of gigantic proportion and I made some bets accordingly and got paid. That horse race is pretty much over. The big question is, what's going to be the next one that isnt already on the radar screen?
hey O Joe, hows your hedge fund doing?
"The big question is, what's going to be the next one that isnt already on the radar screen?"
China, basic metal, investment banker, big banks are all on the critical list where they can go either way depending on US recession (or not) and the impact to China economy.
OJoe, the ECRI guys are not infallible. They claim they've never gotten it wrong, but that's not true. When they were working at Columbia with Moore, they forecast a recession in 1996 using their prime rate indicator. It didn't happen. Their work was good. In fact, it was damned good, but it didn't happen.
ECRI can claim infallibility because they haven't been around as an organization for that long and haven't had to make that many tough calls in real time.
Now, I'm sure you're going to argue my point, and that's fine, but I'm not going to dig through my files or Lexis to find the documentation. You'll have to do that yourself.
david_in_ct,
not trying to be snotty, but no one ever made any money in the markets looking at what is 'painfully obvious',the trick is to find what ain't so obvious.
I don't think that's what Canuck was saying. He didn't say the entire market found it painfully obvious. If the entire market found stagflation painfully obvious, I'd probably be changing my name.
Where are the news articles talking about stagflation though? Even the bears can't agree on this topic, much less the bulls.
There are 68,360 "inflation" news articles.
There are 540 "deflation" news articles.
There are 263 "stagflation" news articles (and rising, known simply because I look for it daily).
I wouldn't say either deflation or stagflation was obvious, based on what's being written. Just my opinion of course (I'm full of them/it, and other things too more than likely.
)
david_in_ct:
No need to worry about sounding snotty. Yes, the mainstream indicators won't find the next implosion (or explosion, that would be worse). The real question is what do the numbers behind the number say.
First, discount numbers/scientific papers/anecdotal evidence where the presenter (e.g. NAR, Paulson, anyone promoting a book) have a vested interest in the outcome of the presentation of their numbers.
Second, make sure the data passes the laugh test
Third, make sure the calculation of the estimates follows proper accounting and things haven't been hidden to make things look better (e.g. SIVs), or people aren't trying to cover things up (MLEC).
Fourth, what are the historic correlations to current trends. In Canada, when housing in the States went down in the past, the lumber industry here had a hard time.
Fifth, where has there been irrational speculation. Housing was (and still is) perfect for this, a lot of the commodities still have it.
Nothing beats talking to people and crunching the numbers. If something doesn't line up, you can bet eventually it will be shown out.
I should add:
Sixth, find a way to get rid of one's personal bias as to what we may think is happening. Our worst enemy is thinking that we know better - this type of thinking lead to the quant models and putting far too much reliance on 'hero' CEOs who are self serving instead of serving the overall group of shareholders/investors.
p.s. Stag Mark was right that I wasn't saying that the market found it obvious: I was saying that it is now obvious
"The big question is, what's going to be the next one that isnt already on the radar screen?"
base metal producers like LMC, TCK_B.TO
steel like X, AKS, CMC
credit cards like COF
retailers like GES, URBN
A great civilization will bear a lot of abuse, but there are dangers in the current situation that threaten anyone who swings for the fences. - Charles Munger, May 2005
For what it is worth, I expect an ongoing bear market in fence swingers, at least back to where we were in May of 2005 (adjusted for inflation).
Here's my anecdotal report: friends that own a hair salon in Orange County, CA, are reporting that their business has dropped substantially. Clients that would ordinarily cut their hair every 5-6 weeks are stretching it to 7-8 weeks, and clients needing color are doubling the interval between weaves and dyes.
On the other hand, we just returned from sushi. The place was packed tonight, busier than I've seen in 2 months. I attribute that to "sick of turkey" syndrome.
The big question is, what's going to be the next one that isnt already on the radar screen?
How about safety? We've been embracing risk so long many have forgotten what safety is. (Of course, people all seeking safety at the same time would most likely cause a recession.)
My sister tells me of a friend (in California) who is seeing her housing payment climb 36% and is now using the "b" word. To put it in my perspective, each future monthly payment would represent a full one third of my (rather frugal) annual living expenses! Why have people done this to themselves? As my sister puts it, "And she was caught in the impossible belief nothing changes!"
My sister starts a new banking job on Monday (in Washington State). She's been out of the workforce for a while (semi-retired) but felt it prudent to reenter. Since she accepted the job they have issued a hiring freeze. Her job is currently safe, but there won't be anyone coming in behind her.
Meanwhile, my girlfriend continues to look for work (also in Washington State).
As I walk around the neighborhood I see plenty of "price reduced" signs on homes for sale (one home has two such signs).
Something tells me Washington State is not going to be as immune as some once thought.
Fence Swinger's are protected under various single-letter to mulitple letter ratings, structured finance and quesi governmental organizations and institutions
words,
ROFLMAO!!! On that note, I'm taking an extended break from the computer. I always like to end with a laugh!
I guess BFE Montana made up for these areas
generally, people don't refer to the pretty places as BFE.. they call it hollywood north, or wall street west
our allies -
Saudi government: Rape victim had illegal affair - CNN.com
She [rape victim] was convicted of violating the kingdom's Islamic law by not having a male guardian with her.
Stagflationary Mark: Where are the news articles talking about stagflation though?
)
...
I wouldn't say either deflation or stagflation was obvious, based on what's being written. Just my opinion of course (I'm full of them/it, and other things too more than likely.
Well, I've had a Google News trigger for stagflation for quite awhile (added it right after reading Economics of Worldwide Stagflation over a year ago). While it is not covered much, it has only been recently that I've been getting hits from "reputable" news sources.
My outlook is that Hilary wins in 08 and makes a lot of money available for Cleantech and green collar jobs. As much as I think inflation is cheating, a new New Deal to repair the environment and upgrade the nation's infrastructure with more sustainable, efficient systems is probably worth it. Let's hope the execution of the programs don't wreck the economy. Volcker might have to come out of retirement.
Also, as CR has noted, war spending has prevented the expected housing led recession.
Oh, and for those interested in getting in on the Cleantech gravy train... choo choo !
Cleantech Group | Accelerating the next wave of innovation
: as reported earnings, including GM, are off 27.8% from Q3 2006.
The Mañana Company
GM is known as the "Mañana Company".... always promising tomorrow what it can't deliver today.
-- Barrons
Is there anything left on GM's Balance sheet that will allow it to write off 'somethin better' than it recently did?
"Lots of really big boxes going into little tiny cars.Lots of really big boxes going into little tiny cars."
More anecdotals:
The most common new cars I'm seeing on the street these days in this California beach town are the Honda Fit and Toyota Yaris, new higher-quality sub-subcompact models that sell for around $13K. New trucks and SUVs, mid-sized cars -- not so much. Buyers seem to be both young single professionals and families (the Fit has a biggish cab).
does painfully obvious reconcile hiding in plain site when observing the recession?
Robert Coté-
Just a couple of comments about your observations -
1. Europe is completely in the thrall of urban planners - highspeed rail, high density development, numerous restrictions on building in green fields (Europeans retain the charming idea that food is grown, and that sufficient farmland to feed themselves is a wiser investment than exurbia), and an emphasis on walkable communities (has something to do with Euope's past, apparently). No wonder they don't have anywhere near America's bountiful retail space. Even worse, at least in Germany, Walmart had to go home - it couldn't compete in the brutal retail environment here, which includes unions - strangely, the world's largest exporter has industry wide unions which actually feel that they have an equal voice in various economic and social policies.
ShopperTrak - as I understand - is reporting based on video trying to count number of shoppers....
NY Times (Sunday)
A Time for Bold Thinking on Housing by Robert J. Shiller
ECONOMIC VIEW; A Time For Bold Thinking On Housing - NY Times
Peakinese,
This is not the place. If rather than use an anonymous post to raise inflammatory issues you had read my post you'd see I agree that the US is very likely over stored although there is probably some unknown amount of understoring possible in those bucolic lands you praise so highly.
As to your opinion as to the crap I bought, no. Sorry, no. That is unless you are willing to sell me some gold at the lowest price recently, say the last 6 months. It is possible to assign common values to good deals higher than the purchase price.
Recession sign?
Democratic Underground - Alert ! *BUZZFLASH* loses it's Funding from it's Progressive Editor & Publisher on Jan.1! - Democratic Underground
"the funding for Progressive Media by big donors is drying up"
From FFDIC's link to the Times piece:
Shiller- WE have to consider the possibility that the housing price downturn will eventually be as big as that of the last truly big decline, from 1925 to 1933, when prices fell by a total of 30 percent."
30 percent. Well, CR, Shiller said it. We need to start thinking about the unthinkable. We have to consider the possibility that virtually all of the equity in US housing could be vaporized.
If you don't think we are in recession yet, ask your friends who are car or real estate salesmen. Better yet, ask your friend the commercial banker. Ooh ohh I know, ask your local retailer!
Josh
Robert Coté: Crap or not, whether you "saved" anything is entirely a matter of perspective (well, it depends on how one defines the term). Would you have purchased the items at their "regular" price? If yes, then you did "save" the difference. If not, then you arguably didn't save anything, or at best the difference to your highest "acceptable" price.
But anyway that's hair splitting, you got it cheaper than sticker (with the caveat about the rebates).
ot trying to be snotty, but no one ever made any money in the markets looking at what is 'painfully obvious'
david_in_ct | 11.24.07 - 11:21 pm | #
My portfolio is up 50% on the painfully obvious YTD. That masks some horrific mistakes as well.
Have some Vicks VaboRub for that snotty!
Savings are not a matter of perspective, at least in our brave new financial world.
See, by spending 178 dollars (rebates paid in full - placing complete trust in people who owe us money to always pay the full amount, as is current practice in America), he saved ~422 dollars, which means he can now go out again, spend another 178 dollars, doubling his savings to ~844 dollars by only spending 358 dollars.
He can continue this process, buying crap while saving money, as illustrated per Citibank's managerial vision - 'When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, youve got to get up and dance. Were still dancing.'
As he still seems to be liquid, he can keep this sort of process going until the American economy restores itself to dynamic health, returning to its rightful place as número uno. No reason to save real money when you can save it by shopping. Which is just a matter of perspective.
Oops - the savings were larger than I thought - he actually spent 356 dollars. Luckily, I don't work in any responsible position in the financial industry, otherwise you would have to add a billion or two (or 10) (or 100) (or 1000) after my figures.
cote:
i agree you're living in a consumerist time-warp..getting hitched to things encumbering you even more perhaps not only forcing you to insure 'em but also to constantly worry about 'em like them not working as well as you thought..
And your rationalization that you saved something takes a cake.
I stayed home while the wife went shopping. It will be interesting to see whether Black Friday meets expectatons of Wall Street. I have puts on JCP, Macys, Dillards and a few other retailers. The JCP Jan puts are worth about $16 per share. They lost some on Friday, put my plan is to hold tight until January so they do not contribute to the 2007 tax bill. My guess is that high foot traffic for retailers may not offset weak margins and the lack of follow through after Friday. On the other hand, Abby Cohen and her colleagues at Goldman are predicting something like a 9% gain on the S&P before year end.
When you under report inflation, it`s easy to show growth.
As I keep reading this blog (and occasionally contributing), one thing I keep noticing.. some people here expect the crash/recession (or possibly depression) to happen in very short order. True, there are some immediate effects visible now. I think various contributors have a compressed time-line.
Florida had a major land boom crash once before.. around 1925-26. It preceded the Wall St crash by 3-4 years. It preceded the depth of the depression by 7-8 years. It took a good 10 years before Florida started pulling out of this. More like 20 years (the end of WW-II) before things got back to normal.
Florida Land Boom wiki
By January 1925, investors were beginning to read negative press about Florida investments. Forbes magazine warned that Florida land prices were based solely upon the expectation of finding a customer, not upon any reality of land value. New York bankers and the IRS both began to scrutinize the Florida real estate boom as a giant sham operation. Speculators intent on flipping properties at huge profits began to have a difficult time finding new buyers. The inevitable bursting of the real estate bubble had begun.
Sound familiar ?
Timebomb, tick tick tick:
YouTube - Beck - Timebomb Music Video
CR, the ShopperTrak data seem questionable on two counts
If stores are open a greater number of hours, as they were this Friday, foot traffic is naturally going to be higher -- so the numbers would have to go up. (ShopperTrak does count by foot traffic - see link below).
Deeper discounts to lure semi-desperate shoppers seemed to work, but I am wondering how many of those feet left in a hurry (and ran to other stores in more desperation) due to limited bargains.
I agree with Northern Cali - with the difference in store hours and mindset of shoppers, we need the hard data to really determine whether profits rose or fell this year - which is the only meaningful bit of data out of all this Black Friday hype.
ShopperTrak | Retail Intelligence | Mall Traffic Analysis | People Counters | Casino Retail Analysis | Foot Traffic Analysis
RayOnTheFarm,
Yes, it does. I quote "A Random Walk Down Wall Street."
On the mid-1920s Florida craze:
Easy credit terms added fuel to the speculative frenzy. "This market has no downside risk," the land speculators opined, as Dutchmen undoubtedly said to each other about the tulip-bulb market in an earlier time.
Here's a quote from the same book describing the stock market frenzy leading up to the Great Depression.
Unfortunately, there were hundreds of smiling operators only too glad to help the public construct castles in the air. Manipulation on the stock exchange set new records for unscrupulousness. No better example can be found than the operation of investment pools.
Unfortunately, that sounds even more familiar.
The Running of the Hedgehogs
Theres a much simpler way of putting it, offered by one of the industrys luminaries. According to Cliff Asness of AQR Capital, Hedge funds are investment pools that are relatively unconstrained in what they do. They are relatively unregulated (for now), charge very high fees, will not necessarily give you your money back when you want it, and will generally not tell you what they do. They are supposed to make money all the time, and when they fail at this, their investors redeem and go to someone else who has recently been making money. Every three or four years, they deliver a one-in-a-hundred-year flood.
...
Both industries share an addiction to leverage, which is to say, borrowed money. They use it liberally to maximize the return of a good deal or a good trade. From the very beginning, in fact, hedge funds were premised on the notion that they could exploit minute profit-making opportunities by placing big leveraged bets. The hedge in hedge funds originally referred to the downside protection a fund would simultaneously employ by, yes, hedging. Typically, that would mean buying one stock and shorting another. While many hedge funds still employ actual hedging techniques, the practice has gone out of vogue. But leverage hasnt, and that means big bets with little or no downside protection. In a word, risky.
...
Ask any hedge-fund manager, and he will tell you that the easy money has already been made, and there are no obvious trades sitting around. A recent report by the European firm Dresdner Kleinwort points out that if 4 percent of assets under management go to fees, and another 4 to 5 percent is spent on trading commissions and interest, hedge funds would need to pull in 20 percent annually to justify their costs. That forces them to take ever greater risks.
...
Well, for one, the appetite for risk among investors seems to be at some kind of historical high. But paradoxially, its also a desire for downside protection. The popularity of hedge funds still has a lot to do with how they performed
Here's the rest of what I attempted to quote.
Well, for one, the appetite for risk among investors seems to be at some kind of historical high. But paradoxially, its also a desire for downside protection. The popularity of hedge funds still has a lot to do with how they performed five years ago. Seriously. During the bear market of 2000 to 2002, when the market fell 40 percent following the dot-com collapse, the average hedge fund didnt lose money. With severe losses still fresh in their memories, pension-fund managers and other institutional investors are perfectly happy to shave a little off the top for that kind of downside protection. The question is in how many funds it still exists.
Florida Land Boom wiki
By January 1925, investors were beginning to read negative press about Florida investments. Forbes magazine warned that Florida land prices were based solely upon the expectation of finding a customer, not upon any reality of land value. New York bankers and the IRS both began to scrutinize the Florida real estate boom as a giant sham operation. Speculators intent on flipping properties at huge profits began to have a difficult time finding new buyers. The inevitable bursting of the real estate bubble had begun.
Sound familiar ?
RayOnTheFarm | 11.25.07 - 8:16 am | #
Ray,
I tried to cross-check the Florida RE bust with Charles Ponzi (no luck, but I didn't try very hard). It seems at the very least the 1920s Florida RE boom/bust had his signature moves, mainly having the next buyer/speculator bid up the price, until it could no longer be sustained.
Setting aside the notion that the run-up of RE prices was fraudulent in nature, I would argue that this time the RE bubble is more systemic in nature, and therefore can have a more immediate impact on the overall economy. I don't know how the Florida regional economy is doing, however. The regional banks there sure got hit hard.
Robert Coté -
'...unless you are willing to sell me some gold at the lowest price recently, say the last 6 months.'
As I have no interest in buying or selling gold, what is its value to me? Its price is essentially meaningless as far as I am concerned. But if I understand your point, its price is important because of what someone else will pay for it.
How much do you think someone will pay for the crap you bought for $178? You apparently believe it to be worth more than you paid, which is fine. Do you think anyone will pay more for it than you? Do you honestly think there is a growing market for crap?
Welcome to America, which brought the world Ebay - where people show a profit selling crap while paying a commission. Shame that it is less than likely that any of the crap you bought was actually produced in America. And yes, I know, intellectual property is what makes America rich - the Communist Chinese find that particular capitalist delusion hilarious, I'm sure, along the Leninist lines of capitalists selling the roap to hang themselves with.
Just read the Shiller piece that FFDIC linked to . . . grist meet mill, worms meet can. I admire his pluck, I guess.
In any forum the legacy of those New Deal institutions are debateable by intelligent people of good will, even today. And for the life of me I cannot see our current political leadership assessing what's gone before, let alone recognizing where we're at and "what should be done about it". Oh yeah, then there's that intelligence and good will part to think about too.
But for this crowd: if even a sliver of those issues goes on-topic in this forum, we'll never get to work on Monday!
Kou Jie
peakinese
I like your style baby. If you want to know what something is worth go to a yard sale, thrift store, or an auction.
That's (yard sale, thrift store, auction) where you'll find all the made in the USA stuff too, how sad. It's not like you can give someone a used sweater for Christmas though!!!
There is not a US recession if you look at it in nominal dollars.
But if you look at it through a basket of foreign currency, we've been in a recession since 2001.
This naturally applies if you look at it through the lens of a basket of commodities also.
Peakinese, have you got any roap to hang yourself with?
"How much do you think someone will pay for the crap you bought for $178? You apparently believe it to be worth more than you paid, which is fine. Do you think anyone will pay more for it than you? Do you honestly think there is a growing market for crap?"
I understand your thinking -- believe me, as a dedicated garage sale enthusiast I see it at first hand. But it's only "crap" if you don't really need it. If your old TV is creaky and you buy a new one for half the going rate, that's not crap. Not if you use it a good long time. Same for laptops, a used coat, even a car which loses 25 percent of its value when you drive it off the floor.
If you buy the stuff to use it, and get your money's worth (there's an old term) out of it, it's valuable even if its market value isn't good -- largely because there isn't an organized market. Yeah, maybe you could only sell that $1000 laptop for $700. But if you needed it, how easy would it be able to find used, at that price? Not so easy.
Frankly, if we do have a serious recession, I expect the price of "crap" to rise again, and even the return of true second-hand retail.
Bill D,
You wrote "The JCP Jan puts are worth about $16 per share. They lost some on Friday, put my plan is to hold tight until January so they do not contribute to the 2007 tax bill."
Do you mean the puts are currently bid at $16 per contract?. When you say $16 per share you imply a bid price of 16 cents per contract.
The reason I ask is that if the market for those puts is truly $16 per contract then those puts are deep in the money with little or no time value left in the premium. (A good thing if you plan on holding until 2008 tax year).
On the other hand if you are saying the puts you own are 16 cents in the money (ex: Jan 40 puts and stock is trading at 39.74) then you own at the money puts with little intrinisc value and tons of time value.
This is key since theta or loss of time value due to the passage of time is NOT linear and accelerates as expiration gets closer.
Somewhat back on topic after being way OT on prior post.
From a local paper - an article on declining sales tax revenues in the land of conspicuous consumption AKA Long Island.
"In Nassau, sales tax revenue is running less than 0.9 percent ahead of 2006 figures, about a quarter of the county's original projected growth of 3.6 percent for 2007. Suffolk, which began the year with a more conservative sales tax projection, also will fall short of its initial target, according to budget officials."
My favorite quote
"Legis. Lisanne Altmann (D-Great Neck), chairwoman of the Nassau Legislature's budget review committee, said Nassau officials will have no choice but to raise taxes.
"I don't know where there is to cut," Altmann said. "There is no way that Nassau County can get away without raising property taxes if the sales tax keeps falling."
Woohoo - wage stagflation and increasing taxes - a lovely combo
Full article
Article on Sales Tax Shortfall
During Great Depression unemployment rate skyrocketed from 3.4 (1929) to whopping 23.6 percent (1932) and it was close to 20 percent throughout the 30's.
I think US is about to experience something quite similar and that would mean 25-30 million people unemployed by 2010, instead of seven million now.
Next year probably will be like 1930, 8-10 percent unemployment rate but the real hellish year could be 2009.
To all who had nothing but snarky jabs at rampant consumerism and me personally:
Last night I billed $327 in parts and services using but 1 item purchased at Fry's $0 after rebate). In your haste to stereotype then excoriate you jumped to a false conclusion.
Additionally; If the US were adequately compensated for intellectual property there would be no trade deficit.
peakinese:
why not lay off robert cote?
reread his first post on the matter: nowhere does he speak of "saving".
He states that he bought items for a certain price, that had a different higher price tag. he then got a rebate on top of that.
the point of his post: that the amount reported to the news agencies will likely be the PRE-rebate purchace price, and maybe even be the original sticker price of his purchases... thus the data will be skewed higher than the actual purchases.
the second part of his post was simply showing how traffic had noticeably slowed on Saturday compared with Friday.
where/why are you arguing SEMANTICS (yes semantics) especially when "saved" was nowhere in his post?
FWIW:
I have gone head to head vs Robert on his Exurban utopianistic viewpoints many a time (in another forum)... so it's not like I'm his groupie... he will see IMO the failure of an overspread populace in terms of infrastructure and global competitiveness...
however, to go go on diatribes about "spending to save" is rediculous.
especially when it's a construct of your own argument.
"Next year probably will be like 1930, 8-10 percent unemployment rate but the real hellish year could be 2009."
EADS chief executive Louis Gallois said the company may well have to transfer some of its production to the US if the dollar continues to remain weak, in an interview with Welt am Sonntag newspaper.
Business finance news - currency market news - online UK currency markets - financial news - Interactive Investor
I don't think it will get all that bad the unemployment during the great depression was largely a result of Hoovers attempt to keep wages from falling.
CR has stated in the past that double digit unemployment is his standard for a recession.
I assume that is the reported unemployment rate as the 'real' rate that includes looking for work, discouraged and part time wishing for full time is about 9% now.
I use slick deals to shop my tech stuff. I used to do the black Friday thing and generally ended up with lots of stuff that was unused a year later.
Yearning,
Thanks. I appreciate the explanation. Peakinese was clearly baiting in the hopes of rehashing old issues in front of a new audience. It should be noted that that the name, "Peakinese" is a term I coined for the constant decades long yapping peak oil novitiates bowing at the altar of Hubbert. If it is any consolation I have recently changed my mind and now believe what the peakinese incorrectly term peak oil may be as close as 50-60 years away. Prior to this my position was that it was too far away to know.
As to the oft termed Cotean Nodaltopia aka Exurban Dystopia I think in an age of solar rooftops all those southern state sprawlburgs may have pulled the diamond from a pile of manure.
A friend that is a retail manager (children's clothing store) here in Florida said that although their Black Firday sales were up 5-6% from last year, she saw an enormous amount of declined credit cards and transactions being split between 2 credit cards. ($40 on this one, $30 on that one).
Robert:
no problem.
I love debate as much as anybody else... but productive debate.
also, I've always enjoyed your contributions regardless of whether or not I always agree with eventual conclusions... you tend to post well thought out ideas with factual support when needed.
And I do not dismiss "on the streets" anecdotal observations either... they "saved" me lots of money in San Diego Real Estate in 2005.
(some of the data I used back then was YOURS).
Alpha B,
What is the sequence of events that gets unemployment from 5+% today to 8-10% in 12 months?
Just curious on how you see it unfolding. I think I know where we are going, but I am continually amused (and enriched) on how the events actually transpire.
Clyde: Almost all new jobs during last five years have been "consumption" based. New restaurants, malls etc etc.
After US consumers have finished maxing out their last credit cards (Christmas sales could be still quite strong this year), those consumption based jobs will start to disappear quite fast.
david_in_ct "not trying to be snotty, but no one ever made any money in the markets looking at what is 'painfully obvious'"
I beg to differ. Just over the past couple of weeks FRE & FNM lost around 1/2 of their rather substantial market caps. I would say it was a long time coming, given their positioning. In fact, there may be another 50% haircut in their uncertain futures.
They were the last man standing in the Own-It, NEW, NFI domino chain.
So to extend that easily visible uncontained cloud a little, to include credit in general, would seem to be a logical step. In that case pure-play credit card and auto lending should be the next shoe. I agree with the suggestion above - COF is a dead man walking. Walchovia and BAC still have some to give back too, if you believe the containment wall around Chernobyl still has some big cracks.
From the previous thread, I like energy-econ's postion in your little wager. It's been a while since tax loss selling has been a dominant force in the equities markets. I expect it'll have an impact through year end. That would suggest financials and builders could even give some more back here.
Robert Cote:
Recession or no, the US is way over stored. Italy 1.2 square feet of retail space per capita, compared with 2.3 square feet per capita in the United Kingdom, 2.2 square feet per capita in France and 1.3 square feet per capita in Germany, according to Cushman & Wakefield Healey & Baker. (The United States has 21 square feet of retail space per capita, according to ICSC.)
RayontheFarm
what percentage of that belongs to walmart ?
some digging around in the WM annual report allowed me to calculate the number for the US.. 618.029 million sq-ft (supercenters + discount stores + neighborhood markets + sams clubs)
first glance says that walmart has 9-10 % of all the US retail space.
So once Wal-Mart drives everyone else out of business we will be roughly inline with the UK and France (21*.1=2.1). Of course finding a new partner to play "peg that dollar" might slow them down a bit.
I wonder what the sales figures would be if stores decided to accept only cash, check or debit cards ? The fact that people are once again spending money they don't in many cases have is nothing new.
Robert Cote,
Why stop at patenting sheer speculation unsupported by empirical evidence? How about genes and organisms.
American patent law is a putrid stew of xenophobia, nationalism, and greed. I applaud the many nations that violate these absurd laws.
That's (yard sale, thrift store, auction) where you'll find all the made in the USA stuff too, how sad. It's not like you can give someone a used sweater for Christmas though!!!
Average Citizen | 11.25.07 - 9:57 am | #
At any other time in history, this comment would be false regarding the vast majority of humanity who lived in areas cold enough to require a sweater. There are times when people make a living off of rags.
We're the new India...
I sat next to an Indian guy on a plane recently who says they've started outsourcing much of their IT work to the US because they just don't have the capacity.
EADS is thinking along the same lines. My one-man consulting operation is getting inundated with work because, in Euros or Canadian dollars, I'm a bargain.
Not sure what this does to the equation. I think we're in a recession, but also that a lot of professional types will do just fine working from home for Canadian, European, Indian and someday Chinese task masters.
first glance says that walmart has 9-10 % of all the US retail space.
So what? Unless you subscribe to the anti-walmart philosophy this is just another meaningless statistic.
American patent law is a putrid stew of xenophobia, nationalism, and greed. I applaud the many nations that violate these absurd laws.
My sister is an intl. patent lawyer and talks about her work a lot. Most of what I hear sounds pretty reasonable. Your wording sounds like you read a 2 paragraph cliff's notes on a very biased site and regurgitated it here. I welcome you proving me wrong.
From the Holiday spending good news is bad news Dept.: ANY INCREASES IN RETAIL SPENDING OVER THE POST-THANKSGIVING HOLIDAY IS ANOTHER NAIL IN THE COFFIN OF MORE DEBT-DRUNKEN US CONSUMERS FALLING FURTHER BEHIND IN THEIR MORTGAGE, CREDIT CARD, AND AUTO LOAN PAYMENTS AND PUSHING THE US ECONOMY INTO AN EVEN DEEPER RECESSION STRAIGHT AHEAD...(It is sad to witness the 4am "herd" running thru the doors of consumption heaven and over the cliff of bankruptcy & foreclosure hell)...
Additionally; If the US were adequately compensated for intellectual property there would be no trade deficit.
But if all the slaves had been paid fair value for their labor, there would still be a trade deficit.
"That's (yard sale, thrift store, auction) where you'll find all the made in the USA stuff too, how sad. It's not like you can give someone a used sweater for Christmas though!!!"
You can if it looks new. I've got a half-dozen new-looking sweaters from the local Goodwill at $3-5 each; Shetland wool or Pendleton or similar, all of them. Might not fool a woman who wants to know "where you bought it" (so she can return it); but guys don't ask so many questions!
Because we're buying so much crap that we don't need, especially as presents for people who don't want them, there is a ton of good looking apparel out there.