CR,

If a few Soverign Funds pick up another couple hundred million worth of retail products, we could add 3-4% to GDP.

Is Sasha related to you? If so, congratulations on a wonderful talent.

Surprisingly weak? Who with half a brain is surprised by any of this? Retail growth for the past x years have been fueled by over expansion, the HELOC ATM, and massive credit card debt. Throw in stagnated wages for the evaporating middle class, job losses, the inelasticity of demand for oil/gasoline...none of this is surprising.

People have very little disposable income. The cash they have is going to put food on the table (more and more expensive due to oil), and to pay for the gas that fuels the SUV that gets them from work to the exurb and everywhere in the exurb.

sequoia512 | 04.08.08 - 10:31 pm

Too F'n funny!

Sasha was a scream in Blades of Glory. One of my favorite scenes.

Why does Sen. Voinovich hate America?!?

Don't know if he hates America or not but he's right.

We're in a recession, really tough Y/Y comparisons coming for the next 3 weeks and C is tugging futures higher. I only hope we get a 500pt rally tomorrow. I need a good reason to go ALL-IN.

From the WSJ: The Federal Reserve is considering contingency plans for expanding its lending power in the event its recent steps to unfreeze credit markets fail.

Among the options: Having the Treasury borrow more money than it needs to fund the government and leave the proceeds on deposit at the Fed, which would issue debt under its own name rather than the Treasury's....

Fed Weighs Its Options in Easing Crunch - WSJ.com

Lower comps and costs that go up 5-10% every few weeks. Wow, retail is sure not not a sucker's game right now. If you're paid on any sort of commission/performance bonus program, you're guaranteed to see a paycut this year. Not just in real terms, but in god-blessed nominal terms, as well.

Got a conference call with my reg VP tomorrow and everyone in my position across the region. I think there's going to be a lot of walls with forehead-shaped dents in them.

From Barron's: Some Wall Street titans have been able to book gains from the declining value of their own debt.
...
Here's how the accounting works: When a company's credit weakens and the yield on its debt rises relative to risk-free Treasuries, the debt becomes worth less to the holder. The financial company, which is the debt issuer, then takes a gain, because theoretically it could buy back its debt below face value.

Wall Street's Latest Illusion Turning Losses into Paper Profits - Barrons.com

[The financial company, which is the debt issuer, then takes a gain, because theoretically it could buy back its debt below face value]

And I guess all that loot passed at the Fed window could be used to buy back the debt. Only in Ben's America!

Ottawan writes:
My local (Austin, TX) COSTCO just raised prices on some grocceries I'm usually buying there by 15%.

Sigh
Ottawan | 04.08.08 - 11:58 pm | #

My personal litmus test is the price per pound of chicken: $2.99. It hasn't budged for several years surpisingly...

S&P has lowered ratings on more than 3,100 tranches from 729 CDO transactions

That suggests smaller XMAS gifts later on, after the subprime resets actually kick in.

The most interesting part of Volker's speech (to me anyway) was the statement that the notional value credit default swaps exceeds the actual value of the debt they are written against by some order of magnitude (that escapes me at the moment)...is this rampant speculation?

And, I hope that nice deep red in the Nikkei holds to the morning.

Dive, dive, dive!

U.S. represents about 21 percent of the global economy.

Cute site:

Why Don't Prices Decline During A Recession?

The money supply is constantly expanding, so the economy has a consistent inflationary pressure given by factor 1. The Federal Reserve has a table listing the M1, M2, and M3 money supply. (To learn about these definitions, see How much is the per capita money supply in the U.S.?). From Recession? Depression? we saw that during the worst recession America has experienced since World War II, from November 1973 to March 1975, real GDP fell by 4.9 percent. This would have caused deflation, except that the money supply rose rapidly during this period, with the seasonally adjusted M2 rising 16.5% and the seasonally adjusted M3 rising 24.4%. Data from Economagic shows that the Consumer Price Index rose 14.68% during this severe recession. A recessionary period with a high inflation rate is known as stagflation, a concept made famous by Milton Friedman. While inflation rates are generally lower during recessions, we can still experience high levels of inflation through the growth of the money supply.

So the key point here is that while the inflation rate rises during a boom and falls during a recession, it generally does not go below zero due to a consistently increasing money supply.

i used to think microsoft had an awesome amount of cash piling up in its balance sheet that it can use for such things as, I don't know, buying yahoo, or saving the world, or something.

But I think this crisis shows where most of the cash awash in the world has gone, and shows that 36 billion that microsoft had to spend is hardly the deposit on a new mega yacht (or a defunct web company): most of the cash has gone into the hands of the top 0.1% as they enriched themselves while building this debt mountain, and thence straight into private equity funds so that it can support thousands of family dynasties for the next 300 years with yearly tax free returns of 10%+. Welcome to the new dark ages for everyone else.

link for the wamu jpm deal-that-wasn't:

WaMu took TPG deal over JPMorgan's $7 bln offer: report
| Reuters

"Today WaMu Corporate announced that unfortunately they will be closing down WaMu Wholesale. All new incoming applications but be submitted by no later than Wednesday April 9th and all current files in the pipeline will be closed accordingly. More details on the announcement are to follow. Please refer to http://www.wamubroker.com for any additional details as well.

We would like to take this opportunity and thank you for all your support and business through the years as it was a pleasure working with you and serving you as our Premiere Mortgage Brokers."

Thieves are getting “very creative,” using vehicles with large tanks and electronic pump systems to quickly drain the tanks of parked big rigs or the fuel storage tanks on farms or ranches.

Rural farmers and landowners who store and use large amounts of fuel in tractors, trucks and farm equipment may want to step up their anti-theft practices, the California Department of Food and Agriculture says.

Fuel thieves are just part of the crime problem facing farmers and ranchers. In addition to the well-publicized thefts of copper pipe and wiring, the old-fashion cattle theft is seeing increased numbers.

The California Bureau of Livestock Identification says that from May to November of last year, 807 head of cattle and calves were reported missing or stolen in California, up from 602 during the same period in 2006.

In the past decade, more than 16,000 head of cattle and calves worth more than $9 million have been reported missing and stolen from California farms and ranches.

April 8 (Bloomberg) -- Dole Food Co., the world's largest fresh-fruit and vegetable producer, is selling land in Hawaii and California to avoid default on $350 million in bonds.

Re: A case of milk that went for about $14 a year ago now costs $3 or $4 more. A 50-pound bag of jasmine rice can set you back at least an extra $2 compared to prices last year.

Bananas used to go for 99 cents a pound; now they generally sell for $1.29 at many island stores.
The rising cost of fuel has increased the cost of shipping food and most other things to Guam, but it's not the only cause of higher prices.

Internationally, experts blame the rise in rice prices on costlier fuel and fertilizer, as well as harvests curtailed by disease, pests and climate change, The Associated Press reported.

There are concerns prices could rise further by 40 percent in coming months, according to the AP.

But there's another aspect of Guam's economy that's a cause for concern: Tourism.

Visitor arrivals from Japan, the biggest source of tourists for the island, saw a 5 percent decline in arrivals in March, or by more than 4,000 tourists, Bradley said.

Overall outbound travel by the Japanese declined in March, which could be attributed to Japanese consumers' economic jitters there as well, Bradley said.

guampdn.com | Hagatna | Pacific Daily News

Wait a few weeks and reevaluate. Distributors/retailers could be holding down retails, hoping that this goes away before they have to raise prices.

For whatever reason, meat hasn't been real bad for me either. Dairy (cheese especially) is up big time, flour is skyrocketing, coffee and beer are both bad. Produce has been bad, but not awful.

But I can't think why dairy and grain would go up, and meat wouldn't.

Fed looking at how to beef up lending power -WSJ

Fed looking at how to beef up lending power: report
| Reuters

Printing presses are being dusted off and serviced.

OT, but I'm puzzled. Logged into chase.com last month as usual to pay my credit card bill via online transfer from my checking account (at a local bank). When I log in this month to pay, I realize that somehow Chase managed to charge me twice last month. No balance due this month. Simple mistake? Maybe they're doing something tricky to improve their accounting? I'm curious if this has happened to anyone else.

In re;

beer prices...

for 2008 crop, contract prices are up about 400%, and you are lucky to get them at any price, folks who do have not contracted for hops may pay much more or have to do without/fold their tents

malt barley is up about 50% and rising

dryfly 11:38 pm:

I disagree - maybe we could have averted it in June 1998

Here's a pretty good summary:

While the Clinton administration generally supported Glass-Steagall "modernization," but there are concerns that mid-term elections in the fall could bring in Democrats less sympathetic to changing the laws.

Sandy Weill calls President Clinton in the evening to try to break the deadlock after Senator Phil Gramm, chairman of the Banking Committee, warned Citigroup lobbyist Roger Levy that Weill has to get White House moving on the bill or he would shut down the House-Senate conference.

frontline: the wall street fix: mr. weill goes to washington: the long demise of glass-steagall | PBS 

That name again:

Gramm was partly caught up in the Enron scandal when it emerged that his wife Wendy had part written an exemption for Enron from federal oversight while she was serving on the Commodity Futures Trading Commission.

Gramm was personally involved further when it came to light that he had helped to turn the exemption into law as well as push through the deregulation of energy markets that led in part to the Enron scandal. During this period Enron was a major contributor to his campaigns

Phil Gramm - Wikipedia, the free encyclopedia 

And where is Phil Gramm now - co-chair and economic advisor of McCain’s campaign. Even before the Rove smear campaign starts McCain is polling well:

WH2008: General

Someone posted on here a while back that McCain and Clinton were more business friendly.

Here people are talking about some not having enough to eat, and we get whining about the cost of beer. And some wonder why those ouside the US think we're idiotic.

And price increases for certain things do not indicate inflation. Some are due to temporary production shortages (wheat from weather), import restrictions, or speculative hoarding. They will flux back down when these pressures cease. We periodically go through beef spikes, chicken spikes, and various produce spikes. I don't class these things as inflation but, then again, I stick to the definition that inflation is the expansion of money and credit.

So the answer is don't buy these expensive items, i don't. Don't drive as much, I cut back. Don't travel. The reduced demand will pull prices back into line and the curve changes. When it comes to retail, after the 10 year orgy we just had, who really NEEDS much of anything? Hunker down for 12 months.

Ipodius, I think most of the people here are unhappy with the increased cost of living. They call it inflation because that is a nice short hand label.

Yes, I understand that, but there is constant price flux. Right now, the cost of fuel is a driver and the speculative commodity action a driver of food prices. The two combine to put enormous pressure on everyday items. But that is temporary and volitile which is why it isn't empasized in the inflation indices. If it were permanent (which we could discuss) then it would be expansionary and have to be accounted for.

But what is supposed to happen is this: if the price of strawberries is high, we won't buy them. Reduced demand will change the curve. The same goes for gas. If everyone put in 1 tank less a week, or flew less, the demand curve would shift and put downward pressure on price. So what I'm saying is just buy exactly what you need and let the market take its course.

my inflation indexed treasury fund was up 15 percent in the last 12 months. And we are in recession. depressflation.

While I've just made that statement about beer, what never ceases to amaze me is how much money people spend on booze. A mixed drink out is anywhere from $8 to $12 around here, and beer is around $3 to $6. You have to be kidding me! I would NEVER spend that (and I don't because I don't drink alcohol but I do hang around in bars . I see people going out every weekend and I wonder how they can afford it. You have to drop somewhere around $100 a night just in bars. Imagine doing that every weekend. Yipes!

Niles writes:
...

For whatever reason, meat hasn't been real bad for me either. Dairy (cheese especially) is up big time, flour is skyrocketing, coffee and beer are both bad. Produce has been bad, but not awful.

But I can't think why dairy and grain would go up, and meat wouldn't.

I read a blog entry on site recently (mighta been here) where the person posting indicated that currently/recently, meat producers (e.g., ranchers, chicken farmers) have been dumping at below cost what would otherwise be future generation producers. This because the cost of feed (thanks, ethanol) has risen so much that the near-term return on meat is negative. So they are deliberately cutting immediate costs by dumping what would have been their producers next year.

Net/Net: current glut of meat is keeping prices low. Future prospects: scarcity of meat and poultry driving prices very, very high.

From the NY Times...

Looming Deficit Impedes Federal Housing Agency

"...the F.H.A., the government agency that insures home loans for many first-time, minority and lower-income buyers, is grappling with financial woes of its own.

Housing officials say the agency will face a deficit for the first time in its 74-year history, starting in the fiscal year that begins in October. And they blame a rapidly growing and increasingly troubled sector of the F.H.A.’s mortgage portfolio, known as the seller-financed down payment loan program, which has suffered from high delinquency and foreclosure rates in recent years."

Looming Deficit Impedes Federal Housing Agency - NY Times

Who could have knew???

Hey...I know now to beat inflation...walk everywhere and don't eat.

Best regards to all.

this issue is an existential theat to my business. not whining, just reporting on an aspect of the economy

Oh i'm not minimizing that, but while the line "beer is food" is funny, it isn't true. When budgets get tight these are the items you cut back on...unless you live in the Czech Rep. where beer is cheaper than bottled water. So if you could do that here (make good beer cheap) you'd do as well I think.

And anon, eating less and walking more would probably decrease our reliance on health care and stupid research into pills so people don't get fat instead of actually preventing disease and curing things. People get fat because they eat too much full stop. It's a simple equation...if you comsume more calories than you expend, you store the excess as fat. Don't get me going on this as I see entire families waddling down the street....

i think its well documented that if we all got together and paid for public transportation collectively it'd cost less than if we all had cars and bought gas.

You'll get Rob on the exburb bandwagon again, but it isn't too hard to figure out that the gas I (and all other commuters to the same place) consume getting to work as we ride by ourselves in a car would be more than a filled subway car of the same people.

I took the T here for years and it was great. I use public transport all over Europe too and always avoid cars...never felt deprived. But, of course, the transport is great here as there. Not so much in a place like Dallas.

ipod: thats what we do, make good beer cheapER than equivilent commercial verieties.

Is it in New England? I'll get my friends to knock back some

dc1000,

I know the argument, joker. I also know it's a ploy to keep statistical validation away from prying eyes.

I went to Target the other day...it was a ghost town. I went to Krogers the other day, same deal.

The mall was nearly deserted last week.

Can't spend what you don't have.

OMG Bosch! LOL, that's horrible!

ergo beer is food

I think most people would think of food as something they could give to their 5 year old when they are crying and hungry...although I did make it through college on a cold one in the morning...until i couldn't do that anymore....

I wouldn't give foie gras to a screaming, hungry 5 year old

Let's not reductio ad absurdum here, although I know it's a hobby for some who post here. If you went out and polled people "should beer be classed as food" you'd get the same reaction to a certain political party that tried to argue ketsup was a vegetable in school lunches.

("Sippin'" because without careful preperation, any more than a few sips will blow the top of your skull clear into the next room.)

Bosch, when I was in college I had friends at WVU that gave me my first "sippin' jar". As I put the mason jar to my lips, this woman put her hand over the top, looked me straight in the eyes and said "now SIP it, y'all, right?". After that first sip I knew why...it also is great for getting rust off a bumper, or old paint off a door.

Damn near spit out my breakfast beer over that one...

I swallowed my tea bag...these luddites that can't figure out something simple like iDrive. For dog's sake, an iPhone is harder.

"I wonder how much record studying TPG did?"
-Justin regarding the WaMu deal

Justin, they don't need to study.

All they need is access to the Discount Window. Didn't you read the memo?

A couple of comments:

1) Reducing consumption will not lower prices. First, expecting people to just stop eating or driving won't work. It's one thing to talk about drinking less beer, but quite another to talk about starving people eating less to keep food costs down. If everyone ate a bit less or drove a bit less it really wouldn't have that much effect because of hoarding and speculation, which leads me to point 2...

2) Speculation and hoarding is a part of inflation. One can say they are different things, but they are interlinked: as money becomes worthless (the dollar), people try to horde real assets. Or, as money floods the system, people will spend that money hording real assets. Finally, there are just the "rich jerk" types who really don't mind playing with the world's food supply as their own private little game/get rich quick scheme provided they make a lot of money off it. If people starve, well, tough - they should have started their own hedge fund. That's the attitude of these shmucks that run the show.

An end to easy money is the only way to stop this lunacy; otherwise, we'll end up with $10 loaves of bread with some clown with a direct tap to the Fed printing presses still trying to bid the price up higher to make more money.