Real retail sales have remained negative, but real PCE has been positive. A look at spending shares gives a reasonable explanation. Things like medical care (17.4% of the total this June vs 17.2% a year earlier) and household electricity and gas (2.5% vs 2.2%) are taking up a bigger share of spending, and don't fall into retail sales. There are necessary services from which cuts in spending are tough to make, so when food and energy take up more of the budget, discretionary items have to take up the slack. I don't have any spa/barber/pampering data to see whether those non-retail-sales categories are suffering.
Does anybody see a scenerio that doesn't forecast another GD? From here, it looks like the world's going down--and the US is gonna use its best remaining asset, the military.
Seriously, recessions and probable recession would add clarity to the graph. As a second thought comparison might it not be a good idea to subtract out population growth to look at retail sales per capita? 250m c. 1993 to 305m c. 2008 would be an average growth rate of 1.4%.
I know I am cutting back - have been for a while actually in anticipation of bad things. I am finally seeing the some sheeple start to realize that things are going to hell in a handbasket and be aware of their non essential spending. I can tell you from looking at a perticular type of high end used vehicle for over the last year that the prices have plummeted but I still can't bring myself to pull the trigger. I have friend that has a full size Chevy truck that is 1 year old. He got a great deal through a relative. He tried to sell and he can't come close to what the dealers are offering for new. Not to mention the free financing.
As much as I try - and I hope I am wrong, I cannot see us getting out of it before it gets really nasty. Although I am not sure how long the govt can continue to string this along keeping it from diving off the cliff.
Gah. That looks awful, though I wish I could compare it to the 90s, 70s, etc. Note that in 2001-2, we had three quick dagger strikes...now it looks like we are stuck in negative territory. Retailers, take note.
(The little tick up in 2008 is probably just noise, but it could be the impact of the stimulus checks.)
k harris wrote:Real retail sales have remained negative, but real PCE has been positive. A look at spending shares gives a reasonable explanation. Things like medical care....
It is very interesting that the general trend of retail sales has been downward for 15 years during a time of vast amounts of construction of retail centers, big boxes, boutique coffeeshops and restaurants, specialty retailers that sell only decorating items or lines or kitchen stuff... and simultaneous expansion of direct internet sales.
I'm actually stuck in this game...my small business needs commercial space and I've been watching with my breath held since April as prices on commercial property.....
...rise.
WTF?
I have ideas about what a property s/b worth, but I'm being outbid by buyers who are bidding 2&3x MORE...
I'm actually stuck in this game...my small business needs commercial space and I've been watching with my breath held since April as prices on commercial property.....
...rise.
WTF?
I have ideas about what a property s/b worth, but I'm being outbid by buyers who are bidding 2&3x MORE...
Retail sales were negative, but consumer credit had a big ($14b v. $7b expected) big jump in the month. How does one reconcile the two?
It appears that more consumers are making the minimum monthly payment rather than paying down card balances. This shows up as an increase in net credit (because less was paid down than the previous month).
Of all the pieces of economic data I could wish for, the % of credit card borrowers making the minimum payment tops the list. The reason is the credit card shoe, when it drops, will spell the end of the consumer. So far, demand for credit card ABS still seems to be robust, but I suspect we are on the cusp of a subprime-like ramp in c.c. deliquencies. When that happens, ABS investors will re-acquaint themselves with the seemingly-forgotten notion of "adverse selection" and scramble for the exits.
BelieverJeff: As much as I try - and I hope I am wrong, I cannot see us getting out of it before it gets really nasty. Although I am not sure how long the govt can continue to string this along keeping it from diving off the cliff.
As much as I try - and I hope I am wrong, I cannot see us getting out of it before it gets really nasty. Although I am not sure how long the govt can continue to string this along keeping it from diving off the cliff.
Don't worry, the U.S. will hold it together until after 2016 Olympics in Chicago.
I wonder how much of it might be that people have finally hit the saturation point. How much stuff can one household buy? How much can you keep in self-storage units? I wonder how self-storage unit companies are doing? Busier because of foreclosures for now?
My guess is once the credit card limit is approached which should be just in time for the all important Christmas season, retail numbers will nosedive. People are running up twice the credit card debt lately compared to this time last month? At that pace the end is coming fast.
What happens when retail goes really negative? Retail, the home of the single mother job, gets whacked. That alone will have a high trickle down misery effect.
Has anyone noticed the greying of the service industry? Retail? I have noticed lately that waitstaff and retail sales people are no longer kids. It looks like Mom and Dad are working the jobs there kids would have.
David Pearson wrote: Retail sales were negative, but consumer credit had a big ($14b v. $7b expected) big jump in the month. How does one reconcile the two?
The consumer credit report was for June, but the retail sales report was for July.
Of all the pieces of economic data I could wish for, the % of credit card borrowers making the minimum payment tops the list.
It wouldn't mean anything. What you really want to know is...what % of all revolving consumer credit outstanding (in a household) is being paid down monthly...and how does the total credit change from month to month?
Credit card balances are still rising, and as long as they keep rising, one card will be used to pay down another.
A fundamental change is taking place in American psyche. Paying off debt is no longer a moral issue. It's a tactical financial issue. Millions of people will come to X point where they decide...this is the time when it makes sense to default on my Y debt but not my Z debt.
Credit cards have become Z debt for many people. But when you default on Y, it makes Z lender nervous, and the credit merry-go-round slows and finally stops.
It's a lender's worst nightmare, and it will play out in America for years. America is by far the world's most vulnerable major economy and stock market, because it's where the credit merry-go-round has been the biggest extravaganza.
When you see Japan and Europe markets fall by 1-2% per day while the NASD and Russell 2000 keep rising, just keep that in mind. Balance will be restored.
Roubini is about 32 years behind the power curve on that one
Ayuh. I recall reading "Rise & Fall of the Great Powers" while travelling through what was still the USSR at the time. It was, of course, comforting to know that the Soviets were slated to be dead meat in short order, but another of Kennedy's points was you wouldn't expect the U.S. to control more than, say, 15% of global wealth over the long-run. This by definition implies catch-up by rising powers and a relative decline in geo-political power. One of the best books I ever read.
In eastern Tennessee today, there is a guy with a Steptoe 24" tool room shaper (machine tool) that came out of TVA storage. The machine was purchased in 1947 and never used. It weighs about 8,000 pounds.
This assclown wants $2000 for the machine. If he doesn't get it, he's going to sell it for scrap ($1,296 as of yesterday), so it can come back as several thousand cheap Chinese eggbeaters.
People like this piss me off. I have no need for the machine in my room or I'd buy it and move it, but the assclown could do something WORTHWHILE and PRODUCTIVE with it.
It won't happen. They're treating precision machine tools like empty soda cans found on the side of the road.
It's fun to be right in your projections. As I read the comments here, most folks are pretty bearish. That means that, like me, they are hoarding cash. If that rings true to you, I'd like to suggest a goal.
The goal is to keep things in perspective and watch for the turn. And the turn will come. Clearly, it won't come soon, but remember the point. Absent Armegeddon, the market will turn, the world will not fall apart, the families who have always been wealthy will still be (comparatively) wealthy.
If you have -or still can - avoid the actual and future meltdown, and have not quite given up on meeting your maker just yet, remember that this is temporary. This is an opportunity.
I have no need for the machine in my room or I'd buy it and move it, but the assclown could do something WORTHWHILE and PRODUCTIVE with it.
Non-sequitur. You have resources, you haven't been creamed by the credit-crunch and you (or your s-in-l) presumably have some ideas as to what productive uses would be. Can't even complain about how expensive housing the thing would be.
I can only draw the conclusion that you don't see enough ROI to take on the project, so why should I presume said "assclown" does and has just decided to piss it away?
I'm feeling it, too. What to do with equipment we, as a collective society, trash - as in, place no value on?
My neighbor "tries" to fix forklifts. He buys dead soldiers, paints them and resells them. He's dirty, crude and doesn't have a computer, so where is he going?
Right now, he's buying dead forklifts and pushing them off the loading dock into scrap metal containers.
so...here come more containers of cheep chinese kitchen gadgets...
BG, this has nothing--absolutely nothing--to do with ROI. It has to do with capability. I already have two shapers and in my world ROI is a meaningless calculation. Few here would understand that.
The assclown could sell the thing for scrap price to some young machinist who would actually use it. He's playing the nuclear card: "pay my price or I junk it."
The problem is the machinists right now are buying nothing--NOTHING--because they're flat on their backs. The industry isn't imploding, it has imploded.
Liz, Tennessee Valley Authority bought the thing and stuck it in a warehouse. Yes, it's likely they literally forgot about it.
Like you, I am very impressed by the folks here. I only recently started reading the halo comments, but I'm seriously impressed by the collective intelligence and some pretty outstanding analysis.
I'll put my two bits in from time to time as well as any helpful hints I find, but you really ought to consider my last comment as my best shot.
Liz, you should also be aware that there was a time when the US government actually had some foresight. They stockpiled machine tools to be used in the event of a national emergency.
A couple of years ago, I was in a huge warehouse near Seattle and saw hundreds of machine tools, new and in crates, that had been stockpiled during the 1950's.
A Chinese company, owned by the Chinese Army, purchased them for scrap. I'm sure they're now in a plant somewhere, turning out precision parts.
Actually, some machine shops are doing well. My BIL owns a small shop and he is running flat out...every other week it seems like he's buying me and other bro's in law something or other just because he's making so much right now.
Has anyone noticed the greying of the service industry? Retail? I have noticed lately that waitstaff and retail sales people are no longer kids. It looks like Mom and Dad are working the jobs there kids would have.
If this is true it means they are taking jobs that rightfully belong to illegals. Could it be that they have been reduced to economic straights below illegals?
I know that personally my life plans have begun to change. I was once on track to retire comfortably at 55 with a paid off house. Now I expect to work till I die on the job, gradually becoming less productive each year beyond 55, but having the anti-age discrimination laws to lean on.
I already have two shapers and in my world ROI is a meaningless calculation
Dude, unless you're a hobbyist, everything is ROI. That holds even if you're bartering for food after the nukes have flown. "Productive Use" = own-use, for-fun or for-profit. Makes perfect sense for the seller to look for whomever is willing to pay him the highest price. So either "scrap" beats what anybody who can competently use the thing thinks it is worth, or some artificial constraint is keeping the possible "productive" users from bidding. So what about you? You're a long-term thinker, right? Buy it and sell it on in a couple of years when those machinists are back on their feet. It's clearly durable equipment.
Also, why do you believe that all machinists are busted? Those in the rust-belt states clustered around the auto industry I could see, but there appears to be plenty of demand from export manufacture and resource extraction. That might not hold if the dollar goes up, but I presume we're talking about the here-and-now.
but having the anti-age discrimination laws to lean on.
kidbuck | 08.13.08 - 11:47 am
When is the last time you heard of an age descrimination lawsuit? Those laws are not being enforced. But, take heart. Older workers are back in style.
My 35 year-old boss hires old people like I because, "they don't expect to get paid to just show up, with a bonus for any actual work performed".
mp writes, "People like this piss me off. I have no need for the machine in my room or I'd buy it and move it, but the assclown could do something WORTHWHILE and PRODUCTIVE with it.
As someone who once salvaged a desk sized semi-main frame computer from a dumpster and made it the center piece of my apartment living room I can understand your frustration. But, given the costs of climate controlled storage, ( I assume it would rust otherwise) what is the owner's next best choice? Are you suggesting he sell for less than scrap prices in order to give it a good home or that he start a business to employ it in?
BG, when it gets to the point where you can't deliver parts to tank crews in Iraq, or provide armor for Humvees, which is where we are now, tell the people on the ground that the reason you can't deliver is because it's all about return on investment.
I'm sure they'll really appreciate that.
kidbuck- "Are you suggesting he sell for less than scrap prices"
No. I'm suggesting that, rather than exercise the nuclear option and hold out for his $600 profit or else, he sell it for the scrap price to someone who would actually put it to use.
Steven Seabrook:
"If you have -or still can - avoid the actual and future meltdown, ... remember that this is temporary. This is an opportunity."
So what should we be looking for as a sign that the worst of this mess is over? And where should we be thinking about putting the cash now sitting in money market funds when those signs are seen?
Liz, Tennessee Valley Authority bought the thing and stuck it in a warehouse. Yes, it's likely they literally forgot about it.
mp | 08.13.08 - 11:11 am | #
Similar situation to how DOD has stashed hydroform presses - the big Cincies - almost half the remaining machines in the world. No one makes those anymore.
I gotta take MP's side on the machine, BG. Nobody except you suggested the the seller take a price lower than scrap (although I bet he could and still come out ok after hauling charges...), MP is just suggesting that if the scrap price $x.xx, then why not sell it for $x.xx+1 and keep it productive?
The seller is being a silly turd about things. He'd better act quick on that scrap price, though, because it may go down soon, as well.
MP is just suggesting that if the scrap price $x.xx, then why not sell it for $x.xx+1 and keep it productive?
Why not, indeed? You telling me this guy is going to scrap it for less than he could get otherwise ($x.xx+1) out of spite? Either he thinks he's going to match the $2K asking price as scrap or he's sadly deluded as to the price of scrap and will be promptly disillusioned when he hauls it over, right?
So the only way MP's story makes sense is if the guy is willing to see it melted down purely for the joy of doing so, even though it would come out of his pocket.
No, wait, there's another. He's got 5 more machines in a warehouse and he's willing to scrap one just to prove to the bidders that he's serious. "Nobody moves or the $%&^#$ gets it!", as a character from Blazing Saddles intoned.
"You telling me this guy is going to scrap it for less than he could get otherwise ($x.xx+1) out of spite? "
Yes, god damn it, yes! And this is true of most machine tools because of their weight. They'd rather take an oxygen lance to them than find them homes.
BG, when it gets to the point where you can't deliver parts to tank crews in Iraq, or provide armor for Humvees, which is where we are now, tell the people on the ground that the reason you can't deliver is because it's all about return on investment.
Actually, that would have very little to do with ROI or unavailable machine tools and a lot to do with the perennial DoD tendency to purchase plenty of vehicles and not enough spares. Spares aren't sexy. Not that I don't sympathize, my MOS was 19D.
Then buy it yourself! You just told me this guy can get better than scrap price somewhere else. If he's a spiteful idiot, why don't you make a profit off it and garner the additional satisfaction of putting the thing in a good home? Hell, gimmee his name. Maybe I'll do it. I don't leave $20 bills lying on the ground when I spot them, either.
"When is the last time you heard of an age descrimination lawsuit? Those laws are not being enforced."
Actually just last week I heard about a suit with major implications "won" by us old geezers. It involved the laws that allowed the federal government to force policeman and prison workers retire at specific ages. It also prevents the feds from stipulating maximum ages for hiring. For example, I previously could not begin a career working in prisons if I were over 35. (There are many industries inside prisons besides guarding.)
I'm not sure if this will carry over into the military or local police agencies. I don't have a link and have only heard about it verbally through the chain of command. But, since I'm already hearing about policy decisions based upon it I suspect it's true.
Knock yourself out. Just don't forget that you'll have to get a truck and have it rigged out unless you plan on doing it yourself. You could do it with an 11,000 lb forklift.
wally writes:
What are you guys gonna do, rebuild the Krupp empire and turn out WWI weaponry again?
wally | 08.13.08 - 1:12 pm | #
Nah - we use them to make pieces for role playing games... everyone else shows up with these little plastic models, we show up with the real things. It's quite the advantage you know.
One final thought re shapers for those very few who are interested.
Shapers are no longer used in production shops because of their efficiency: they only cut on one stroke. Vertical milling machines "replaced" the shaper. However, a shaper will produce a better surface finish if set up properly.
If you are one of the few repair shops that still exist, a shaper can be a godsend when you need to square up some material--set it up and walk away-- or, even more importantly, make a spline or keyway. You can't do that on a mill. You have to use a broach. Very expensive.
Shapers use very simple tooling: hand-ground lathe tools.
So, don't let anyone tell you--especially the $7.50/hour machine operator kids--that shapers are "antiques."
I'll bet you guys didn't think ex-bankers could learn s&*t like this, did you?
BG: So the only way MP's story makes sense is if the guy is willing to see it melted down purely for the joy of doing so, even though it would come out of his pocket.
No, wait, there's another. He's got 5 more machines in a warehouse and he's willing to scrap one just to prove to the bidders that he's serious. "Nobody moves or the $%&^#$ gets it!", as a character from Blazing Saddles intoned.
Actually, I'm stickin' with my earlier expalnation--the guys a silly turd. Rational actors work every time in the world of people who think about things like ROI. In the world of everyone else; silly turds, crazy bastards, romantic fools and sentimental old farts abound.
But your secondary theory makes sense also--he may be engaged in suppl;y destruction to boost the value of his remaining stock. Eastern Tenn is full of sharpies like that!
Shapers are no longer used in production shops because of their efficiency: they only cut on one stroke. Vertical milling machines "replaced" the shaper. However, a shaper will produce a better surface finish if set up properly.
I still see them around in tool rooms for squaring up inserts & pre-forms prior to EDM work. That and surface grinders (look similar). They got more metal in each one of them than a floor full of small Haas's.
Actually, I'm stickin' with my earlier expalnation--the guys a silly turd. Rational actors work every time in the world of people who think about things like ROI. In the world of everyone else; silly turds, crazy bastards, romantic fools and sentimental old farts abound.
Actually he probably scraps out all the left overs at once (one quick transaction - get the shit out of here) while he'd have to 'close the deal' piece by piece if he sells them as is to machinists so he 'figures' his time to do the paper work & all is 'worth something'.
Like maybe he'd have to get off his ass to sell the machines vs. sell it all at one time as scrap.
Nice to see you keepin' it real.
Real retail sales have remained negative, but real PCE has been positive. A look at spending shares gives a reasonable explanation. Things like medical care (17.4% of the total this June vs 17.2% a year earlier) and household electricity and gas (2.5% vs 2.2%) are taking up a bigger share of spending, and don't fall into retail sales. There are necessary services from which cuts in spending are tough to make, so when food and energy take up more of the budget, discretionary items have to take up the slack. I don't have any spa/barber/pampering data to see whether those non-retail-sales categories are suffering.
Does anybody see a scenerio that doesn't forecast another GD? From here, it looks like the world's going down--and the US is gonna use its best remaining asset, the military.
Despite the stimulus checks, YoY real retail sales have remained negative all year.
The data seem to suggest that consumers are saving the money from these stimulus checks.
In other words we're taking on heaps of new federal debt so people can just hoard it.
Sounds like a worst case outcome to me.
The next round of stimulus checks will have to be 10x as large to have the desired effect.
Blue barz? Where iz my blue barz?
Seriously, recessions and probable recession would add clarity to the graph. As a second thought comparison might it not be a good idea to subtract out population growth to look at retail sales per capita? 250m c. 1993 to 305m c. 2008 would be an average growth rate of 1.4%.
I know I am cutting back - have been for a while actually in anticipation of bad things. I am finally seeing the some sheeple start to realize that things are going to hell in a handbasket and be aware of their non essential spending. I can tell you from looking at a perticular type of high end used vehicle for over the last year that the prices have plummeted but I still can't bring myself to pull the trigger. I have friend that has a full size Chevy truck that is 1 year old. He got a great deal through a relative. He tried to sell and he can't come close to what the dealers are offering for new. Not to mention the free financing.
As much as I try - and I hope I am wrong, I cannot see us getting out of it before it gets really nasty. Although I am not sure how long the govt can continue to string this along keeping it from diving off the cliff.
Paying more, for less!
Gah. That looks awful, though I wish I could compare it to the 90s, 70s, etc. Note that in 2001-2, we had three quick dagger strikes...now it looks like we are stuck in negative territory. Retailers, take note.
(The little tick up in 2008 is probably just noise, but it could be the impact of the stimulus checks.)
k harris wrote:Real retail sales have remained negative, but real PCE has been positive. A look at spending shares gives a reasonable explanation. Things like medical care....
Relying on "official" government numbers is tricky. I picked up this helpful explanation this morning from Bigpicture: Crash Course Chapter 16: Fuzzy Numbers - consumer price index | Crash Course Videos at Chris Martenson - consumer price index, cost of living, data manipulation, deficit, economic statistics, economy,, GDP, growth rate, hedonics, Inflation, Medicare, rece
I recommend it.
It is very interesting that the general trend of retail sales has been downward for 15 years during a time of vast amounts of construction of retail centers, big boxes, boutique coffeeshops and restaurants, specialty retailers that sell only decorating items or lines or kitchen stuff... and simultaneous expansion of direct internet sales.
I'm actually stuck in this game...my small business needs commercial space and I've been watching with my breath held since April as prices on commercial property.....
...rise.
WTF?
I have ideas about what a property s/b worth, but I'm being outbid by buyers who are bidding 2&3x MORE...
Just proves that CRE hasn't crapped out. Yet.
(catches breath, folds head on desk and sighs...)
I'm actually stuck in this game...my small business needs commercial space and I've been watching with my breath held since April as prices on commercial property.....
...rise.
WTF?
I have ideas about what a property s/b worth, but I'm being outbid by buyers who are bidding 2&3x MORE...
Just proves that CRE hasn't crapped out. Yet.
(catches breath, folds head on desk and sighs...)
Retail sales were negative, but consumer credit had a big ($14b v. $7b expected) big jump in the month. How does one reconcile the two?
It appears that more consumers are making the minimum monthly payment rather than paying down card balances. This shows up as an increase in net credit (because less was paid down than the previous month).
Of all the pieces of economic data I could wish for, the % of credit card borrowers making the minimum payment tops the list. The reason is the credit card shoe, when it drops, will spell the end of the consumer. So far, demand for credit card ABS still seems to be robust, but I suspect we are on the cusp of a subprime-like ramp in c.c. deliquencies. When that happens, ABS investors will re-acquaint themselves with the seemingly-forgotten notion of "adverse selection" and scramble for the exits.
sry 'bout the dbl post...I hate u haloscan...
BelieverJeff: As much as I try - and I hope I am wrong, I cannot see us getting out of it before it gets really nasty. Although I am not sure how long the govt can continue to string this along keeping it from diving off the cliff.
Until Jan 21st, 2009.
cd
As much as I try - and I hope I am wrong, I cannot see us getting out of it before it gets really nasty. Although I am not sure how long the govt can continue to string this along keeping it from diving off the cliff.
Don't worry, the U.S. will hold it together until after 2016 Olympics in Chicago.
...and the US is gonna use its best remaining asset, the military.
Mel....
Oh I get it. We'll sell off our nooks like the USSR had to do!
I wonder how much of it might be that people have finally hit the saturation point. How much stuff can one household buy? How much can you keep in self-storage units? I wonder how self-storage unit companies are doing? Busier because of foreclosures for now?
My guess is once the credit card limit is approached which should be just in time for the all important Christmas season, retail numbers will nosedive. People are running up twice the credit card debt lately compared to this time last month? At that pace the end is coming fast.
What happens when retail goes really negative? Retail, the home of the single mother job, gets whacked. That alone will have a high trickle down misery effect.
Has anyone noticed the greying of the service industry? Retail? I have noticed lately that waitstaff and retail sales people are no longer kids. It looks like Mom and Dad are working the jobs there kids would have.
David Pearson wrote:
Retail sales were negative, but consumer credit had a big ($14b v. $7b expected) big jump in the month. How does one reconcile the two?
The consumer credit report was for June, but the retail sales report was for July.
It wouldn't mean anything. What you really want to know is...what % of all revolving consumer credit outstanding (in a household) is being paid down monthly...and how does the total credit change from month to month?
Credit card balances are still rising, and as long as they keep rising, one card will be used to pay down another.
A fundamental change is taking place in American psyche. Paying off debt is no longer a moral issue. It's a tactical financial issue. Millions of people will come to X point where they decide...this is the time when it makes sense to default on my Y debt but not my Z debt.
Credit cards have become Z debt for many people. But when you default on Y, it makes Z lender nervous, and the credit merry-go-round slows and finally stops.
It's a lender's worst nightmare, and it will play out in America for years. America is by far the world's most vulnerable major economy and stock market, because it's where the credit merry-go-round has been the biggest extravaganza.
When you see Japan and Europe markets fall by 1-2% per day while the NASD and Russell 2000 keep rising, just keep that in mind. Balance will be restored.
Nova,
So true
I was discussing that with significant other while eating dinner yesterday..very noticeable...
Now we're in real trouble!
Roubini started talking about "The Decline of the American Empire."
On the bright side, he says "decline" not "collapse."
Roubini started talking about "The Decline of the American Empire."
Roubini is about 32 years behind the power curve on that one.
Roubini is about 32 years behind the power curve on that one
Ayuh. I recall reading "Rise & Fall of the Great Powers" while travelling through what was still the USSR at the time. It was, of course, comforting to know that the Soviets were slated to be dead meat in short order, but another of Kennedy's points was you wouldn't expect the U.S. to control more than, say, 15% of global wealth over the long-run. This by definition implies catch-up by rising powers and a relative decline in geo-political power. One of the best books I ever read.
In eastern Tennessee today, there is a guy with a Steptoe 24" tool room shaper (machine tool) that came out of TVA storage. The machine was purchased in 1947 and never used. It weighs about 8,000 pounds.
This assclown wants $2000 for the machine. If he doesn't get it, he's going to sell it for scrap ($1,296 as of yesterday), so it can come back as several thousand cheap Chinese eggbeaters.
People like this piss me off. I have no need for the machine in my room or I'd buy it and move it, but the assclown could do something WORTHWHILE and PRODUCTIVE with it.
It won't happen. They're treating precision machine tools like empty soda cans found on the side of the road.
People like that are wasting the air I breathe.
Now that the useless tax rebates are out and oil has bottomed IMO, Ex gasoline retail sales is in for a bah-humbug X-Mas...
It's fun to be right in your projections. As I read the comments here, most folks are pretty bearish. That means that, like me, they are hoarding cash. If that rings true to you, I'd like to suggest a goal.
The goal is to keep things in perspective and watch for the turn. And the turn will come. Clearly, it won't come soon, but remember the point. Absent Armegeddon, the market will turn, the world will not fall apart, the families who have always been wealthy will still be (comparatively) wealthy.
If you have -or still can - avoid the actual and future meltdown, and have not quite given up on meeting your maker just yet, remember that this is temporary. This is an opportunity.
mp,
I have no need for the machine in my room or I'd buy it and move it, but the assclown could do something WORTHWHILE and PRODUCTIVE with it.
Non-sequitur. You have resources, you haven't been creamed by the credit-crunch and you (or your s-in-l) presumably have some ideas as to what productive uses would be. Can't even complain about how expensive housing the thing would be.
I can only draw the conclusion that you don't see enough ROI to take on the project, so why should I presume said "assclown" does and has just decided to piss it away?
Thank you Steven S. I like the folks here, and I like reading what they have to say, but, dang, it can get depressing.
mp-Why had the machine never been used in more than 50 years? Had it been forgotten about?
BG & MP...
I'm feeling it, too. What to do with equipment we, as a collective society, trash - as in, place no value on?
My neighbor "tries" to fix forklifts. He buys dead soldiers, paints them and resells them. He's dirty, crude and doesn't have a computer, so where is he going?
Right now, he's buying dead forklifts and pushing them off the loading dock into scrap metal containers.
so...here come more containers of cheep chinese kitchen gadgets...
BG, this has nothing--absolutely nothing--to do with ROI. It has to do with capability. I already have two shapers and in my world ROI is a meaningless calculation. Few here would understand that.
The assclown could sell the thing for scrap price to some young machinist who would actually use it. He's playing the nuclear card: "pay my price or I junk it."
The problem is the machinists right now are buying nothing--NOTHING--because they're flat on their backs. The industry isn't imploding, it has imploded.
Liz, Tennessee Valley Authority bought the thing and stuck it in a warehouse. Yes, it's likely they literally forgot about it.
Lawyerliz
Like you, I am very impressed by the folks here. I only recently started reading the halo comments, but I'm seriously impressed by the collective intelligence and some pretty outstanding analysis.
I'll put my two bits in from time to time as well as any helpful hints I find, but you really ought to consider my last comment as my best shot.
Liz, you should also be aware that there was a time when the US government actually had some foresight. They stockpiled machine tools to be used in the event of a national emergency.
A couple of years ago, I was in a huge warehouse near Seattle and saw hundreds of machine tools, new and in crates, that had been stockpiled during the 1950's.
A Chinese company, owned by the Chinese Army, purchased them for scrap. I'm sure they're now in a plant somewhere, turning out precision parts.
Actually, some machine shops are doing well. My BIL owns a small shop and he is running flat out...every other week it seems like he's buying me and other bro's in law something or other just because he's making so much right now.
Has anyone noticed the greying of the service industry? Retail? I have noticed lately that waitstaff and retail sales people are no longer kids. It looks like Mom and Dad are working the jobs there kids would have.
If this is true it means they are taking jobs that rightfully belong to illegals. Could it be that they have been reduced to economic straights below illegals?
I know that personally my life plans have begun to change. I was once on track to retire comfortably at 55 with a paid off house. Now I expect to work till I die on the job, gradually becoming less productive each year beyond 55, but having the anti-age discrimination laws to lean on.
I already have two shapers and in my world ROI is a meaningless calculation
Dude, unless you're a hobbyist, everything is ROI. That holds even if you're bartering for food after the nukes have flown. "Productive Use" = own-use, for-fun or for-profit. Makes perfect sense for the seller to look for whomever is willing to pay him the highest price. So either "scrap" beats what anybody who can competently use the thing thinks it is worth, or some artificial constraint is keeping the possible "productive" users from bidding. So what about you? You're a long-term thinker, right? Buy it and sell it on in a couple of years when those machinists are back on their feet. It's clearly durable equipment.
Also, why do you believe that all machinists are busted? Those in the rust-belt states clustered around the auto industry I could see, but there appears to be plenty of demand from export manufacture and resource extraction. That might not hold if the dollar goes up, but I presume we're talking about the here-and-now.
but having the anti-age discrimination laws to lean on.
kidbuck | 08.13.08 - 11:47 am
When is the last time you heard of an age descrimination lawsuit? Those laws are not being enforced. But, take heart. Older workers are back in style.
My 35 year-old boss hires old people like I because, "they don't expect to get paid to just show up, with a bonus for any actual work performed".
mp writes,
"People like this piss me off. I have no need for the machine in my room or I'd buy it and move it, but the assclown could do something WORTHWHILE and PRODUCTIVE with it.
As someone who once salvaged a desk sized semi-main frame computer from a dumpster and made it the center piece of my apartment living room I can understand your frustration. But, given the costs of climate controlled storage, ( I assume it would rust otherwise) what is the owner's next best choice? Are you suggesting he sell for less than scrap prices in order to give it a good home or that he start a business to employ it in?
BG, when it gets to the point where you can't deliver parts to tank crews in Iraq, or provide armor for Humvees, which is where we are now, tell the people on the ground that the reason you can't deliver is because it's all about return on investment.
I'm sure they'll really appreciate that.
kidbuck- "Are you suggesting he sell for less than scrap prices"
No. I'm suggesting that, rather than exercise the nuclear option and hold out for his $600 profit or else, he sell it for the scrap price to someone who would actually put it to use.
Steven Seabrook:
"If you have -or still can - avoid the actual and future meltdown, ... remember that this is temporary. This is an opportunity."
So what should we be looking for as a sign that the worst of this mess is over? And where should we be thinking about putting the cash now sitting in money market funds when those signs are seen?
It won't happen. They're treating precision machine tools like empty soda cans found on the side of the road.
People like that are wasting the air I breathe.
mp | 08.13.08 - 10:50 am | #
What he said.
Liz, Tennessee Valley Authority bought the thing and stuck it in a warehouse. Yes, it's likely they literally forgot about it.
mp | 08.13.08 - 11:11 am | #
Similar situation to how DOD has stashed hydroform presses - the big Cincies - almost half the remaining machines in the world. No one makes those anymore.
I gotta take MP's side on the machine, BG. Nobody except you suggested the the seller take a price lower than scrap (although I bet he could and still come out ok after hauling charges...), MP is just suggesting that if the scrap price $x.xx, then why not sell it for $x.xx+1 and keep it productive?
The seller is being a silly turd about things. He'd better act quick on that scrap price, though, because it may go down soon, as well.
What are you guys gonna do, rebuild the Krupp empire and turn out WWI weaponry again?
kurtyboy,
MP is just suggesting that if the scrap price $x.xx, then why not sell it for $x.xx+1 and keep it productive?
Why not, indeed? You telling me this guy is going to scrap it for less than he could get otherwise ($x.xx+1) out of spite? Either he thinks he's going to match the $2K asking price as scrap or he's sadly deluded as to the price of scrap and will be promptly disillusioned when he hauls it over, right?
So the only way MP's story makes sense is if the guy is willing to see it melted down purely for the joy of doing so, even though it would come out of his pocket.
No, wait, there's another. He's got 5 more machines in a warehouse and he's willing to scrap one just to prove to the bidders that he's serious. "Nobody moves or the $%&^#$ gets it!", as a character from Blazing Saddles intoned.
"You telling me this guy is going to scrap it for less than he could get otherwise ($x.xx+1) out of spite? "
Yes, god damn it, yes! And this is true of most machine tools because of their weight. They'd rather take an oxygen lance to them than find them homes.
BG, when it gets to the point where you can't deliver parts to tank crews in Iraq, or provide armor for Humvees, which is where we are now, tell the people on the ground that the reason you can't deliver is because it's all about return on investment.
Actually, that would have very little to do with ROI or unavailable machine tools and a lot to do with the perennial DoD tendency to purchase plenty of vehicles and not enough spares. Spares aren't sexy. Not that I don't sympathize, my MOS was 19D.
11C
Yes, god damn it, yes!
Then buy it yourself! You just told me this guy can get better than scrap price somewhere else. If he's a spiteful idiot, why don't you make a profit off it and garner the additional satisfaction of putting the thing in a good home? Hell, gimmee his name. Maybe I'll do it. I don't leave $20 bills lying on the ground when I spot them, either.
lama writes:
"When is the last time you heard of an age descrimination lawsuit? Those laws are not being enforced."
Actually just last week I heard about a suit with major implications "won" by us old geezers. It involved the laws that allowed the federal government to force policeman and prison workers retire at specific ages. It also prevents the feds from stipulating maximum ages for hiring. For example, I previously could not begin a career working in prisons if I were over 35. (There are many industries inside prisons besides guarding.)
I'm not sure if this will carry over into the military or local police agencies. I don't have a link and have only heard about it verbally through the chain of command. But, since I'm already hearing about policy decisions based upon it I suspect it's true.
I file this under be careful what you wish for.
Knock yourself out. Just don't forget that you'll have to get a truck and have it rigged out unless you plan on doing it yourself. You could do it with an 11,000 lb forklift.
Scrapyard find - Practical Machinist - Largest Manufacturing Technology Forum on the Web
wally writes:
What are you guys gonna do, rebuild the Krupp empire and turn out WWI weaponry again?
wally | 08.13.08 - 1:12 pm | #
Nah - we use them to make pieces for role playing games... everyone else shows up with these little plastic models, we show up with the real things. It's quite the advantage you know.
One final thought re shapers for those very few who are interested.
Shapers are no longer used in production shops because of their efficiency: they only cut on one stroke. Vertical milling machines "replaced" the shaper. However, a shaper will produce a better surface finish if set up properly.
If you are one of the few repair shops that still exist, a shaper can be a godsend when you need to square up some material--set it up and walk away-- or, even more importantly, make a spline or keyway. You can't do that on a mill. You have to use a broach. Very expensive.
Shapers use very simple tooling: hand-ground lathe tools.
So, don't let anyone tell you--especially the $7.50/hour machine operator kids--that shapers are "antiques."
I'll bet you guys didn't think ex-bankers could learn s&*t like this, did you?
BG:
So the only way MP's story makes sense is if the guy is willing to see it melted down purely for the joy of doing so, even though it would come out of his pocket.
No, wait, there's another. He's got 5 more machines in a warehouse and he's willing to scrap one just to prove to the bidders that he's serious. "Nobody moves or the $%&^#$ gets it!", as a character from Blazing Saddles intoned.
Actually, I'm stickin' with my earlier expalnation--the guys a silly turd. Rational actors work every time in the world of people who think about things like ROI. In the world of everyone else; silly turds, crazy bastards, romantic fools and sentimental old farts abound.
But your secondary theory makes sense also--he may be engaged in suppl;y destruction to boost the value of his remaining stock. Eastern Tenn is full of sharpies like that!
Interesting discussion about industrial equipment. Here's a link from the Industrial Auctioneer's Association:
IAA Auction Calendar
Lot of plants being closed every year and stuff bought for pennies on the dollar and shipped to Asia (for the most part).
Shapers are no longer used in production shops because of their efficiency: they only cut on one stroke. Vertical milling machines "replaced" the shaper. However, a shaper will produce a better surface finish if set up properly.
I still see them around in tool rooms for squaring up inserts & pre-forms prior to EDM work. That and surface grinders (look similar). They got more metal in each one of them than a floor full of small Haas's.
Video of old Cinci shaper
YouTube - Cincinnati Shaper cutting Climax locomotive bolster plate
This is what they do.
Actually, I'm stickin' with my earlier expalnation--the guys a silly turd. Rational actors work every time in the world of people who think about things like ROI. In the world of everyone else; silly turds, crazy bastards, romantic fools and sentimental old farts abound.
Actually he probably scraps out all the left overs at once (one quick transaction - get the shit out of here) while he'd have to 'close the deal' piece by piece if he sells them as is to machinists so he 'figures' his time to do the paper work & all is 'worth something'.
Like maybe he'd have to get off his ass to sell the machines vs. sell it all at one time as scrap.