Japan's Economy: "the world stopped turning"
Submitted by
CalculatedRisk on Thu, 11/27/2008 - 6:45pm (138 comments)
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fecund?
..................2nd?.............
The world stopped turning for about a month and a half after the middle of September ..."
So exports have rebounded?
.....two weeks ago , I was at Ginza street ,and everything goes pretty well....media is a bit exaggerated ....they are selling fears....it's bad but not that bad...
Japan just needs to import Mexicans and get their population growing again (j/k - I support pop. decline)
Say goodnight, Gracie.
You old whoooooor.
Spent the day eating turkey with a buddy - he does a lot of work in Asia. He says it is every bit as bad as reported... both in China & Japan.
Tomorrow will be interesting - Black Friday. The world will be watching.
I drive a truck for a living and freight has slowed a lot...trains are moving containers but truckload freight is way down...many more companies going to go bust after january 1...many companies selling equipment and laying people off because of lack of freight...I think CR is right when he said atm is closed and consumption is WAY down...it shows in freight volume. this is a drastic change from a couple of years ago when truckers couldnt keep up with demand ( think cars clothes plasma tv's) everything is moved by tractor trailer and when consumption is down then we slow down...also because all the other industries have laid off workers we have had a spike in people coming into the industry to drive truck...now there is an even bigger glut in drivers sitting around...sure hope those baby boomers start spending again....
My alma mater just announced they were closing up shop between Christmas and New Year's.
A lot of schools do this, but never before at my school. Was announced hurriedly at the last minute too (just before Thanksgiving)
Black Friday:
Many keep wondering if it's gonna be bad/good/not so bad/etc.
Personally, if I were struggling but still felt I needed to get Xmas gifts, I'd be hitting the Black Friday loss-leaders hard. I personally expect that Black Friday will fall into the "no so bad" category, which will lead to false hope for a "not so bad" Xmas.
Then come January/early February, when the stores struggling just to make it to Dec. 25th throw in the towel, when the banks lending to marginal retailers pull lines of credit, and when the 4th QTR number come out... that's when the shit will hit the fan.
IMHO, of course
Cn
Me and my husband must be among the few people left who haven't gotten into flat screen tvs. When we lived in a boom town suburb, I was surprised how many of these 1200 sf homes had large screen tvs. We've been pretty happy with our $200 old fashioned tv.
I get the feeling that a lot of people have done their Christmas shopping and bargain-hunting already. Malls around here have been packed the last couple weekends. You'll get a big glurt of activity tomorrow, but I'm guessing holiday shopping will simply die after Saturday.
My company usually closes for one week between Christmas and New Year's. This year they added a second week of mandatory time off.
Personally, if I were struggling but still felt I needed to get Xmas gifts, I'd be hitting the Black Friday loss-leaders hard.
I personally know a lot of folks who will be doing exactly that. At 4AM...
Campbeln, I'm pretty sure the malls will be packed - a number of people told me they are going bargain hunting tomorrow (I guess the retailers are adversting sales pretty hard). The expectations are so low - Black Friday will probably be OK compared to the dire predictions.
Barakuda, thanks for sharing. Truck traffic is a great indicator - so you will probably be one of the first to sense the eventual turnaround in retail. Hopefully it won't take too long!
All, I think the Home ATM really boosted car sales and high end electronics (like flat screen TVs) - and also home improvement. So I'm not surprised at all by Panasonic's announcement.
Best to all.
Ed - Mtn View(Unrated) writes:
My company usually closes for one week between Christmas and New Year's. This year they added a second week of mandatory time off.
Ed - Mtn View | 11.27.08 - 10:30 pm | #
With or without pay? If paid is it mandatory 'vacation'? If without pay do workers qualify for UEI?
TIA.
JayD, you need to do the math.
If you are talking about individual level most of us can adjust and will be ok, although the governments are really trying to screw this up and prolong it by 10 years to save their buddies on Wall Street.
As for company earnings. Repeat: You need to do the math. Please come back when done.
Dryfly,
Its really bad in Japan. My brother is working there and its getting ugly. Right now they do not have the funding to move the expatriates back to the USA as promised. Its not so much the air-fare. Its the cost of shipping the household goods that they won't provide. He works for a Japanese consumer electronics company that he would prefer I not mention.
Shutting down the Home ATM equals far fewer flat screen TVs. Hoocoodanode?
lol
But me and the wife plan to buy a flat screen next year. 30% cheaper? In Yen or dollars?
Oh... we're being cheap. Oh, 1080I, but we'll stop at 42" (46" if its that cheap). Note: We'll pick a lower power consumption model too. 
Got Popcorn?
Neil
Agh, I endangered comments by a couple of the greats (dry and CR himself)! I shall savor =)
Anyway... when do the 4qtr numbers start coming out in relation to xmas/retail in the new year? Pre- or post Jan 20th (the new new prez that brings)?
For want of appreciation
a HELOC was lost
For want of a HELOC
a Plasma was lost
For want of a Plasma
a (Baltic Dry )Shipment was lost
For want of a Shipment
a factory was idled
For want of a factory
tax revenues fell
For want of enough taxes
an economy stumbled
For want of a healthy economy
a world saw depression
For want of home appreciation.
With or without pay? If paid is it mandatory 'vacation'? If without pay do workers qualify for UEI?
I have no idea about the company mentioned. But often its a mandatory burn down of vacation. If you have no vacation, I've seen the use of sick time... the rest is 'unpaid.'
Note: If you go for UEI the company isn't necessarily obligated to pay benefits... its a two edged sword...
No what about the Honda factory in Europe that has a planned 60 day shutdown. Ouch...
Got Popcorn?
Neil
Apple is offering rather stingy discounts on its computers for Black Friday. $100 on high end Macbooks and $50 on the entry level ones? No thanks, I'll pass.
I'm starting to look forward to the next iteration of Apple's cyclical irrelevancy.
For want of home appreciation.
Commissar Rob Dawg
For want of a factory job...
We exported our home equity.
Got Popcorn?
Neil
Totally OT, Neil:
You'll want the 1080p (progressive, not interlaced) as the p means "more better". I'm pretty sure most/all of the "full hd" sets are P's but anyway...
Also, we got a 50" plasma (I know, earth hater, didn't realize at the time) in the end of fin. year sales here in Australia and yea, 42"/46" is PLENTY! (we now refer to the frontroom as "the drive-in", not that we're complaining...).
Best of luck in getting the 30% off in dollars!
C
It is Japan, do not underestimate the currency pressure. This is how financial flows do not sustain currency pricing indefinitely, trade flows always come out on top.
They're facing a global fall in demand so I would link it more to the global credit, and therefore earnings, bubble than MEW specifically. Housing/property was a conduit/tool/mechanism which enabled it.
I do agree consumer durables producers will take a bigger hit since they expanded to chase the illogically sized market. But consumer electronics were not absorbing the $800mn annual US MEW alone
Campbeln,
You're right. 1080P
Best of luck in getting the 30% off in dollars!
lol Yea.. it will probably be constant in nominal dollars. But we're moving soon and that's one less thing to haul. (Hopefully our last rental.)
Got Popcorn?
Neil
They're facing a global fall in demand so I would link it more to the global credit, and therefore earnings, bubble than MEW specifically. Housing/property was a conduit/tool/mechanism which enabled it.
Exactly. And they turned that MEW knob too far.
Now how the heck are we going to pay for our energy? Ok, Australia will ship ore and wine. But the US? Me thinks we'll have to cut our consumption a bit.
Tonight's Turkey dinner conversation was on the 'politics of green' and the strategic implications.
Got Popcorn?
Neil
OT, idle conversation fodder
Modern IQ ranges for various occupations via 2002 article
Agh, we Aussies have issues as well (born a Cali lad and immigrated to Oz during the dot-bomb). Thankfully the land of Oz does have goods to sell (ore, wine as well as gold, wool/sheep, grain, etc.) but our personal debt is HUGE (bigger then the US's and at or over the Brits if I remember correctly).
Medium/long term we should be ok in the lucky country, but short term I'm pissed I didn't more more of our savings into USD at 98.5c! (stupid imploding hedge funds causing a rush into the USD that I stupidly didn't expect).
I'm just glad I've got a "nationality hedge" as that 70/71% consumers and 15%(?) financial services part of US GDP ain't not lookin' so sweet right now...
Cn
Campbeln, I'm pretty sure the malls will be packed - a number of people told me they are going bargain hunting tomorrow (I guess the retailers are adversting sales pretty hard). The expectations are so low - Black Friday will probably be OK compared to the dire predictions.
CR do you ever go out to malls on days like this? If for no other reason than to OBSERVE HISTORY? I sometimes do but probably won't tomorrow... my son works at Mall of America and will tell me (so I don't have to go).
BTW his store at MOA is above plan but only because they cut staffing early before the damage hit so as sales declined they were already 'staffed' for those sales levels.
They measure performance in 'hours'... something like net sales per period minus total labor cost per period divided by average labor rate per period... So if they have a day where net sales minus total labor cost exceeded plan by $3000 and have a combined labor rate of $300/hr (all employees at that store working that period combined)... they would have gained '10 hours' that period (usually a day or shift).
He said his store is above plan on hours but some of the smaller stores at lessor malls in the region are as much as 3,000 to 5,000 hours behind plan... that's a lot he said. No way they go 'black' this holiday even if they cut back now. Too late for that.
Comrade Peronista writes:
JayD, you need to do the math.
If you are talking about individual level most of us can adjust and will be ok, although the governments are really trying to screw this up and prolong it by 10 years to save their buddies on Wall Street.
...I am not talking about myself or individual , pal...that's what I saw at largest electronics mall in the world ... dont take the face value what newspaper said...
Agh, edit... seems that much touted 70/71% of GDP number included financial services (Hoocoodanode), but still...
http://usinfo.state.gov/products/pubs/economy-in-brief/page3.html
Bullet points (2006):
Gov: 12.4% (this will get bigger in the smaller pie)
Ag: 0.9%
Mining: 1.9%
Construction: 4.9% (ugh-oh)
Manufacturing: 12.1%
"Services": 67.8%
Of "services", it seems that RE+FinServ is 21% (III - Sorry!.
But no matter how you cut it, 68-71% of GDP getting pounded hard is not going to go over smoothly.
C
Thanks for the numbers round up Campbeln. It appears last quarter could be super ugly.
Campbeln,
You might find the BEA's numbers more useful for what you are looking at.
from: http://www.bea.gov/industry/index.htm#annual
to the table
BEA : Gross-Domestic-Product-by-Industry Accounts
which shows Value Added by sector as % of GDP
The term FIRE is commonly used to denote Financial + Insurance + Real Estate which are closely interrelated. For 2008, FIRE was 20.9% of GDP -- although that will not include the ancillary spending on outsourced legal and IT
Gosh my pants feel tight!
To much pecan pie.
So the larger question is: Has the world economies ever had such an abrupt change in such a short period of time??
From an historical perspective, things take time to evolve. Now, however, we have producers refusing inputs, manufacturers shuttering production, retailers declaring BK prior to the big selling season, and consumers moving on.
Rather interesting times. Have we been experiencing a full economic cycle at warp speed? Will this prove to be a short aberation?
well here is what I see from my view...I have 2 big auto plants near by(louisville ky) both are idling plants for extended period of time,GE plant is downsizing and laying off,circuit city closed big distribution center and store nearby closed for liquidation,mall and wal-mart activity is weak,people are there but no bags in there hands,just "window shopping",retailers discounting heavy before black friday...I think black friday will be selective shopping,not fill your cart to the top. as to CR on freight volumes picking up...Everyone I talk to from truckers to shippers and recievers of fright all say the same thing all are cutting back extensively...I ask everytime I pick a load up or deliver a load.90% of companies say same thing all cutting staff because of lack of orders...I think once black friday passes and we get to second week of december I believe freight volumes will fall off sharply,most people I speak to dont see pick-up in freight of most kinds until april-may...but for sure jan, feb, and march are going to be extremely week...most companies are wondering if they have enough cash flow to make it to other side...it is forcing companies to work and sell for less just to keep cash flowing,just to stay alive (just like in post about panasonic)this creates the de-flationary situation that the government is worried about,stores selling at cost to stay afloat = bad business...I am seeing this in trucking industry,companies hauling frieght for cost just to survive next six months,on the surface this appears good for people who ship goods (think wal-mart best buy etc)looks to keep shipping cost down but if too many freight companies go bust then we will have shortage of trucks hauling freight,rates will rise sharply (no one can open new freight companies because no one can get credit to buy $125,000 rigs) hell of a neg. feed back loop
just an opinion from a truck driver
This is just the beginning. A shoert period of deflation, then severe inflation, international political unrest and then, TEOTWAWKI.
Rather interesting times. Have we been experiencing a full economic cycle at warp speed? Will this prove to be a short aberation?
Could be, but the memories of the little people are long.
My grandparents NEVER got over the Great Depression psychologically, even though they went on to live typical 1950s middle-class lives. That caution was passed on through the generations; possibly "stickier" in my family than in most.
It depends on the shock to the system. Economists can intellectualize what's happened all they want, but that's because most of them are comfortably off. I think we will never again see the rate of rampant, devil-may-care consumption that we saw in the '90s and '00s.
Dryfly, it is paid time off. It improves the financials if there is less earned vacation time on the books. They will let you take time from the next year if you run out.
In California there is a state law that prohibits it, but in other states they now require employees to use all their vacation by year end or lose it.
had a chance to exchange a few words with a cousin of mine at dinner tonight. he is a big dude at a company that has a resort on the las vegas strip. he said they talk to bankers everyday. credit can be had at 8-12 hundred basis points above libor. the market is frozen solid. he has always been a very optimistic guy and he still was tonight. i dunno, maybe it was the expressions he made when telling me about the business that got me worried.
in other news, i probably had 2000 calories worth of desert.
or to put it another way
Manufacturing peaked in 1953 at 28.3%, where it's under 12% in recent years.
FIRE was 10.5 - 15% until it started growing in conjunction with the boom in private credit under Reagan in 1980
From 1955 to 2007, value added as % of GDP
Information services doubled from 2.5 to 4.7
Professional and Business Services quadrupled from 3.7 to 12.2
Waste management quintupled from 0.6 to 3
Education, health, social services quadrupled from 1.9 to 7.9
Government was stable from 10.8 to 15.3
Thanks for the links EvilHenryPaulson.
Actually, that makes me think... so is that a double negative (HP being evil, and all)? Or is it a double-plus-evil kinda thing?
Heh, kinda like my view of religion; I've been meaning to join the Mormons, which the specific goal of going to their hell. See, I figure any place without caffeine and alcohol would be hell for me, therefor the negative of that should be sweet! It's possible there's a hole in that logic, but I don't see it!
C
i also talked with a buddy of mine that runs a large sporting goods store here in las vegas. he told me some of the daily and weekly sales numbers his store was putting up. i was shocked. when i was 16 i worked at a little arby's that put up bigger numbers. he said the dsw(shoe store) next door was getting killed and the furniture store next to them was always dead. the employees sat out front all day and smoke according to him. several of the smaller store fronts were empty.
@evilhenrypaulson
worker productivity has greatly increased since '53
Hell has been outsourced and consolidated by all US-majority religions: now in the hands of anti-Allah.
Best join the free-thinkers as they have consolidated heaven and hell and socialized it. (heheh)
I was looking at the various coupon sites for Black Friday deals, I was pretty disapointed at the "deals" given.
I think it is more hype than enough to move product.
Some of the places I've been looking:
Black Friday Ads - The Official Black Friday 2009 Website
Black Friday 2009
Dell Coupons, Best Buy Coupons, Discount Cheap Laptops, Computer Sale
Coupons, Deals, and Cash Back Shopping - FatWallet.com
Campbeln, I really wasn't thinking when I picked the first name I thought of (EHP), perhaps I felt sarcastic
also, 8.33mn employed by FIRE in some of the country's highest paying jobs (workforce is about 150mn?). A 25% cut is potentially ahead
Barakuda,
That's value added as a % of GDP. It is a break down of the relative contribution by industry to the total production. Productivity is a meaningless metric in this case
"Japan just needs to import Mexicans and get their population growing again (j/k - I support pop. decline)
"
Why import Mexicans?
They ALREADY have those dirty pakistanis living there.
FWIW: Happened past a couple of Best Buys tonight in the L.A. area, and there were people with tents camping out. They must have some good deals.
I talked with an insider at UPS, and he told me they've been laying off A LOT of their truck drivers lately.
Is anyone seeing less and less semi trucks on the road these days?
duh,
ups is a great example...at this time of year they sub a lot of work out to outside carriers...but only giving out a fraction this year,word has it they are just tryin to keep there guys working through holidays
®, I'm not "on the ground" and haven't been able to troll through the dead tree versions of the ads, but I agree. I was looking at many of the same sites you mentioned over the last day or two for deals and didn't see any!
Hell, one of the stores had a KitchenAid mixer for $299, I got the next model up on Black Friday 2 years ago $180! 750g+ Hard Disks (which is what I was looking at) were higher then I got them for 6 months ago online.
Something is up with Black Friday this year. I figured that there MUST be screaming deals just to get people through the doors, but it really doesn't look like it AT ALL!
Of course, anyone know the lead time on getting ads printed for Black Friday? Maybe all the prices were set before the mid-Sept maelstrom?
C
Black Friday is crap for deals this year. Many other people I deal with who also watch prices have noticed this too. Most of them are staying home this Black Friday.
I've seen what look like some sweet deals on flat screen monitors & TVs, but NWIH would I ever get up that early and weather those crowds.
I have family that works at WalMart and the shoppers are insane.
campbeln,
I noticed the same thing,a couple of weeks ago you saw ads for $300 notebooks,now on black friday the line starts at $400 I think its a joke this year,the best deals may come later as retailers realize they have way to much inventory (btw staples had a 8.9 sub-notebook for $359 not sure if it had cd-rom)
Campbeln,
Not sure if it is still the top place to check, but try PRICEWATCH :: Price Comparison Shopping Tool - Find the lowest prices on computers, parts, electronics, clothing and more before you buy $61, free shipping, 750GB
Off topic rant...
About flat screen TVs mentioned above in the context of home ATM being shut down... that particular metric/barometer is very 2004
What other kind of TV do they sell now? CRTs are only at the ultra low end, and increasingly difficult to find.
10 years ago, I got a good price on a 27" Panasonic - $349 at Sears. It has served me well.
A vastly superior 32" LCD TV can now be had for the same price. Amazing. It seems that advancements (and resulting price decreases) in flat panel technologies progress at a rate similar to computer equipment (CPUs, HDs, memory, etc).
Back circa 1975, my father was very proud of his $700 Zenith. That would be something like $2500 in today's dollars. I seem to remember that it had as good a picture as many TVs produced 10 years later.
At the current rate, it should be possible to get a 42" 1080p TV for $500 within a couple of years.
But yeah, it can't be a good time for selling those high end $2000 TVs. The cheap ones are good enough now that most people can't tell the difference. Heck, a significant percentage can't even tell the difference between SD and HD.
Of course, anyone know the lead time on getting ads printed for Black Friday? Maybe all the prices were set before the mid-Sept maelstrom?
Prices could have been set a year ago - seriously. That is if the 'offer' was part of a larger mfg-retailer joint promotion.
On the other hand that doesn't stop them from changing that offer right up until store open. The lead time on the printer is weeks so they still could have changed pricing AND got the fliers out fairly recently.
BTW - my guess is the stores with the biggest discounts are clothing & apparel. My wife & her friend were looking on line & clothing retailers seemed to be cutting pretty heavily ON SELECTED ITEMS (read this as loss leaders).
How long do the modern flatscreens last, however?
Because I have a 1992 RCA (tube) that is still going strong.
ztexas,
wal-mart 6am 42 1080p $499
EHP, thanks for that! But I'm looking for externals (in USB and/or sata cases). I'm not sure I'll ever buy a desktop again, laptops are just too powerful/convenient now-a-days. Besides, then I can surf while in my drive-in!
If you've got any other links, I'd appriciate them! Best I've found is $160 for a 1.5tb Seagate External on NewEgg (and so help me if you people buy all of them before I get my order in! =)
C
sneering nihilist if you are still here can you email me if you want to meet up in the vegas area sometime
oDohF9WAno4UPUYY@spambox.us
thanks
More anecdotal evidence that the Phoenix auto dealers are getting killed. As in "no sales for the past two weeks" bad. I think we're going to see some bankruptcies shortly.
Since we have some good anecdotal data that retailers are not discounting, does anyone have some theories?
Tight budgets, trying to make money off everyone that assumes they will be getting a good deal, leaner inventories, something with vendor financing, strategic plan to wait until boxing day/next year/next government stimulus plan? Maybe they only expect to sell to the people who will be buying regardless of sales price?
Sharp 42" LC42SB45U 1080p LCD HDTV $799
Dell notice: The page you requested cannot be displayed
We have a flatter than flat screen TV that's actually very deep (since it's about 10 years old). But we keep it in the closet, and on the rare occasions we need to turn it on, we open the closet door. Still works great!
BTW: WalMart has announced the will price match other stores black friday ads on items they carry.
E.H.P,
I think they believe consumers come out thinking that they are automatically getting deals on black friday...they are going to be suprised to learn consumers are doing homework this year...
EHP,
As someone else (mal?) upthread mentioned, heard on the radio news, here in Chicago, people are camping out @ Best Buy stores...fwiw.
Cn,
Navigate the site I linked for you. There are such externals for $89 w/ shipping
Barakuda,
That's my thinking so far. I think they will be cutting prices when they (or the manufacturers) have to clear inventory, but for now no one wants to blink first
minister of truth is right...wal-mart will match ANY,yes ANY price add...EVEN GROCERY ADDS!!! I do it all the time...bring add from kroger meijer,etc the wal-mart here keeps grocery adds from other stores at register
Barakuda writes: wal-mart 6am 42 1080p $499
After clicking 'publish' it occurred to me that with BF sales tomorrow, my price speculation might already be dated/obsolete
Now, if only auto prices dropped at a similar rate. My wife's '97 Explorer is close to its natural end-of-life. I hate spending a chunk of money for another vehicle with the economy in this state.
Ministry of Truth -- cool beans. i just sent you an email.
EHP, re: retailer theories.
I don't know about that in the US. Here in Oz, we are surrounded by oligolopies so this sore of "herding" behavior is common. Hell if it wasn't for Aldi (a German-based grocery store) the 2 major grocery stores would still be making 50c-$1 per 3L of milk. When I worked in a grocery store in the states, they harped into us that milk, eggs, etc. were at cost if not a little below just to get people in the door. Yet here they command a 10-20% profit margin?
US side... all you need is one or two big-ish retailers to start a war (cough Circuit City cough). Now, this isn't to say that you're wrong by any means, just that I'm not sure it's a "planned" thing.
Maybe they had to pay their suppliers (or still have to pay) in lower bucko's in relation to Yen or otherwise?
C
@ ztexas
gm red tag sale until end of year,ford heavy discounts.
E.H.P,
wait until after jan 1st when the retail bankruptcies start...several couldnt make it until then...you will see LOTS of liquidation.
EHP, forgot to mention... have done so and still can't beat the gb/$ of that 1.5tb on NewEgg @ $160 (plus it's a Seagate with the 5yr warr.). But thanks for the resource! It's already in the bookmarks!
C
"Since we have some good anecdotal data that retailers are not discounting, does anyone have some theories?"
No theories, but what if there is simply no fat to cut? Retailers have beat the crap out of each other, so no mas?
Gains from the secular shifts to outsourcing have slowed, stopped, reversed?
About the most recent "breakthrough" was the elimination of textile quotas, but the deflationary effect has about reached it's limit. And lower commodity prices have yet worked their way through to retail.
Now, if only auto prices dropped at a similar rate. My wife's '97 Explorer is close to its natural end-of-life. I hate spending a chunk of money for another vehicle with the economy in this state.
ztexas
Call around many banks are giving repo'd vehicles away...just to many legal dollars doing it the old fashioned way
ztexas,
Buy it from Canada new for a discount while the USD is strong (went from 90¢ to $1.30 inside the last 6 months)
Barakuda,
The interesting part will be when the manufacturers get squeezed. The factories that produce things like LCD screens require massive investment and ideally pump them out for 3 shifts 7 days a week until the process technology is obsolete in 3 years. Labour and energy costs are a fraction of the capital investment, so they need to find buyers. The one thing they can do is allocate more production to fewer/larger screens
"wait until after jan 1st when the retail bankruptcies start...several couldnt make it until then...you will see LOTS of liquidation.
"
EXACTLY ! And THAT is when Ill be doing my shopping...
E.H.P,
manufacturers getting squeezed already,wal-mart,best buy,etc have already went to manufacturers told them to cut cost...wal-mart has even went into some plants and showed them how to cut cost to lower bottom line,dont know if anymore fat to trim
@ duh,
I think consumers smell blood in the retail waters and are waiting them out,wouldnt suprise me if people saved gift cards for liquidation sales...just a guess
Barakuda,
"I think consumers smell blood in the retail waters and are waiting them out,wouldnt suprise me if people saved gift cards for liquidation sales...just a guess"
I think you are absolutely correct.
However, be wary of those gift cards, because if the retailer goes under, those gift cards will be worthless.
@ duh
yea its gonna be messy this year,saw lots of stories about gift cards...gotta be careful might get stuck with a lemo
Most of my friends are spending less this XMAS. My wife and I are spending about the same.
I just bought a new car, thinking about getting a second new car to stimulate the economy. As long as I'm employed, it will all work out.
Traunche Coat Mafia
Bought a car from someone trying to sell to raise cash. Didnt do much for the economy but helped him out...
Gift cards are likely FDIC protected:
FT Alphaville » Blog Archive » A FDIC gift voucher for all
has anyone considered the point that the goods that are being sold now was made during the top of the raw goods cycle and they paid a lot to manufacture goods a few months ago and now raw goods prices have come down and they are stuck with higher cost products to get rid of before they can get cheaper raw goods
Barley
How would you go about calling banks about repo cars?
gift cards covered under TARP hhmmm
Does anyone have an option about where C is going next week? I have an open option spread and I'm thinking there is no chance that the government will let C fall below 5.00 again. Should I sell my 2.50 puts now?
Should I sell my 2.50 puts now
When do they expire?
It's possible there's a hole in that logic, but I don't see it!
Campbeln | 11.27.08 - 11:30 pm | #
You're neglecting the constant visits to get you back on the straight and narrow in this lifetime. That's the punishment.
OT-re: IQ, engineers
It seems that CR commenters have skewed to a relatively high percentage of those who claim to be engineers (used to be lawyers a while back.) Strikes me that while they may be extremely logical, one tiny flaw at the beginning sends them on a straight line irrevocably into the bizarre.
Tim, December 19.
barakuda, that is an interesting point. At the same time now they are going to be cutting the quantity of goods that they produce in the factories but still have to pay the same fixed costs as before. Fixed costs like the cost of capital they used to build the [now] overly large factory in the first place...
Those two things might balance out.
yea massive selling on C when it broke $5 hedgies and money marks and pensions have to dump...probably get below $5 again first week in december then pop in ho-ho rally back above $5
that is: the higher fixed costs / unit of production vs. lower costs of raw goods..
Traunche. Hmmmm. AIG rallied to 5 bucks I think after their bailout over six days or so the got cut in half.
With the Citi bailout they backed up the equity.
My advice wait til 5 then sell. But I think you will make the best decision.
Barakuda, well that won't help me. I have 2.50 puts and 10 calls, and I was doing great until the government intervened.
Now, I am afraid C will hover between 5.00 and 8.00 and I am screwed. Oh well, it's been a casino since 1987.
Marc Faber recommends getting into Gold explorers at this point.
Bloomberg News
Explorers are risky plays that just about act like options on gold on the way up as well as on the way down. They've been beaten down tremendously. I mentioned two I liked over the past week-end.
tcm, barakuda, don't know anymore. everything the fed/treasury are doing is meant to save the banks. I can't see C going down at this point considering how far the fed/treasury are willing to go to keep it afloat. I am afraid of going short on any of the banks at this point. This is no longer a free market.
ponyless in nj
well I think they are compensating by swithing "quantity" for less "quality" among other things like labor costs etc,
Since we have some good anecdotal data that retailers are not discounting, does anyone have some theories?
I'm going to go way out on a limb.
Last summer, the Supreme Court, overruling its precedent of 90 years, held that minimum resale price agreements were not per se illegal; prior to this decision, it was illegal for any manufacturer to dictate at what price their products could sell for. After Leegin, such price agreements are permissible unless it was shown that these agreements were anti-competitive. Instinctively, the initial response would be to think that the giants like BBY and WMT would say F-U and dictate the terms to the mfgs; however, they would be the ones most benefiting from this change, as they could be certain that smaller retailers would be precluded from violating MSRP.
Ponyless, I beg to differ with you. IMO, it's never been a free market.
RE
I like Miners too They got beaten harder than gold I think they have a 20% more upside over the metal from here.
Ponyless in NJ
Im not shorting because we are so far down. Just like it was smart to sell the Dow at 12k. You are not going to hit the bottom of the market. 7.5k was my target and I stopped going short at 8.5k missed a lot of money but I sleep better now.
well in my opinion I think market is tryin to shake out the "Playas" this is the kind of crap that kills I think traunche aint the only fish on the proverbial hook...the market is leaving the dead in the street,no mercy...the game changes by the hour...hard to keep up,lots of people i know sittin this long round out on sidelines
RE writes:
Gift cards are likely FDIC protected:
Protected as respects failure of the underlying bank but not failure of the merchant.
I like Miners too They got beaten harder than gold I think they have a 20% more upside over the metal from here.
IMO explorers will move 50% to 100% or more if the metal moves up 20% from here.
mp writes:
Ponyless, I beg to differ with you. IMO, it's never been a free market.
Always succinct and timely.
The stock market is definitely rigged now. My option play was dumb, but I am mostly long physical gold.
I am hoping the Treasury issues debt-free fiat once the current debt pyramid collapses. We don't need private banks creating US dollars.
"I like Miners too They got beaten harder than gold I think they have a 20% more upside over the metal from here.
"
Bought a shitload of gold miners (GDX, AUY, GG, NEM, PAAS, and SLW) last Thur, and Friday. Put tight stops under those just in case the world ends...
Anyone got an opinion on those juicy fat dividend paying Candaian Energy Trusts (ie. AAV, HTE, PWE, ERF, PGH etc) ?
@Barakuda
Thank you for your posts. You are making my mind work overtime.
I agree with the logic when the shippers go broke... but I'm gaming it. Will rigs still cost 125K - in these circumstances???
I'm thinking no.
I'm thinking a downward spiral.
Thoughts?
sdtfs, interesting perspective on an engineer's thought process
Basel Too, That is some great info too obscure for me or a news columnist to know about.
Good night.
P.S.
CR has brought Makiw's feet to the fire in a new post. I find it really sad when such hacks like Mankiw rise above their competence, they really do not know any better.
duh
I bought GDX at 24 in Oct. Just now making money.
I bought some PGh 2 weeks ago. Been crap. I don't know I like GSG or UNG as a hedge against inflation over the next ten years. 10% of total portfolio.
As Canadian Energy Trusts, you may want to look at this:
Canadian Royalty Trusts Will Never Return to Their Former Glory
Canadian Royalty Trusts Will Never Return to Their Former Glory -- Seeking Alpha
@sandito
yea I thought about it after I hit publish....I talked to truck dealer and he said they cant give trucks away now...10k-15k off price still no buyers,no one is gettin credit,also no bank will lend to buy semis in down freight market...banks affraid of reposses...also there is a flood of used stuff on market
mp, Perhaps... But the current government intervention in C and the remaining financial companies is blatant and overwhelming.
Ponyless, I agree with you.
duh,
Have held Canroys for about 3 years (PGH, PVX, PWE). The situation is a bit "murky" because of changes in Canadian tax laws about 18 mos. ago. Some might convert to a corp. structure..some might become MLPs...plus, the drop in oil has hit 'em too. Because, like a REIT, they paid the bulk of cash flow out in distribution (by law to maintain trust status), they raised capital by share issuance, and borrowing. Because of turmoil in the cap. markets, some (PVX, for example) have cut distributions.
The explorers I really like here are: GUY.TO and KGI.TO which is a small producer as well. GUY especially has tremendous upside IMO.
@Barakuda,
Thanks. You have your ear to the ground... I'm working through how this plays out...
Assume shippers go bust.
Less work around... but gas costs are cheaper, trucks can be had for a song... less work than people willing to work... on the opposite end... not much money to be made...
if you play that out (and obviously you are well informed here)... what happens?
I'm still thinking price death spiral, but please let me know what you think (perhaps I'm overlooking something).
Almost all TVs are "flat screen" these days, including those bulky remaining CRT models.
I assume you meant "flat panel."
Barakuda......Just curious.You in Bullit Co.?
RE reports of Black Friday shoppers camping out overnight: is it too paranoid to suspect stores hiring people for promotional purposes?
sandito,
I think a lot of trucking companies go bust,cant refi equipment(depreciating asset) shortage of trucking companies,not truck drivers...forces labor cost down( think lower wages)too many drivers...trucking companies raise rates because supply and demand
tiny tim
clark...you?
Louisville....The area you described sounded like Outer Loop which is about where I am.....Good comments by the way.
Hmmmmm.... I get it all except for this...
i'm a trucking company who survives
my labor costs are cheaper
my costs of goods are cheaper (gas, trucks)
i've got many newbies and some seasoned wanting to get work driving
there are more applicants than work- which pushes my labor costs down
I am in stiff competition with the remaining shipping survivors
my customers also need to keep costs low (as their businesses continue to get whacked and their customre base dwindles)
will i raise rates - and get my throat cut by the other shipper? or... will i keep playing the game to beat my competitors out. lowering and lowering my prices
If we get to one or two players... maybe i can claim monopoly and raise rates... until then... though... it is a deadly game.
tell me i am missing something.
BTW... your posts are great
Tiny Tim
that was my old name but people kept calling me Tiny so I dropped that part
How can an entire planet gear up their economies towards exporting goods on credit to a single country?
sandito
well I guess this is what greenspan would call a "conundrum" I am not sure what the cure is but I sure see the symptoms...I think a lot of trucking companies are trimming the fat every place they can and hold the line by not raising rates and possibly working with shippers with long term agreements for service...not sure to much can work in this environment...I think in the long run the companies with the deepest pockets will prevail...( think microsoft lots of cash) I know that sounds kinda generic but I think it could be just that obvious...only problem is how many survive to see the gains on the other side and of the survivors,how many will be damaged from the downfall...
How can an entire planet gear up their economies towards exporting goods on credit to a single country?
Leave the punch bowl where it is and step and away...
@Barakuda
agree sir... just working through the time window... i think we're at least a year off from thinking about raising rates... perhaps even 2-5 years.
shipping is the backbone of what we call an economy.... it will play out in many different businesses.
thank you for the thoughts/posts.
I am going to sleep for the night... will be back in the am
I used Tiny Tim on another thread and just didn't change back.Like many of us I probably used 7 or 8 different names on different sites today.I'm retired and spend a LOT of time on the net(6-10 hours a day and sometimes more).I go to 20-25 sites every day and another 40-50 once a week or so.If I comment I might use 20-25 handles.As we all know CR is taking up a lot of my time the last few months.I pretty much read every comment.
Pitchforks,Torches&Pikes World
KOOL.
I'm off to other sites(watch porn) and I can tell you that I won't be out in the dark to Black Friday shop.
dryfly, Ed: My employer does shutdowns too, which always happen to be only partial weeks due to how the holidays fall. As far as I know, you have a choice between burning vacation and unpaid (some may prefer the latter), vacation is the default. Visa workers are only "encouraged" to burn vacation, and don't have the unpaid option.
Aside from that there is the concept of a "core crew" for "essential" operations, who are basically the people who tell their boss they want, or are willing if asked, to work through the shutdown (as long as it doesn't exceed a plausible number per organization -- if even that). This pretty much indicates the whole thing is a sham.
As the unpaid option is elective, I don't think there is a UE angle.