I believe we are going to see language coming from Chairman Ben that basically says fed funds rates could stay at zero for a long time. This will influence financial markets expectations of future short term rates. The only way to bring the long bond yield down to ridiculously low levels is for Mr. Market to believe that it is an accurate discounting of the future.
Deflation and ZIRPMesiterBen reminds me of the scene in Children of God where our heroes are trying to escape the farmhouse and the car wont start so they have to roll it down the hill while trying to turn the engine over.
Seems like the economy is rolling off the cliff and to start it Chairman Ben needs a lot of Treasuries and he needs a lot of folks to finance the Treasuries hes loaned out on very short terms lately. U.S. is basically a leveraged hedge fund that ran a naked short on its own debt (U.S dollar) but now has to cover its short (deleveraging) so what we need is cheap financing (low Treasury yields).
There was a huge duration grab in the bond market yesterday. This means that investors were buying all the long bonds they could. Driven by deflation fears? Yes however swap rates, basically representing private risk versus sovereign risk , also went negative on the long end. This means that investors see a private counterparty as less risky than the government, which obviously is not driven by fundamentals (oh snap the CDS on U.S. sovereign debt is 90 basis points? I think that doubled in about 2 weeks). Although people have theories no one seems to know quite why this is happening, the argument that exotic trades are causing short covering was rumored. The effect is flattening the yield curve, bring the long end closer to the short end.. which is basically zero. The only way to get this condition fundamentally is for folks to have expectations that the rates make sense.
Which takes us back to Chairman Ben having to say fed funds rates could stay at zero for a long time because this will influence financial markets expectations of future short term rates.
4 Trillion is a lot of meatballs to mop up, wed rather be paying 3% than 8%.
Good article by Chris Laird at Kitco.com. He quotes from NY Times.com: The ships keep coming, but theres nowhere for the cars to go, Mr. Golledge said.
Not far away, metal, cardboard, paper and plastic are piling up in the lot of Corridor Recycling. The company takes in refuse from around the country, then bales it for shipment to China. The cardboard is used to make new boxes while used shrink wrap is turned into shoe soles and insulation for sleeping bags and coats.
For much of this year, the company shipped about 25 containers a day, each filled with 23 tons of refuse to be recycled. But after the Olympics, demand slowed for recycled metal. In October, demand for everything else took a sharp downturn, and for the last two weeks the company has not shipped a single container.
It just came to a complete stop. Absolutely a stop, said Gilbert Dodson, the recycling companys co-owner. Ive seen it slow over the last 25 years, but this is the worst, he said of the current downturn...
Just as the US stupidly tried to increase its ability to dump capacity abroad by creating import restrictions (which has the effect of further expanding domestic production), China seems to be hoping for the same thing by increasing export rebates and slowing the currency appreciation (there is even increasing talk of depreciation).
This cant work for long. The world has excess production and there is a need for the US to reduce its demand and increase its savings. The only proper place for new demand to originate is, once again as in the 1930s, from current account surplus countries. They should be engaged in demand creation, not supply creation. If they continue trying to export their way out of a slowdown, there will almost certainly be a trade war, as in the 1930s, and the full force of the adjustment will be borne by the current account surplus countries, again as in the 1930s. Remember that back then the current account deficit countries, like Germany after 1932, found it relatively easy to limit the impact of the crisis by forcing balanced trade which has the effect of increasing demand (domestic) and reducing supply (foreign).
It is amazing to me that people like Ferguson, who have been arguing correctly for years that US consumed too much and saved too little, are now terrified of the necessary adjustment, and are arguing that it should be stopped and even reversed. The process cannot be stopped US savings are too low and will rise one way or the other. The global imbalance between production and consumption must grow because US and European consumption must decline, and if we cannot find a new source of demand, there will have to be a contraction in production. In an open world, the contraction will be paid for by everybody more or less equally, with those aggressively pursuing export growth getting off relatively lightly and the rest doing worse. In a closed world most of the cost will be borne by the countries with overcapacity.
If Asian countries continue to try to boost exports it is not hard to see why this could easily lead to trade barriers. ...
our CEO held an interesting meeting today... he told everyone to stop spending.The entire time I was curiuos if he considered the impact on our product.
fed funds rates could stay at zero for a long time...
---comrade swan
I don't see how that could happen unless the US just prints the money it is loaning out/giving away.
The way things are going, it won't be selling new Treasuries. Previous buyers (Asia, Russia, the Arabs) won't have FX cash to buy US debt, as they are already struggling to keep their own economies afloat through stimulus packages - at the same time as their exports shrivel. And there won't be domestic buying of Treasuries, as our own economy has stripped its gears.
How is the Fed going to keep the FF rate at zero when it costs the US 25%+ to borrow?
Can anybody here explain why the banks' non-borrowed reserves are improving (i.e. less negative numbers), while the monetary base totals are dramatically increasing?
FED has started to pay interest to Banks reserves if they park it at FED.
So that should drain liquidity from the market place. This to save the lucky 9. So we have more recession/deflation, despite monetary base up xxxx% annualized.
We don't have a liquidity problem. We have a solvency problem. The important thing is to save the Lucky 9.
When oil goes down to $30 a barrel does Iran suddenly have "enough nuclear fuel" for two weapons? Maybe if it goes down to $20 they'll have have nuked the whole Arabian Peninsula...
Okay, I kid, I kid, I have no idea if the nuclear agency with zero credibility is now credible again...
are you kidding me writes:
our CEO held an interesting meeting today... he told everyone to stop spending.The entire time I was curiuos if he considered the impact on our product.
the parodox of thrift is here.
are you kidding me | 11.21.08 - 2:42 am | #
That's repeating all over the world.
Stop spending and lay off.
Scaring.
China's trade surplus is somewhat fictitious. With a floating currency they would have crashed long ago.
The world economy is out of balance. I'd call this recession the Great Unwinding - because we've got about a generation's worth of speculation to blow off.
Well, I'm also gladly to inform that time of denial is still roaring.
I work in a very big manufacturing firm; yesterday top management announced that the bottom was in and they was re-entering the market for their personal investments, as "well ya know, it couldn't go to zeero".
Couldnt?
I keep repeating this in the threads recently because my eyes were opened.
Are there any companies that don't have debt? Are there companies that didn't use credit to expand?
Those are the companies to buy... and not until we get "capitulation". Also, do people really believe the market is going to shoot up and you'll miss the rally? Like people's attitudes which will take a beating into the coming year will all of a sudden change... after it took them awhile to change?
Anyway, it seems like governments everywhere are doing everything they can to stop some type of company blow up... well it appears Citi is about to blow up; will they get another bail out?
Isn't it almost time that we hear about how AIG needs $30B more dollars and is re-structuring their loan?
Just looking through random Economist "Pocket World in Figures" booklet:
Countries with most over-valued currencies: 1) Iceland, 2) Norway, 3) Switzerland.
Total Cash (mrq):\t24.49B
Total Cash Per Share (mrq):\t27.569
Total Debt (mrq):\t0
Total Debt/Equity (mrq):\tN/A
Current Ratio (mrq):\t2.462
Book Value Per Share (mrq):\t23.674
Whether it's a sign of the troubled financial times or wily art investors are waiting until the last minute, there's been only one online bid for a signed portrait of Omaha billionaire Warren Buffett.
As of 8 a.m. EST, the $100,000 offer that opened the bidding on Nov. 10 has not been raised. The Internet auction ends at 8 p.m. EST Thursday
...there's been only one online bid for a signed portrait of Omaha billionaire Warren Buffett.
Probably Warren made that bid himself. He may have raised B Hussain's profile with his recent sucking up, but he has destroyed his own reputation, what was left of it.
The bloodletting in the financial- services industry will accelerate in coming months, with job cuts doubling to about 350,000 worldwide by mid-2009, said Brian Sullivan, chief executive officer of search firm CTPartners. Reductions on that scale would be equivalent to 20 percent of the global workforce at financial companies before the credit crisis began, said Sullivan, whose firm has worked with Citigroup Inc. and JPMorgan Chase & Co. Banks, brokerages and funds have eliminated about 170,000 positions worldwide. Financial Job Losses May Double to 350,000 by 2009 (Update1) - Bloomberg.com
An unexpected drop in U.S. electricity consumption has utility companies worried that the trend isn't a byproduct of the economic downturn, and could reflect a permanent shift in consumption that will require sweeping change in their industry. Surprise Drop in Power Use Delivers Jolt to Utilities - WSJ.com
This is close to the DotCom shakeout (25%) and bubble industry shakeouts in previous depressions.
I wish I knew what was really happening. If the Feds have truly driven large sums of long money into low interest rates, then Bernanke is one step towards fixing this thing and color me surprised. However it could be illusion to change " perception"
There's sure a lot of wild rumors floating around- military coup, nukes exploded in the arctic, military call-up, Arab loans, gold manipulation, etc
At the moment, baseball is bucking a trend. Teams are about to start awarding free agents lavish contracts that, in at least two instances, will almost certainly top $100 million. Meanwhile, the stock market continues to sink, retirement accounts are disappearing and the Big Three automakers are on the verge of bankruptcy.
With that as a backdrop, the 81-year-old Volcker went to Major League Baseballs headquarters Thursday morning and addressed team owners and baseball officials for roughly 45 minutes. According to several people who attended the meeting, Volcker discussed what led to the current economic plight and where things might be headed. His assessment was not upbeat, the attendees said.
If you believe the plug-in electric car will be a factor then demand will soar.
A 100hp electric engine is 77.4 KW. If
you run it two hours per day, more or
less, you need 150 KWH. That is a lot
more juice than the average home now
consumes.
Then there is the growth in heatpumps
to replace oil and gas fired furnaces in mid latitude areas. Lower construction costs too to go with all
electric homes.
I can't explain the dip seen by some utilities in the WSJ article but I just bet it is an aberration owing more to local factors including weather and empty houses.
comrade kidbuck(Irritating) writes: I'm seeing strong "hints" from my boss that I should be using more of my own time for company projects.
Time to get a new boss?
Be careful. Not a good time to jump and become junior-est guy at a shop unless you are SURE it is a VERY solid shop and you are equally SURE you can push someone else in front of the steamroller.
I don't know what it is, but something's wrong with that calculation.
The Tesla roadster, which by any measure is a very high-performance vehicle, requires less than three bucks for a 244 mile charge. In my case, that means monthly electricity costs would rise by about six or seven dollars if I were driving a Tesla.
The Globe and Mail reports in its Friday edition that Ed Clark has admitted that TD Bank is no longer immune to the global financing crisis. The Globe's Tara Perkins writes TD will be hit with $350-million, after tax, in credit losses this quarter. TD's chief executive officer says steering a bank through a credit crunch is no easy task. TD focused almost exclusively on eliminating credit risk, he told analysts on a conference call. They ensured the bank had plenty of cash on hand. What it missed was the rest of the world running out of cash. "I think that turned out to be a mistake."
"I feel bad for all the people who have/will lose their jobs, but the FIRE sector needs to contract to a shadow of its former self."
PeakVT | 11.21.08 - 6:15 am | #
I see all these layoffs and think "How overstaffed are these companies?". My boss has 21 mechanics reporting to him. His boss has damn near 30 managers under him.
Maybe I don't want to know how overstaffed they are...
Yes I also predict another round of "stop spending" at my workplace... a few weeks ago we were told that... drum roll... the department Christmas party would be canceled. I'm sitting there thinking "That's IT?" And everyone else thought it was a big deal, but I was thinking, "You've got to be kidding me... there's no way this is ending with just a canceled Christmas party." And I work in an industry usually insulated from economic downturns.
Yes, if you believe bonds are in a bubble and/or there will be inflation at some point. Since it is an ultra, downside risk under deflation is probably considerable. IMHO, TITFA, IANAL, YMMV.
I must admire the ability of the U.S. media to spin news positively. Or sometimes just inanely. After a day's reading, I have to wonder what galaxy they're in.
C, Misean,
You get little sleep C, and Misean didn't you have a plane to catch?
Liked both the Seeds and the Garbage versions. As for Seeds, only had pushing to hard on my mental hard drive, so thanks.
In the case of newspapers, we're not trying to "entertain" or "spin everything positive," 98 percent of newspapers simply do not have enough good people asking enough good questions anymore. Cut to the bone, with the remaining talent focusing on the wrong things, out of pure habit.
Unit472 - I have been following electric cars and ultra-capacitors for years. As a rule of thumb, a car with a 100 mile range needs about 30kwh of energy for 20HP of power with a motor/drive train efficiency of about 40% efficient.
Although higher HP is used during acceleration, once you get to a steady state speed, wind resistance and friction requires less than 20 HP.
And regenerative breaking makes the cost of accelerating less dire as you actually charge the batteries when you break.
Byzantine_Ruins, thanks for thoughtful reply. I'm sorry to irritate you.
I just think that while we are focusing on the few percentage points change in unemployment statistics that greater changes are taking place in the labor force. Many variables just don't show up in the statistics. For example, if I am asked to do the work of 1.5 people, isn't this a form of wage deflation?
Also, don't unemployment numbers effect us differently from prior depressions now that there are so few one income families (and/or so few extended families)?
I see too much anecdotal evidence all pointing one way. Yesterday a vendor called (nuts and bolts supplier) and was so pleased to get my order she teared up. Too many of her regular customers aren't buying anything. My main auto parts supplier says business has been down 30% from a year ago.
Well Betty Boo on BloomTV is really excited right now. I bet Maria is in the bathroom squirting in the toilet.
Oh, I get it Smuckers and Heinz, the backbone of the economy are reporting good news, because they're off by less than the general market. That's a good one. At least BloomTV reports they have $2B in loans due early next year.
All this good news has GOT to be an up tick day. I mean Shitty, according to Betty Boo is "ROARING" back today...but still under $5. That's that whole percentage thing working.
Until mass financial reporting is totally discredited among the target demographic of the advertisers, it will still be there, but likely shriveled over time.
The talking heads gotta know the writing's on the wall, but what else can they do in the red dust world?
Meantime, I'll only pay for cable as part of a hotel bill.
Until mass financial reporting is totally discredited among the target demographic of the advertisers, it will still be there, but likely shriveled over time.
I want them to bring back all the guests they've had over the past two weeks who said "THIS IS DEFINITELY THE BOTTOM".
"The Tesla roadster, which by any measure is a very high-performance vehicle, requires less than three bucks for a 244 mile charge. In my case, that means monthly electricity costs would rise by about six or seven dollars if I were driving a Tesla."
The Tesla will use up 0 kW. They're out of business and won't produce a car.
comrade kidbuck writes:
I see too much anecdotal evidence all pointing one way .... Too many of her regular customers aren't buying anything. My main auto parts supplier says business has been down 30% from a year ago.
And yet I think you'll find that plenty of businesses, particularly smaller mom-and-pop types with no debt, are doing just fine. I spoke to another small-company owner in our building yesterday and her business (trophies/awards/promotional items) is up YoY. Our business (IT-related) is also up YoY. As has been pointed out in these fora numerous times, businesses that rely on cheap credit are going to get killed as the excess gets wringed out of the entire system from producers to consumers. But businesses that are fundamentally well-run, flexible, not reliant on debt or credit, and making products that people want to buy will do just fine.
I would think auto parts would do relatively well, since presumably people will defer new car purchases and keep their existing vehicles longer. Of course, they'll be driving less. So, who knows.
Plug in only cars are a niche market pipe dream that will stay where it belongs, a fantasy of greying old hippies and crunchy Husseinamaniacs.
Wanna know why?? The freaking AC won't work in half the country. The hot half. Might as well drive a golf cart all summer. How do I know?? Spent many hours with the GM Impact at the APS shop in Phoenix in the early 90's. Impact as the proto that became the ev1. You know, the car that the kumbaya crowd complains was chopped up for "oil interests". It was chopped up because they had to install timers on the AC to start cooling the car while on the charger in the garage, and you "might" get to work comfortably. AC sucked so much juice, batteries would only last 1/2 to 3/4 of the time depending on outside temp. I was stranded many times in the summer. Piece of shit.
Unless we have broken the laws of thermodynamics, this whole plugin car thing will be a non starter with actual consumers. Draw a line east to west through St. Louis, and you won't sell anything south of that line after the first summer, guaranteed.
I can't wait to see the review on Edmunds. "Innovative, responsible, and looks great in the garage, but utterly unreliable technology rushed to market to satisfy the cravings of crunchy granola heads."
comrade kidbuck(Irritating) writes: I just think that while we are focusing on the few percentage points change in unemployment statistics that greater changes are taking place in the labor force.
Oh, certainly. That's why I have a much dimmer view of what we're going to see in the future than the statistics paint. We've systematically adjusted our perspective so that our projections paint the rosiest possible picture of reality.
For example, if I am asked to do the work of 1.5 people, isn't this a form of wage deflation?
Yes, and in fact, Alan Greenspan's vaunted productivity increase was silent deflation when payout is measured per work unit.
Also, don't unemployment numbers effect us differently from prior depressions now that there are so few one income families (and/or so few extended families)?
Also true, there was a discussion yesterday of the real estate impact of DINKs living at the edge of their dual means turning into SINKs.
This is something we'll have to learn about, though, as we've manipulated the system or the statistics to "win" at the economy rather than have an actual business cycle for several decades now.
Now that we have to pay the forfeit, we'll have to confront several cyclical downturns added together and with compound interest, taking place in a context that is totally new to us, with a populace I will generously describe as "sissified".
I see too much anecdotal evidence all pointing one way. Yesterday a vendor called (nuts and bolts supplier) and was so pleased to get my order she teared up.
IMO, it's going to be as bad as any such thing ever was.
oink!
first? No way.
Local news just gave an update on the Asian markets. Coupling continues.
damn Pig!
Soon it will be easier to list the companies not trying to become bank holding companies.
No way am I .. first ?
Does this mean that Jim Rogers will be moving back?
I believe we are going to see language coming from Chairman Ben that basically says fed funds rates could stay at zero for a long time. This will influence financial markets expectations of future short term rates. The only way to bring the long bond yield down to ridiculously low levels is for Mr. Market to believe that it is an accurate discounting of the future.
Deflation and ZIRPMesiterBen reminds me of the scene in Children of God where our heroes are trying to escape the farmhouse and the car wont start so they have to roll it down the hill while trying to turn the engine over.
Seems like the economy is rolling off the cliff and to start it Chairman Ben needs a lot of Treasuries and he needs a lot of folks to finance the Treasuries hes loaned out on very short terms lately. U.S. is basically a leveraged hedge fund that ran a naked short on its own debt (U.S dollar) but now has to cover its short (deleveraging) so what we need is cheap financing (low Treasury yields).
There was a huge duration grab in the bond market yesterday. This means that investors were buying all the long bonds they could. Driven by deflation fears? Yes however swap rates, basically representing private risk versus sovereign risk , also went negative on the long end. This means that investors see a private counterparty as less risky than the government, which obviously is not driven by fundamentals (oh snap the CDS on U.S. sovereign debt is 90 basis points? I think that doubled in about 2 weeks). Although people have theories no one seems to know quite why this is happening, the argument that exotic trades are causing short covering was rumored. The effect is flattening the yield curve, bring the long end closer to the short end.. which is basically zero. The only way to get this condition fundamentally is for folks to have expectations that the rates make sense.
Which takes us back to Chairman Ben having to say fed funds rates could stay at zero for a long time because this will influence financial markets expectations of future short term rates.
4 Trillion is a lot of meatballs to mop up, wed rather be paying 3% than 8%.
Good article by Chris Laird at Kitco.com. He quotes from NY Times.com:
The ships keep coming, but theres nowhere for the cars to go, Mr. Golledge said.
Not far away, metal, cardboard, paper and plastic are piling up in the lot of Corridor Recycling. The company takes in refuse from around the country, then bales it for shipment to China. The cardboard is used to make new boxes while used shrink wrap is turned into shoe soles and insulation for sleeping bags and coats.
For much of this year, the company shipped about 25 containers a day, each filled with 23 tons of refuse to be recycled. But after the Olympics, demand slowed for recycled metal. In October, demand for everything else took a sharp downturn, and for the last two weeks the company has not shipped a single container.
It just came to a complete stop. Absolutely a stop, said Gilbert Dodson, the recycling companys co-owner. Ive seen it slow over the last 25 years, but this is the worst, he said of the current downturn...
global trade and credit problems
from China Financial Markets:
(site no available right now)
China Financial Markets
Just as the US stupidly tried to increase its ability to dump capacity abroad by creating import restrictions (which has the effect of further expanding domestic production), China seems to be hoping for the same thing by increasing export rebates and slowing the currency appreciation (there is even increasing talk of depreciation).
This cant work for long. The world has excess production and there is a need for the US to reduce its demand and increase its savings. The only proper place for new demand to originate is, once again as in the 1930s, from current account surplus countries. They should be engaged in demand creation, not supply creation. If they continue trying to export their way out of a slowdown, there will almost certainly be a trade war, as in the 1930s, and the full force of the adjustment will be borne by the current account surplus countries, again as in the 1930s. Remember that back then the current account deficit countries, like Germany after 1932, found it relatively easy to limit the impact of the crisis by forcing balanced trade which has the effect of increasing demand (domestic) and reducing supply (foreign).
It is amazing to me that people like Ferguson, who have been arguing correctly for years that US consumed too much and saved too little, are now terrified of the necessary adjustment, and are arguing that it should be stopped and even reversed. The process cannot be stopped US savings are too low and will rise one way or the other. The global imbalance between production and consumption must grow because US and European consumption must decline, and if we cannot find a new source of demand, there will have to be a contraction in production. In an open world, the contraction will be paid for by everybody more or less equally, with those aggressively pursuing export growth getting off relatively lightly and the rest doing worse. In a closed world most of the cost will be borne by the countries with overcapacity.
If Asian countries continue to try to boost exports it is not hard to see why this could easily lead to trade barriers. ...
our CEO held an interesting meeting today... he told everyone to stop spending.The entire time I was curiuos if he considered the impact on our product.
the parodox of thrift is here.
fed funds rates could stay at zero for a long time...
---comrade swan
I don't see how that could happen unless the US just prints the money it is loaning out/giving away.
The way things are going, it won't be selling new Treasuries. Previous buyers (Asia, Russia, the Arabs) won't have FX cash to buy US debt, as they are already struggling to keep their own economies afloat through stimulus packages - at the same time as their exports shrivel. And there won't be domestic buying of Treasuries, as our own economy has stripped its gears.
How is the Fed going to keep the FF rate at zero when it costs the US 25%+ to borrow?
maybe he implied not to spend company money but use your own if you had to
CEO held an interesting meeting today... he told everyone to stop spending.The entire time I was curiuos if he considered the impact on our product.
Next year is going to be really bad.
Can anybody here explain why the banks' non-borrowed reserves are improving (i.e. less negative numbers), while the monetary base totals are dramatically increasing?
Fed. H3 totals
The monetary base has jumped from 800 some billion to almost 1.5 trillion since summer.
I assume the increase in monetary base correlates with the improvement in bank non-borrowed reserves, but what does that mean? Anyone?
Unirealist, not sure what's going on, but:
Monetary Base is up dramatically.
FED has started to pay interest to Banks reserves if they park it at FED.
So that should drain liquidity from the market place. This to save the lucky 9. So we have more recession/deflation, despite monetary base up xxxx% annualized.
We don't have a liquidity problem. We have a solvency problem. The important thing is to save the Lucky 9.
That's the reason why Singapore stock market is up 2.5% anc counting today?
When oil goes down to $30 a barrel does Iran suddenly have "enough nuclear fuel" for two weapons? Maybe if it goes down to $20 they'll have have nuked the whole Arabian Peninsula...
Okay, I kid, I kid, I have no idea if the nuclear agency with zero credibility is now credible again...
are you kidding me writes:
our CEO held an interesting meeting today... he told everyone to stop spending.The entire time I was curiuos if he considered the impact on our product.
the parodox of thrift is here.
are you kidding me | 11.21.08 - 2:42 am | #
That's repeating all over the world.
Stop spending and lay off.
Scaring.
Ned Flanders,
Did you pay attention, what was it last Thursday? The Dow broke 8k and hit a new low and then immediately rallied.
"Allright, everyone thinks our companies are garbage... buybuybuybuybuy!"
BTW Argentina passed pension takeover:
Al Jazeera English - Americas - Argentina passes pension takeover
I'd really like a CR report/update on default risk for this country.
China's trade surplus is somewhat fictitious. With a floating currency they would have crashed long ago.
The world economy is out of balance. I'd call this recession the Great Unwinding - because we've got about a generation's worth of speculation to blow off.
YLSP, I agree, ironic mode was ON tough.
"Allright, everyone thinks our companies are garbage... buybuybuybuybuy!"
Double sucker's rally: their companies ARE actually garbage, but tehy don't already know it.
Well, I'm also gladly to inform that time of denial is still roaring.
I work in a very big manufacturing firm; yesterday top management announced that the bottom was in and they was re-entering the market for their personal investments, as "well ya know, it couldn't go to zeero".
Couldnt?
I keep repeating this in the threads recently because my eyes were opened.
Are there any companies that don't have debt? Are there companies that didn't use credit to expand?
Those are the companies to buy... and not until we get "capitulation". Also, do people really believe the market is going to shoot up and you'll miss the rally? Like people's attitudes which will take a beating into the coming year will all of a sudden change... after it took them awhile to change?
Anyway, it seems like governments everywhere are doing everything they can to stop some type of company blow up... well it appears Citi is about to blow up; will they get another bail out?
Isn't it almost time that we hear about how AIG needs $30B more dollars and is re-structuring their loan?
Are there any companies that don't have debt? Are there companies that didn't use credit to expand?
Those are the companies to buy...
Virtually none, I'm afraid.
During my honeymoon in Argentina, I was astonished that people financed the purchase of shoes.
It's systemic.
The only way to bring the long bond yield down to ridiculously low levels
It's already at ridiculously low levels.
Just looking through random Economist "Pocket World in Figures" booklet:
Countries with most over-valued currencies: 1) Iceland, 2) Norway, 3) Switzerland.
Don't think Iceland holds the top spot anymore...
How many of the companies we're trying to bailout become sustainably profitable?
Are there any companies that don't have debt?
Of course there are. How does this sound to you?
Balance Sheet
Total Cash (mrq):\t24.49B
Total Cash Per Share (mrq):\t27.569
Total Debt (mrq):\t0
Total Debt/Equity (mrq):\tN/A
Current Ratio (mrq):\t2.462
Book Value Per Share (mrq):\t23.674
Cash Flow Statement
Operating Cash Flow (ttm):\t9.60B
Levered Free Cash Flow (ttm):\t4.38B
Whether it's a sign of the troubled financial times or wily art investors are waiting until the last minute, there's been only one online bid for a signed portrait of Omaha billionaire Warren Buffett.
As of 8 a.m. EST, the $100,000 offer that opened the bidding on Nov. 10 has not been raised. The Internet auction ends at 8 p.m. EST Thursday
Are there any companies that don't have debt? Are there companies that didn't use credit to expand?
CSCO, GOOG, MSFT. And that's without even looking anything up.
maybe he implied not to spend company money but use your own if you had to.
I'm seeing strong "hints" from my boss that I should be using more of my own time for company projects.
Time to get a new boss?
...there's been only one online bid for a signed portrait of Omaha billionaire Warren Buffett.
Probably Warren made that bid himself. He may have raised B Hussain's profile with his recent sucking up, but he has destroyed his own reputation, what was left of it.
What's a republic?
The entire time I was curiuos if he considered the impact on our product.
Well, maybe hanging onto his employees was his most important consideration. Depending on the business, that's either smart or brilliant.
The bloodletting in the financial- services industry will accelerate in coming months, with job cuts doubling to about 350,000 worldwide by mid-2009, said Brian Sullivan, chief executive officer of search firm CTPartners. Reductions on that scale would be equivalent to 20 percent of the global workforce at financial companies before the credit crisis began, said Sullivan, whose firm has worked with Citigroup Inc. and JPMorgan Chase & Co. Banks, brokerages and funds have eliminated about 170,000 positions worldwide.
Financial Job Losses May Double to 350,000 by 2009 (Update1) - Bloomberg.com
An unexpected drop in U.S. electricity consumption has utility companies worried that the trend isn't a byproduct of the economic downturn, and could reflect a permanent shift in consumption that will require sweeping change in their industry.
Surprise Drop in Power Use Delivers Jolt to Utilities - WSJ.com
Futures say serious rebound. Bargin hunters or setup for a Friday selloff? Stock Futures on Bloomberg
20% reduction on global workforce in finance
This is close to the DotCom shakeout (25%) and bubble industry shakeouts in previous depressions.
I wish I knew what was really happening. If the Feds have truly driven large sums of long money into low interest rates, then Bernanke is one step towards fixing this thing and color me surprised. However it could be illusion to change " perception"
There's sure a lot of wild rumors floating around- military coup, nukes exploded in the arctic, military call-up, Arab loans, gold manipulation, etc
Many companies (most?) parked their cash in commercial paper markets.
It is frozen., illiquid.
They havent admitted this yet.
They will have to soon.
Why do you think they rushed to tap credit lines when this started.
This is close to the DotCom shakeout (25%) and bubble industry shakeouts in previous depressions.
I feel bad for all the people who have/will lose their jobs, but the FIRE sector needs to contract to a shadow of its former self.
Last one for the day: Volcker Gives Baseball an Update On the Economy - NY Times
At the moment, baseball is bucking a trend. Teams are about to start awarding free agents lavish contracts that, in at least two instances, will almost certainly top $100 million. Meanwhile, the stock market continues to sink, retirement accounts are disappearing and the Big Three automakers are on the verge of bankruptcy.
With that as a backdrop, the 81-year-old Volcker went to Major League Baseballs headquarters Thursday morning and addressed team owners and baseball officials for roughly 45 minutes. According to several people who attended the meeting, Volcker discussed what led to the current economic plight and where things might be headed. His assessment was not upbeat, the attendees said.
PeakVT(Excellent) writes:
Futures say serious rebound. Bargin hunters or setup for a Friday selloff?
Interesting question. If it is +300-+500 we'll know there are still plenty of knife-catchers to play the Greater Fool.
If it's another down day, then there aren't.
RE: electricity demand.
If you believe the plug-in electric car will be a factor then demand will soar.
A 100hp electric engine is 77.4 KW. If
you run it two hours per day, more or
less, you need 150 KWH. That is a lot
more juice than the average home now
consumes.
Then there is the growth in heatpumps
to replace oil and gas fired furnaces in mid latitude areas. Lower construction costs too to go with all
electric homes.
I can't explain the dip seen by some utilities in the WSJ article but I just bet it is an aberration owing more to local factors including weather and empty houses.
Wall Street portrait:
Magritte - Not to be Reproduced
comrade kidbuck(Irritating) writes:
I'm seeing strong "hints" from my boss that I should be using more of my own time for company projects.
Time to get a new boss?
Be careful. Not a good time to jump and become junior-est guy at a shop unless you are SURE it is a VERY solid shop and you are equally SURE you can push someone else in front of the steamroller.
Unit:
I don't know what it is, but something's wrong with that calculation.
The Tesla roadster, which by any measure is a very high-performance vehicle, requires less than three bucks for a 244 mile charge. In my case, that means monthly electricity costs would rise by about six or seven dollars if I were driving a Tesla.
Of course, my house uses more than that.
2008-11-21 06:42 ET - In the News
The Globe and Mail reports in its Friday edition that Ed Clark has admitted that TD Bank is no longer immune to the global financing crisis. The Globe's Tara Perkins writes TD will be hit with $350-million, after tax, in credit losses this quarter. TD's chief executive officer says steering a bank through a credit crunch is no easy task. TD focused almost exclusively on eliminating credit risk, he told analysts on a conference call. They ensured the bank had plenty of cash on hand. What it missed was the rest of the world running out of cash. "I think that turned out to be a mistake."
whoa this home builder seems to be standing strong:
341.38
+2.93 (0.87%)
Nov 20 - Close \t
NVR, Inc. - Google Finance
"I feel bad for all the people who have/will lose their jobs, but the FIRE sector needs to contract to a shadow of its former self."
PeakVT | 11.21.08 - 6:15 am | #
I see all these layoffs and think "How overstaffed are these companies?". My boss has 21 mechanics reporting to him. His boss has damn near 30 managers under him.
Maybe I don't want to know how overstaffed they are...
Chris
Futures market...why doesn't BloomTV just say opex rally an leave it at that?
No. Since I've been up I've heard every absurd thing in the world for the rally.
Shitty selling itself off? Double plus good.
Maybe TARP coming back? Double plus good.
Gov'ts getting serious about recession? Double plus good.
Glod this is annoying.
But it can't go straight down, so I guess I'll buy me some SRS on Monday.
Knurd!
Nostrovia,
Elderly news. This story has been in a zimmer for months.
Does anyone know if TBT is a good buy?
"Pretty soon it will be easier to list the countries NOT in recession"
SOMALI
Obama Transition Said to Consider a Prepack Auto Bankruptcy
Obama Team Said to Explore `Prepack' Auto Bankruptcy (Update4) - Bloomberg.com
Yes I also predict another round of "stop spending" at my workplace... a few weeks ago we were told that... drum roll... the department Christmas party would be canceled. I'm sitting there thinking "That's IT?" And everyone else thought it was a big deal, but I was thinking, "You've got to be kidding me... there's no way this is ending with just a canceled Christmas party." And I work in an industry usually insulated from economic downturns.
Does anyone know if TBT is a good buy?
Yes, if you believe bonds are in a bubble and/or there will be inflation at some point. Since it is an ultra, downside risk under deflation is probably considerable. IMHO, TITFA, IANAL, YMMV.
Peter Schiff Sucks(Unrated) writes:
Obama Transition Said to Consider a Prepack Auto Bankruptcy
CDS drama!
Ah yes "prepack" BK should be good for several 100 points today. Prepack BK for entire US auto industry is GOOD news.
My Glod! This is going to hell in a broken hand basket that's on fire.
The Halon is about to start blowing.
Nostrovia,
With apologies to the Man in Black:
When I was just a young boy
My Momma told me son
Don't play with securities
And don't ever play with guns
But I sold CDS in the Apple
Just to watch them fry
And when I hear the SEC a'comin
I hang my head and cry...
C
I must admire the ability of the U.S. media to spin news positively. Or sometimes just inanely. After a day's reading, I have to wonder what galaxy they're in.
C, Misean,
You get little sleep C, and Misean didn't you have a plane to catch?
Liked both the Seeds and the Garbage versions. As for Seeds, only had pushing to hard on my mental hard drive, so thanks.
Let the young ones figure that message out...
RE....A great post. Give us more...
The MSM is in entertaiment mode...Most people here are trying to deal with reality...
In the case of newspapers, we're not trying to "entertain" or "spin everything positive," 98 percent of newspapers simply do not have enough good people asking enough good questions anymore. Cut to the bone, with the remaining talent focusing on the wrong things, out of pure habit.
Anak - yuh kin sleep when yurh dead. I expect scintillating insight and wit out of you for the next four hours.
And Cooper's Panopticon will be rating...
C
Comrade Misean is Dope writes:
Ah yes "prepack" BK should be good for several 100 points today. Prepack BK for entire US auto industry is GOOD news.
My Glod! This is going to hell in a broken hand basket that's on fire.
The Halon is about to start blowing.
Nostrovia,
Comrade Misean is Dope | Homepage | 11.21.08 - 8:00 am | #
@ Halon ref was induced one forceful coffee spit take. Happy Friday clean-up!
Unit472 - I have been following electric cars and ultra-capacitors for years. As a rule of thumb, a car with a 100 mile range needs about 30kwh of energy for 20HP of power with a motor/drive train efficiency of about 40% efficient.
Although higher HP is used during acceleration, once you get to a steady state speed, wind resistance and friction requires less than 20 HP.
And regenerative breaking makes the cost of accelerating less dire as you actually charge the batteries when you break.
Another voyeur huh.
Too bad I like to watch too. Besides which, it's kick back time in GMT +8.
I'm sure the others will be along presently...
When they came for Countrywide, I said nothing because I held no CFC shares.
When they came for Lehman, I said nothing because I held no LEH shares.
When they came for Citigroup, I rejoiced because I held Jan 09 puts @ 20.
When they finally came for me, I was long gone.
Zinger Corey.
Like I said.
Cmon, rally monkey..... gotta reload!!
I checked my balances after I covered a majority of my shorts yesterday afteroon..... I'm still ~7% in puts.
Might be time to reload in some June or Sept black swans. Although at this pace, the rally may be gone by the (first) opening bell.
Byzantine_Ruins, thanks for thoughtful reply. I'm sorry to irritate you.
I just think that while we are focusing on the few percentage points change in unemployment statistics that greater changes are taking place in the labor force. Many variables just don't show up in the statistics. For example, if I am asked to do the work of 1.5 people, isn't this a form of wage deflation?
Also, don't unemployment numbers effect us differently from prior depressions now that there are so few one income families (and/or so few extended families)?
I see too much anecdotal evidence all pointing one way. Yesterday a vendor called (nuts and bolts supplier) and was so pleased to get my order she teared up. Too many of her regular customers aren't buying anything. My main auto parts supplier says business has been down 30% from a year ago.
What's a republic?
Well Betty Boo on BloomTV is really excited right now. I bet Maria is in the bathroom squirting in the toilet.
Oh, I get it Smuckers and Heinz, the backbone of the economy are reporting good news, because they're off by less than the general market. That's a good one. At least BloomTV reports they have $2B in loans due early next year.
All this good news has GOT to be an up tick day. I mean Shitty, according to Betty Boo is "ROARING" back today...but still under $5. That's that whole percentage thing working.
Glod!
Nostrovia,
Damn, so the bear goes back in the cage today?
For shame.
C
Until mass financial reporting is totally discredited among the target demographic of the advertisers, it will still be there, but likely shriveled over time.
The talking heads gotta know the writing's on the wall, but what else can they do in the red dust world?
Meantime, I'll only pay for cable as part of a hotel bill.
Damn, so the bear goes back in the cage today?
More like: they've got the bear on a leash today, and they're parading him around in front of a bunch of school children.
Wait for the "Animals Gone Wild Moment".
Wait for it . . . .
Wait for it . . . .
"I'm seeing strong "hints" from my boss that I should be using more of my own time for company projects.
Time to get a new boss?"
Emigrate to Somalia. Live the life of a Pirate King.
Until mass financial reporting is totally discredited among the target demographic of the advertisers, it will still be there, but likely shriveled over time.
I want them to bring back all the guests they've had over the past two weeks who said "THIS IS DEFINITELY THE BOTTOM".
Terrifying new thread up.
"The Tesla roadster, which by any measure is a very high-performance vehicle, requires less than three bucks for a 244 mile charge. In my case, that means monthly electricity costs would rise by about six or seven dollars if I were driving a Tesla."
The Tesla will use up 0 kW. They're out of business and won't produce a car.
A Peek Inside The Soon-To-Be-Dead Tesla Motors Detroit Office - Tesla - Jalopnik
The Tesla Model S Sedan: What Could Have Been - Tesla Motors - Jalopnik
Wow, look at the price of gold etc.. Can this be right?
Live Market Quotes
comrade kidbuck writes:
I see too much anecdotal evidence all pointing one way .... Too many of her regular customers aren't buying anything. My main auto parts supplier says business has been down 30% from a year ago.
And yet I think you'll find that plenty of businesses, particularly smaller mom-and-pop types with no debt, are doing just fine. I spoke to another small-company owner in our building yesterday and her business (trophies/awards/promotional items) is up YoY. Our business (IT-related) is also up YoY. As has been pointed out in these fora numerous times, businesses that rely on cheap credit are going to get killed as the excess gets wringed out of the entire system from producers to consumers. But businesses that are fundamentally well-run, flexible, not reliant on debt or credit, and making products that people want to buy will do just fine.
I would think auto parts would do relatively well, since presumably people will defer new car purchases and keep their existing vehicles longer. Of course, they'll be driving less. So, who knows.
PS, gold did about the same two days ago, bit later.
24-hour Spot Chart - Gold
Plug in only cars are a niche market pipe dream that will stay where it belongs, a fantasy of greying old hippies and crunchy Husseinamaniacs.
Wanna know why?? The freaking AC won't work in half the country. The hot half. Might as well drive a golf cart all summer. How do I know?? Spent many hours with the GM Impact at the APS shop in Phoenix in the early 90's. Impact as the proto that became the ev1. You know, the car that the kumbaya crowd complains was chopped up for "oil interests". It was chopped up because they had to install timers on the AC to start cooling the car while on the charger in the garage, and you "might" get to work comfortably. AC sucked so much juice, batteries would only last 1/2 to 3/4 of the time depending on outside temp. I was stranded many times in the summer. Piece of shit.
Unless we have broken the laws of thermodynamics, this whole plugin car thing will be a non starter with actual consumers. Draw a line east to west through St. Louis, and you won't sell anything south of that line after the first summer, guaranteed.
I can't wait to see the review on Edmunds. "Innovative, responsible, and looks great in the garage, but utterly unreliable technology rushed to market to satisfy the cravings of crunchy granola heads."
jt:
Reread your own links. Neither post indicates Tesla Motors has closed.
Only greying old hippies need electric cars.
Because the rest of us have access to unlimited oil!
That's some realism.
Gainas writes:
I have been following electric cars and ultra-capacitors for years.
Thanks for your insightful post.
Dou you have any guestimate about the "battery cost" per driven mile ?
I think they are not cheap, how long do they last ?
"Reread your own links. Neither post indicates Tesla Motors has closed."
If it hadn't closed, then why aren't there any development engineers at their development plant in Rochester Hills developing the new car?
What do you think? New cars drop out of the air?
comrade kidbuck(Irritating) writes:
I just think that while we are focusing on the few percentage points change in unemployment statistics that greater changes are taking place in the labor force.
Oh, certainly. That's why I have a much dimmer view of what we're going to see in the future than the statistics paint. We've systematically adjusted our perspective so that our projections paint the rosiest possible picture of reality.
For example, if I am asked to do the work of 1.5 people, isn't this a form of wage deflation?
Yes, and in fact, Alan Greenspan's vaunted productivity increase was silent deflation when payout is measured per work unit.
Also, don't unemployment numbers effect us differently from prior depressions now that there are so few one income families (and/or so few extended families)?
Also true, there was a discussion yesterday of the real estate impact of DINKs living at the edge of their dual means turning into SINKs.
This is something we'll have to learn about, though, as we've manipulated the system or the statistics to "win" at the economy rather than have an actual business cycle for several decades now.
Now that we have to pay the forfeit, we'll have to confront several cyclical downturns added together and with compound interest, taking place in a context that is totally new to us, with a populace I will generously describe as "sissified".
I see too much anecdotal evidence all pointing one way. Yesterday a vendor called (nuts and bolts supplier) and was so pleased to get my order she teared up.
IMO, it's going to be as bad as any such thing ever was.
One more thing about Tesla I forgot: they laid off their employees by a blog post!
By the way, anything you ever wanted to know about Tesla. All articles from the last few months:
Jalopnik: Obsessed With The Cult Of Cars
"Are there any companies that don't have debt? Are there companies that didn't use credit to expand?
Those are the companies to buy... "
AAPL. $25 billion in the bank. Cool, hard, cash.