Let us declare the first inning over. Welcome to the top of the second.
We'll know the third inning (final?) has begun when the dread feedback loop leads to a new round of financial institution failures and further house price declines.
If the third inning isn't the final inning, well, we'll have put the political back into political economics and the perspectives of people like Lukacs and Gramschi will again be of interest.
many are only now, for the first time in 25yrs, discovering that the ride of a car that they associated with a new car, is in fact, associated with new TIRES - keep the "old" car, and get new tires - now about getting that "new car smell"........
"starting to feel like a bottom of sorts is setting in - would not surprise me
God | 12.03.08 - 11:08 am | #"
Based on what exactly? What kind of actual fundamentals would lead you to that conclusion? I do not see the slide in home prices stopping anytime soon. What economic activity gives you the basis for calling a bottom?
At first I was worried now I'm fearfull. Fortunately my Japanese masters have assured me not to worry. On the bright side, due to our flexibility, manpower has been shifted from less demanded products (large trucks) to "relatively" more demanded products. Also instead of swinging the axe extensive training programs have been implimented for employees, though it is more geared towards specific human capital vice general.....worst case we could retool and start making Amish buggies..
The concept of deflation is now firmly in the mind of the consumer. It will be very difficult to dislodge. Why buy now when it will be cheaper next month?
I may add to my position in QID. Though the action I am seeing indicates my predictions in the first place are not going to pan out, in which case I should close the entire position.
I have a friend that works for an company that manufactures auto parts for the assembly of new cars. They have customers like Toyota, Nissan, Ford, and so forth. In their company's entire 20+ year history, this is the first year ever that Toyota has canceled an order placed earlier in the year.
Scott writes:
I have a friend that works for an company that manufactures auto parts for the assembly of new cars. They have customers like Toyota, Nissan, Ford, and so forth. In their company's entire 20+ year history, this is the first year ever that Toyota has canceled an order placed earlier in the year.
Scott | 12.03.08 - 11:17 am | #
The order has gone out to extend the life of many things, Services that were once performed offsite are now being brought in house
franko writes:
many are only now, for the first time in 25yrs, discovering that the ride of a car that they associated with a new car, is in fact, associated with new TIRES - keep the "old" car, and get new tires - now about getting that "new car smell"........
3M spray adhesive. Use it to glue two peices of automotive carpet, stick it under a front seat. bam insta new car smell and an easy extra grand in final sales price.
Dawg:
The concept of deflation is now firmly in the mind of the consumer. It will be very difficult to dislodge. Why buy now when it will be cheaper next month?
Not until I see it in housing. Mortgage apps doubled last month, so there are still too many knifecatchers out there.
--
I thought that autos were not as overbuilt (or overbought) as CRE and CRE was not as overbuilt as RRE.
What % of GDP is due to autos, CRE and RRE? USG needs to buy autos, CRE and homes, demolish where necessary and dump in the nearest oceans. And people complain that I don't provide solutions.
the new national bank will have lots of business making loans to fill the void of the lost credit creation which was coming from outside of the traditional fed controlled banking system. people and firms will be begging for those loans (kibble) at ever higher interest rates.
abstract finance has become a disproportionately large part of the economy. finance serves commerce, not the other way around.
the leverage monster we created is starving and will consume any feed.
They will at the only bank left in town.
the credit creation reflected in the non cash money supply of the shadow banking system did a lot of things for people an built a lot of over capacity.
the credit creation reflected in the non cash money supply of the shadow banking system did a lot of nice things for people an built a lot of excess capacity.
that excess capacity has a lot of inertia.
the problem is the huge inertia from the old system is now feeding the negative spiral. the old system had mass that is in flux right now, convulsing, and SHRINKING.
all the little debt colonies we called category killer retail are collapsing under their own appetite for debt.
if the retail numbers for the fourth quarter come in at 15% decline or more, most retailers will fold.
services and consumption are, um, like 70% of GDP.
OT--Market may be up, in part, because John Chambers was upbeat in opening comments at an investor presentation. But in Q&A he said not sure when downturn would be over. Would not update guidance.
Also, over on Naked Cap. there was an article about how the Chinese devaluation might have the same effects as the Smoot Hawley Act back in the GD. Anyone have any thoughts on this? Thanks!
I'm pretty sure I can get some of our Nachi robots to hand churn some butter.... Amish labor costs are low?? I grew up in PA an amish furniture is an arm and a leg...probably about 2.5 horses though
"Based on what exactly? What kind of actual fundamentals would lead you to that conclusion? I do not see the slide in home prices stopping anytime soon. What economic activity gives you the basis for calling a bottom?"
God's affiliated with several companies - all are feeling the "pain", but most are still making a lot of money as cost pressures somehwat offset the sales slowdown. Also, several of these companies are buying in fully secured debt at cents on the dollar. One company has more cash than debt and just bought in some debt from a desperate seller at a huge discount. Makes no sense.
Things will get worse, but its starting to feel like a bottom as I said.
In this type of market no one is going to make money - the shorts and longs will both get buried. The longs have felt the pain for the past 6 months - now its time for the bears to get flushed down the toilet. Its been too easy to make money on the short side. Thats changing and both the extreme bulls and extreme bears need to disappear for the market to make any sense.
Deflation is in the mind of this consumer, in relation to autos. We have an 11 yo and a 7 yo car, and a big credit from a GMAC card which is obviously not long for this world. We're thinking about buying a car, but frankly I expect the fire sales to lower the price more than my GM discount (plus both cars (Chevrolets) run fine). So we're not buying.
Every day I pass the same BMW dealership the same time of day. Last year, there were always customers walking the lot, but in the last 2 months, I have not seen one person walking the lot- not a single one.
Deflation is in the mind of this consumer, in relation to autos. We have an 11 yo and a 7 yo car, and a big credit from a GMAC card which is obviously not long for this world. We're thinking about buying a car, but frankly I expect the fire sales to lower the price more than my GM discount (plus both cars (Chevrolets) run fine). So we're not buying.
I would not buy another GM car if they were giving them away for free..peaces of 36,000 mile junk.
The markups might be incredible, but the labor costs are very low.
Many Amish are turning to manufacturing since the farms have been subdivided to point that most are not economically viable.
And because they believe that the children learn best at the elbows of the adults, there are operations with early teens working alongside their parents. 12 years old was a joke, but since school for them legally ends in the 8th grade, it's not long afterwards until they join the family operation.
Periodically see in paper that some family is pursuing labor department waiver via Senator/Rep's office in order to let youngsters work.
But yeah, the markups are wild at times and since they're amish, they get it...
Remember that this volume decline is hitting an industry with huge fixed costs, and that these are decreases relative to 2007. GM, for example, reported a loss of $38.7 billion for 2007. That's billion, with a "b". Back when things were good.
I believe that lost income and jobs in the auto sector tipped the U.S. economy into recession this summer, and we may be on the cusp of much more dramatic adjustments in this sector than anything seen so far. The wrenching changes that might be immediately ahead could mark the beginning of a frightening new phase in the economic downturn. - Hamilton
There's somebody else that's using the CUSP word. That's really comforting.
Take a breath, everyone. What other result than the economy falling off a cliff could be reasonably expected after the shocks of Sept-Dec? We were told that the end of the (economic) world was nigh. That was an hysterical statement by our leaders and it invoked an hysterical response.
Did anyone really expect consumers to go out and spend?
I suppose the market could go any direction from here over the short term. But as this very bad economic news keeps multiplying, the market has become a witches' brew setting up for a big fall at some point.
My guess is that it's being driven almost totally by professional leveraged traders and black boxes at this point, with hedge fund and mutual fund money continuing to flow out steadily. So, the leverage is sitting on a very thin base.
I'd prefer to bet on the side of the witches' brew and stay short, but I can understand if you'd rather sit this market out. It's definitely weird.
I'll just say, though, don't miss the coming run-up in PMs and commodities. It could happen a lot sooner than you think.
On a happy note, we have a Loch Ness Monster pattern on the Dow Chart now, not sure what that means really, but it must be positive!
Comrade Kristina | 12.03.08 - 11:32 am | #
And just what makes you so sure it isn't the beginning of another middle finger formation?
"Stocks rallied Tuesday on indications that the automakers might get a bailout after all. GE also helped sentiment after it said it will keep its dividend intact and work to sustain its top-tier debt rating despite the poor economy."
I think many people underestimate the contractionary, shock impact of super high gasoline prices. This looks a lot like what happened in 1973 with the oil embargo. Unfortunately with the housing/banking mess and crushing debt, I'm not sure the girders are going to stand the stress like they did in 1975.
YSLP: the US is the single largest market for Japanese automakers...plus their vehicles produced here are designed for American roads and buyer tastes. Many models would not fit well in Japanese traffic and wouldn't appeal to Japanese tastes.
Japan is getting killed economically by these upheavals as much as China; but isn't getting as much press because China is the big new kid on the block. Due to cultural/historical factors, Japan is far less likely to experience violent social unrest/revolt than China.
The yen/dollar rate has been suppressed for a long time as the Japanese govt looked on as carry trade took place. This benefited Japanese exporters. Now the rate is moving up to a more realistic value based on purchasing power parity and related factors.
The FED induced flattening of the yield curve in Treasuries might drive some investors back to stocks, hoping that in the long run they will give a better return from current valuations.
The auto manufacturers are toast. We should not give them money to burn. Next year will be even worse than this year. For some reason, the Asian manufacturers don't need a bailout. Why do you think that is? Check out GloomBoom.com.
Assisting the Poor and Middle Class by Clearing the Air and Assisting Auto Companies
The glut of cars in the U.S. provides an opportunity to remove old polluting cars from the roads and help the working poor and middle class. France recently bought old cars from owners to permanently remove them as a way to improve air quality. Unfortunately older cars are owned by people who cannot afford to replace their cars with newer models. So the impact of a government purchase program is limited, especially in suburban, exurban and rural regions of the country where mass transit is not available.
The auto industry is overloaded with new and used cars that it needs to sell. Every day the value of these cars is falling and prospects for selling these vehicles are dim. What if people could trade their old (ten years or older) cars in for a used (5 to 7 years old) car? That would allow owners to continue to drive, but would take the polluting cars off the road. These polluting cars would have to be destroyed and materials recycled. Title transfer would be to owners or the financing company of the old car. Although the value of the car will go up, payments will not increase and interest rates will fall under federal guidance for financing companies that participate in the program.
The federal government could also create a second tier subsidy for owners of cars 5 to 7 years old, allowing them to trade up for a new car much like a rebate. Government would pay the difference to the dealers. The auto industry would do its part in reducing the base cost of the cars to the dealers, who would have to operate on a lower margin to make the project successful. This program would have a 12 to 18 month lifespan depending on the state of the economy. This program would allow the auto industry the time to retool for green transportation.
Auto companies and dealerships would receive tax credits on a portion of their lost margins that would not expire for several years, which would help them as the economy recovers in the future.
ItÂ’s apparent that this program will cause price distortions in the auto markets, but it would be temporary; the current auto inventory would disappear and the air quality would improve.
True, we busted our butts trying to bring an american made car to the japanese market...the "voltz"... instead we switched the steering column to the left side and now call it a "pontiac vibe" ....ironic
I'll just say, though, don't miss the coming run-up in PMs and commodities. It could happen a lot sooner than you think.
rich | 12.03.08 - 11:34 am | #
Uhhhh...how much are you down now? So far you have been wrong in a big way on this trade....just saying
Americans should be getting ready for a huge change in lifestyle. For some it will be a change for the worse but for most it can be a change for the better. I don't relish the idea of children living in cardboard boxes but for most of us we will be getting used to the new lifestyle of walking instead of driving, spending the evening on the porch with the neighbors instead of in front of the hdtv and making our own bread rather than buying it at Panera. And for many of us, this will truly be a change for the better.
Does anyone remember how clear and blue the skies got after the jets were grounded in 2001? Personally, that is worth more to me than the ability to rapidly move from region to region, or to get South American grapes in December.
Given this bar graph, why would anyone attempt to save this sinking ship? There is not enough money in the treasury to keep the Big Three alive with these sales numbers. BK, the American Way!
homedad43 writes:
Why not let the Amish make cars?
Introducing the 2010 Shoo-fly! Now with theft reducing fender reins to tie your car to the hitching post!
homedad43 | Homepage | 12.03.08 - 11:42 am | #
Their products would definately be better than anything GM would put out...I actually saw a buggy "pimped" out once with brass rivits and purple velvet interior....
ItÂ’s apparent that this program will cause price distortions in the auto markets, but it would be temporary; the current auto inventory would disappear and the air quality would improve.
are you kidding? taking old cars off the road doesn't help if you are making more cars than are needed.
the production of cars itself creates quite the pollution (mining manufacturing transportation etc), although not necessarily in the same locale where the end product is driven.
franko(Unrated) writes:
many are only now, for the first time in 25yrs, discovering that the ride of a car that they associated with a new car, is in fact, associated with new TIRES - keep the "old" car, and get new tires - now about getting that "new car smell"........
franko | 12.03.08 - 11:07 am | #
Half right - usually requires new or adjusted rocker arms (or at least bushings & bearings) and sometimes new shocks and steering rack/pinion.
Then if necessary an engine tune (even modern EFI engines can benefit from occasional cleaning & 'tuning').
All combined w/ the new tires might be a couple grand or so. Do that and the 'new car feel' is pretty much totally restored.
I've always said - if you own cars you will either pay bankers & car salesman OR you will pay mechanics - one or the other. Now compare where & how the bankers & salesman live vs the mechanics and decide which one costs more to 'support'?
My cars are all over 150K miles so you know my opinion on the issue.
We tried to rent a Tahoe for our camping trip in the Sierras this summer but Enterprise was out of them and had to give us an Escallade instead. That car was fantastic.
I love my 10 year old Honda, but if I had 50Gs to waste on a car that is one GM car I would buy. I still smile thinking about how great that ride was.
Rats, now I have to fire up the C++ compiler and add a special case for that stock...... I had my trading app showing my net delta $ long and $ short, the delta for SRS clearly should be 100% like other stocks.
Last night I was at the Toyota dealer for some service, and I saw the finance-rate blackboard out on the sales floor. Interest rates varied by FICO score. for a 60 month loan, FICO 720 and above got a 7.7 percent interest rate. By the time you were down into the lower 600s, it was 14 percent. FICO Mid 500's? 22 percent.
Aside from every other problem the car companies have -- how many people who don't have the cash in hand are going to buy a car under those terms these days?
yeah, when the teens haven't joined the church yet, they give 'em free rein for a while to get it out of their system.
When I was a teen, some of the sweetest wheels in town belonged to Amish teens who would keep 'em behind the local garage until Friday and Saturday nights.
Nicest was an early '70s GTO.
Just a weird sight to see teenage Amish boys driving around bopping their heads a la Wayne and Garth to AC/DC or Foghat.
yeah, because commodity prices crashed and they are in trouble.
I have no crystal ball about commodities. I still have long oil and gold/silver positions from long ago that I haven't bothered closing, but otherwise I'm out out out of everything.
there's just no logic IMO.
I've heard rationale for why PM's can boom (the comex issue as example) and also for why they might crash. (continued deleveraging). who can say anymore.
That would allow owners to continue to drive, but would take the polluting cars off the road.George Kalogridis
Don't know where you live, but in Illinois emissions testing is mandatory. Can't get a license vehicle sticker without the emissions test and mandatory repairs if needed. You can't avoid the emissions test because NO-ONE escapes ticket(s) for out of date license plate due to no emissions test. It's a moneymaker for the state
With or without the credit issues I have no reason to buy a new vehicle. The new ones are loaded up with safety crap, computers and black boxes that are waiting for lawyers. Even my sons in their 20's have seen the light and have bought 80's vehicles that are simpler to maintain, work on and a LOT cheaper. Frugality means keeping what you have in good condition so it last 30+ years. Now, what is the manufacturing volume requirements for this demand model?
The government has had a hand in driving the industry over a cliff.
So far you have been wrong in a big way on this trade....just saying
You are right and are not addressing me but C&C have you ever seen something go down in price and not be able to get your hands on. There does seem to be a disconnect between reality and the "paper electronic price". It does not make sense, there are reports all over the world about physical shortages. Maybe manipulation but which way? To get suckers like me to buy or sell?
My thesis on hard commodity price moves are currency, not demand related. Ag commodities are possibly both due to extremly low cereal stocks. Time will tell.
According to Bianco, “The only single American event in history that even comes close to matching the cost of the credit crisis is World War II: Original Cost: US$ 288 billion, Inflation Adjusted Cost: US$ 3.6 trillion.”
On a happy note, we have a Loch Ness Monster pattern on the Dow Chart now . . .
You people really need to brush up on chart reading. The Dow is tracing out a recumbent Virgin of Guadalupe pattern -- because her face is in partial occultation, the outcome is surely bullish.
Can't get a license vehicle sticker without the emissions test and mandatory repairs if needed
correct. but it is far more ecofriendly to make repairs on a high emission vehicle than to scrap it and create a new vehicle.
the program in Illinois does not necessarily decrease overall pollution, it reduces pollution where the end product (car) is driven, like I said above.
Even if it's a "green" vehicle (like a Prius). If I recall, from the start of production to scrapping a Prius actually uses MORE overall energy than a Chevy Tahoe. Now this is energy and not pollution... but the point is that creating cars is HIGHLY energy intensive and pollution productive.
I just think it's a horrible idea to base a Detroit bailout as some sort of "green" initiative, if it were implemented in the manner above.
Better in some ways would be to allow them to fail as auto manufacturers and set up a retraining program to have the ex-car employees create something similar but different, like the oft-loved green technologies.
Assume we have $350b left. Allocate 30-60k apiece to underwater homeowners. Whether or not they are behind or not. First come, first serve. After proof--tax assessment values perhaps, or appraisals, I leave it up to regulators--the allocated money is sent to the bank. If that suffices to bring a loan current, fine, if not the homeowner could chip in. If current it comes off the principal balance. Owers get bailed, banks get money, good payers are rewarded along with deadbeats. If you are still underwater, too bad, keep making payments someday you make break the surface.
For adjustibles and neg am, lenders must keep payment the same for a year after the adjustment and eat any neg am for a year. Which they'd never collect anyway.
"God" wants a reason that the stock is going up(sic). Here's what Martin Wolf says in the FT this morning:
"Some argue that an attempt by countries with external deficits to promote export-led growth, via exchange-rate depreciation, is a beggar-my-neighbour policy. This is the reverse of the truth. It is a policy aimed at returning to balance. The beggar-my-neighbour policy is for countries with huge external surpluses to allow a collapse in domestic demand. They are then exporting unemployment. If the countries with massive surpluses allow this to occur they cannot be surprised if deficit countries even resort to protectionist measures."
Uhhhh...how much are you down now? So far you have been wrong in a big way on this trade....just saying
I beg to differ.
SLW is up 15% today.
GLD and SLV have been about flat.
Down quite a bit on DBA and DBE. But feeling pretty good about holding them right here, all through 2009.
My strategy has been to hedge short stocks vs. long commodities, with frequent rebalancing. So far, it's just holding its own. But at some point, they break apart and go back to historical negative correlation. And I'm betting it will be PMs/commodities up and stocks down.
Not having a bad year at all. Very interesting times.
The painful discovery of 2009, I am afraid, is that the word 'bailout' as now used does not mean what most people think it means. To politicians today it means 'postponement', whereas to most people it means 'fix'.
You people really need to brush up on chart reading. The Dow is tracing out a recumbent Virgin of Guadalupe pattern -- because her face is in partial occultation, the outcome is surely bullish.
And since her feast day is next Friday, WATCH OUT!
(If next Friday was op-ex too, we'd hit 400,000 on the DOW......)
My 2000 Saturn; 72,0000mi is in the repair shop once a month. I'm spending a minimum of $300 per month. Today, the idiot light was on....again. The 02 sensor failed....whatever that means. Over $300 out of the pocket. I'm holding off on buying new and 5 years of car payments.
I laugh every time I hear a Lexus commercial advertising their December to Remember sale. I doubt any dealer will want to remember the numbers that will be announced for Dec., or Jan, or Feb.,....
//Comrade Kristina writes:
On a happy note, we have a Loch Ness Monster pattern on the Dow Chart now, not sure what that means really, but it must be positive!
Indeed, Cthulhu Rising pattern must be more positive than negative.
" rps writes:
My 2000 Saturn; 72,0000mi is in the repair shop once a month. I'm spending a minimum of $300 per month. Today, the idiot light was on....again. The 02 sensor failed....whatever that means. Over $300 out of the pocket. I'm holding off on buying new and 5 years of car payments.
rps | 12.03.08 - 12:00 pm | # "
Find a seven-year-old Civic with low miles. With luck, you'll still be driving it in ten years.
They did, Blackhalo. They drove their own industry right into the ground while simultaneously thumbing their nose at economy, efficiency, low operating costs and the public good in general. The deserve jail, not money.
Not sure if this were meant as a joke, but I've often wondered about this.
The human mind can only handle a certain amount of information, and process so many details at a given time.
An aggregate of human minds can hold and process even more.
but at a certain point even the aggregate human processing ability is breached. we may have come to that point.
The various securities are so complex now that each individual and firm only knows a small microcosm of "the market". due to this, trading becomes difficult as there is massive information assymetry. at times, there are likely times when neither side has the necessary information.
as buffett said, one must read 750,000 pages of papers just to understand one CDO.
does anybody think that the rating's agencies could really do that? could Pimco? could Cerebrus? and so on?
it worked for a time because everything went up, so it hid the problems inherent in the system. and that built trust and confidence.
but now the game is exposed. the situation may be un-knowable to the aggregate human mind.
"Some argue that an attempt by countries with external deficits to promote export-led growth, via exchange-rate depreciation, is a beggar-my-neighbour policy. This is the reverse of the truth. It is a policy aimed at returning to balance. The beggar-my-neighbour policy is for countries with huge external surpluses to allow a collapse in domestic demand. They are then exporting unemployment. If the countries with massive surpluses allow this to occur they cannot be surprised if deficit countries even resort to protectionist measures."-Martin Wolf
Protection for auto makers, yes?.
trader walt
Not just automakers specifically. But, like I mentioned in the last thread, the shields are about to be energized soon, and it won't just be us doing it. It's trade-war II coming to a globe near you.
I'm gonna ask Don the car repairshop owner if he's going to go public and be offering IPO's in the near future. His shop is ALWAYS busy with older cars. Independent car repairshops is the next best place to invest for the next five years
I'm on the same side of the trade as Rich, short, with half of my capital in cash. I can sleep at night, with some medication. If the unemployment numbers, car numbers, house sales, foreclosures, and ten and thirty year figures are building a base, I think its a lot further down than the current DJIA indicates. Things are crashing too fast to plan more than a quarter ahead. Maybe two, if you want to gamble.
I agreee with Rich about oil. whats being pumped now is probably old oil, whose cost still make it proitable to sell. As that evaporates, higher cost oil will replace it. Nobody is in the give away business for long.
And as far as Plaxico Burress, I believe his story. He was carrying the gun to protect his bling and cash at, are you ready for this, at Applebees. Wife and I will be going to Dennys tonite, so I'll be packing too.
On a far happier note, CITI has found a buyer. At least we can believe the Pirates. (Parody)
Somali Pirates to acquire Citigroup
December 2, 2008 – 5:57 pm
(hat tip Walnuts)
November, 2008 (Bloomberg) — The Somali pirates, renegade Somalis known for hijacking ships for ransom in the Gulf of Aden, are negotiating a purchase of Citigroup.
The pirates would buy Citigroup with new debt and their existing cash stockpiles, earned from hijacking numerous ships, including most recently a $100 million Saudi Arabian oil tanker. The Somali pirates are offering up to $0.10 per share for Citigroup, pirate spokesman Sugule Ali said earlier today. The negotiations have entered the final stage, Ali said. ”You may not like our price, but we are not in the business of paying for things. Be happy we are in the mood to offer the shareholders anything,” said Ali.
The pirates will finance part of the purchase by selling new Pirate Ransom Backed Securities. The PRBSÂ’s are backed by the cash flows from future ransom payments from hijackings in the Gulf of Aden. MoodyÂ’s and S&P have already issued a AAA investment grade rating for the PRBSÂ’s.
Head pirate, Ubu Kalid Shandu, said “We need a bank so that we have a place to keep all of our ransom money. Thankfully, the dislocations in the capital markets have allowed us to purchase Citigroup at an attractive valuation and to take advantage of TARP capital to grow the business even faster.”
Shandu added, “We don’t call ourselves pirates. We are coast guards and this will just allow us to guard our coasts better.”
Bloomberg News 10:24 AM
CITI IN TALKS WITH SOMALI PIRATES FOR POSSIBLE CAPITAL INFUSION
WILL REQUIRE ALL CITI EMPLOYEES TO WEAR PATCH OVER ONE EYE
SOMALIAN PIRATES APPLY TO BECOME BANK TO ACCESS TARP
PAULSON: TARP PIRATE EQUITY IS AN “INVESTMENT”, WILL PAY OFF
KASHKARI SAYS “SOMALI PIRATES ARE ‘FUNDAMENTALLY SOUND’”
MOODYÂ’S UPGRADE SOMALI PIRATES TO AAA
HUD SAYS SOMALI DHOW FORECLOSURE PROGRAM HAD “VERY LOW” PARTICPATION *
FED OFFICIALS: AGGRESSIVE EASING WOULD CUT SOMALI PIRATE RISK
FED AGREED TODAY TO TAKE “WHATEVER STEPS” NEEDED FOR SOMALI PIRATES
@dryfly: I've always said - if you own cars you will either pay bankers & car salesman OR you will pay mechanics - one or the other. Now compare where & how the bankers & salesman live vs the mechanics and decide which one costs more to 'support'?
Thank you for crystalizing that thought in my head.
@crispy: I'd be curious what your commodities readout is.
FWIW: I'm no goldbug, and I don't have a horse in the race. But I do think that eventually we will see inflation. (When? My guess today is mid 2010.) Around that point, I suspect commodities will increase in value. So I wouldn't touch them until late '09, and I'd still take a careful look around before leaping.
I'd welcome counter opinions (but not gold religion or Ron Paulism.)
What I'd love is a simple, no-gimicks and geegaws car, with the modern safety features, but without all the unnecessary "comfort" features like heated radio-knobs and hydrallic cup-holders. One with a basic, non-computer controlled engine, with easy access to change the oil filter myself, etc. And it only comes in black, and uses standard over-the-counter parts that don't change every year.
Rich
Just wondering, Being that we've seen over the last year a collapse of vitually every asset class(housing, equities, copper, gold, silver, oil, grains, etc), why you think there will be a diconnect going forward between equities and the others? Up to this point the de-leveraging process has killed all of them.
Hey everyone Chairman Ben and Sec Paulson plan on measures to stimulate the credit market... whew! Now what exactly was that first 4 Trillion for again? Someone needs to say stop! enough is enough... well someone besides us...
From Bloomberg...
Even as Congress leans toward approving a controversial auto industry bailout and Democrats prepare a massive stimulus package, the heads of the Federal Reserve and Treasury are signaling that they, too, are planning more steps to ease credit and jump-start the economy.
With most economists expecting the Fed to cut the federal funds rate again at its mid-December meeting, the big buzz involves what new credit-easing measures may be in the works.
What the Fed Can Do Besides Cut Rates
Thus far this week, both Treasury Secretary Henry Paulson and Fed Chairman Chairman Ben Bernanke have either hinted at or made vague references to new measures. And given their use of innovative tools in trying to manage the crisis to date, itÂ’s likely the two policymakers will continue to try as many things as possible.
Given that cars were even easier to finance than houses, it really shouldn't be a surprise that a chart of new car sales is starting to look a lot like a chart of new home sales. It's been 26 years since we've had a real recession - this is what they look like.
As a heads up, the U.S. production rate for autos is going to slow down even more in December. A number of Tier 1 suppliers for U.S. automakers are going to suspend production for the year as early as next week. Without the inflow of parts, the OEMs will follow shortly after.
By contrast, "normal" would be to shut production down only for the last week of the year (from December 24 through January 1, coinciding with the holidays).
Unprecedented would be the correct term.
I have sold parts into the automotive supply chain for close to 25 years and I can't remember a time where the lower tier suppliers dictated to the upper tiers (in this case tier 1 to OEMs) when and how long there is a shutdown EXCEPT when there were strikes at key suppliers.
Usually if a lower tier shuts you down - they pay stiff penalties... in some cases as high as 'thousands of dollars per minute'.
Dr. Hamilton - is there more to this story you can share with us? I am just stunned.
This was (and is) a global margin call----
Oil and distillates inventories are down (report just released)--
Let us see where we stand when we get to the other side of the wall we are about to crash into.
Yearning To Learn writes:
Perhaps we are now at peak complexity. Â… at a certain point even the aggregate human processing ability is breached. we may have come to that point.
Â…
I recommend the Easy Button by Acme. You can get them at Staples.
I'm suddenly thinking of why it is that mansion houses of old had big old oak trees around them. The trees were a status symbol, as in, "Look how rich I am. My family didn't NEED to cut down these trees for fuel."
Wondering what the new status symbols will be 100 years from now. Will zaftig beauties be back in style? ("Look at how rich I am. I can afford to eat!")
[It's been 26 years since we've had a real recession]
What we have now only resembles the recessions of a generation ago in the GDP contraction. Previous recessions were characterized by inventory builds & solved by low rates and production contractions until the levels got back into line.
With JIT manufacturing (such as it is in America) and everything lean this one is a totally different animal. A service economy can whack jobs at will...
yeah, when the teens haven't joined the church yet, they give 'em free rein for a while to get it out of their system.
When I was a teen, some of the sweetest wheels in town belonged to Amish teens who would keep 'em behind the local garage until Friday and Saturday nights.
Nicest was an early '70s GTO.
Just a weird sight to see teenage Amish boys driving around bopping their heads a la Wayne and Garth to AC/DC or Foghat.
homedad43 | Homepage | 12.03.08 - 11:47 am | #
A recent memory re Amish is a drive I took down a country road in MD where I came upon a drop-dead blonde beauty who was driving a three-horse plow or whatever, bare feet and all. If I were an Amish boy, I would not stray very far from the hearth.
NEW YORK (Reuters) - U.S. crude oil stocks fell unexpectedly last week as imports dropped, while gasoline and distillate supplies also posted surprise falls as refiners cutting output, weekly government data on Wednesday showed.
Commercial crude oil supplies in the United States fell 400,000 barrels to 320.4 million barrels in the week to November 28, the Energy Information Administration (EIA) said, compared with analysts' projections of a rise of 1.7 million barrels.
Crude imports fell 1.46 million barrels per day (bpd).
If I just wanted to double my money in the next four years and not pay attention to the markets I don't think there is any doubt in my mind I'd just sink it all in oil.
Since gas prices have drastically dropped, I'm wondering why the big 3 aren't able to sell the gas guzzlers? The cause & effect was fuel cost. Is the love affair with SUV's at an end or is everyone tapped out?
So true. I still remember being an innocent young competitive intelligence analyst at a telecom company in mid-2001, trying to reconcile what I saw in our abysmal balance sheets and shrivelling customer lists with the cheerful optimism and convoluted explanations involving EBITDA and burn rates coming from our CEO. I chalked it up to my inability as a humanities/marketing major to understand the intricacies of corporate finance and leading edge broadmand technology--until the company went TU and the CEO was indicted. It was a powerful lesson--it wasn't that I was too dumb to understand how finance works, the PTB invented overcomplicated instruments to make me and other observers think we were just too stupid to get it, while they were using investors' and media's fear of asking "stupid questions" to cover for their malfeasance and stupidity.
Somewhere along the line families and companies forgot the first rule of accounting--ultimately you have to take in as much or more than you expend to thrive as a going concern. If you can't do that, no amount of HELOCs, ARMS, or Credit Default Swaps will save you.
Toyota sort of has this mindset with the Scion line. One or two factory options per model, along with exterior color options. That way, thay can just turn the crank and minimize production cost. I think that is is a very smart move. They market these cars to kids who dont have a lot of extra $$$. Considering that J6P wont have a lot of extra $$$ in the coming years, I think you may see the successful auto makers adopt this model. If we are goign to stick with one color, I recommend white or tan though. Black is a PITA.
i can tell you this: as one simple minded consumer, cash rich, debt free decent credit, member of a credit union... blah blah..
I lost my tranny in my 99 Expedition it still sits in my garage, threw a rod in my 2001 sebring covertable (just towed to charity)... Wife has Envoy.. So i need new ride, right?
Tell wife i dont want car payments any more, not now...
went to Craigslist and bought a 1990 Jeep cherokee in Fairfax VA, one owner, for 800 bucks... had it for a month and does well on my daily 40 mile RT outside the beltway...
Figured its paid for itself already...
Why would anyone want a new car now? Deal with the finance manager that knows your a qualified buyer , 2nd one he's seen all month, he needs his commission, starts f'ing with your interest rate or extended warranty...
like i feel for the 75 dollar an hour union worker, or the FM at the dealer who now has to sell his boat and slip cause times are yougher than last year... F' em i say. Take bailout money, i'll never buy a car from you again, you should give me one, it's my money...
I state that the first phase of the depression is over. How bad the second phase gets depends on the repercussion impact of the first phase. If we experience severe contraction in Q1/2009, the bailouts to date are likely an expensive delay tactic.
It seems a bit arrogant to presume that a Keynes et al approach is superior. Where is the debate and discussion on this?
Imagine Bernanke years from now stating "I was wrong again!"
"Toyota sort of has this mindset with the Scion line. One or two factory options per model, along with exterior color options. That way, thay can just turn the crank and minimize production cost. I think that is is a very smart move."
Both Nissan and one of the Korean car makers just rolled out sub-10000 MSRP versions of their compacts (Nissan's was the Versa). For that price you get no sound system, air conditioning, and for all I know you have to crank the windows yourself.
But the running gear is the same as higher-priced models. I see these as becoming popular. Maybe by necessity.
rps writes:
Since gas prices have drastically dropped, I'm wondering why the big 3 aren't able to sell the gas guzzlers? The cause & effect was fuel cost. Is the love affair with SUV's at an end or is everyone tapped out?
Fuel costs just aren't that important. Try to buy a 2006 Civic at 32mpg versus a 2006 Explorer at 16mpg. $8000 even at $4 was 2000 gallons. Heck the $8000 would throw off $30/mo interest while buying down the gas difference.
No, it was consumer preference and credit and something we haven't talked about; retained value. That 2006 Civic? $19k new, $16k now with 70k miles. The Explorer? Do you need to ask?
(AP) The Ford Escape Hybrid SUV being driven to Washington D.C. by Ford CEO Alan Mulally has broken down outside of Wheeling, W.V. The tow truck dispatched to aid the disabled vehicle and Ford CEO was a GM product. Ford CEO Mulally became agitated and didn't allow the GM vehicle to tow the disabled Ford vehicle.
rps writes:
Since gas prices have drastically dropped, I'm wondering why the big 3 aren't able to sell the gas guzzlers? The cause & effect was fuel cost. Is the love affair with SUV's at an end or is everyone tapped out?
rps | 12.03.08 - 12:23 pm | #
The decline in gas prices occured so quickly that the general population believes the opposite could happen just as quickly. Basically it is a trust issue.
American's love big cars/SUVs. If gas prices stay low for a year or more I suspect you will see an uptick in SUV sales. As a side note I would love to drive a full size truck again. However I am waiting until a truly fuel efficient (30+ MPG city, more eco friendly, version is developed.
and to my more knowledgable investor friends here... explain me this..
if AIG is too big to fail, and supported to all expenses by bailout money... and their stock is at a buck 80, why wouldn't i buy a million shares? OK half a million? chances are I'll see them again at 10 bucks????
Does Michelle Cabrerra have an Adam's Apple ? She looks like one of those women Crocodile Dundee said you need to do a reach-around on, just to be sure.
"For that price you get no...
air conditioning..."
You'd have to be a masochist to drive without air conditioning in a DC summer. Or maybe someone who works in a ship's engine room when not on the beach.
"(AP) The Ford Escape Hybrid SUV being driven to Washington D.C. by Ford CEO Alan Mulally has broken down outside of Wheeling, W.V. The tow truck dispatched to aid the disabled vehicle and Ford CEO was a GM product. Ford CEO Mulally became agitated and didn't allow the GM vehicle to tow the disabled Ford vehicle."
This sounds fake, no link either and google news search comes up with anything. Someone is trying to start a rumor.
rps writes:
Since gas prices have drastically dropped, I'm wondering why the big 3 aren't able to sell the gas guzzlers? The cause & effect was fuel cost. Is the love affair with SUV's at an end or is everyone tapped out?
Well Ford is increasing production of the F150 Expired
As for SUV's, they are today's station wagons so the "love affair" with family size vehicles will continue unless your for defining a 'family' as no more than 2 people.
I think the real problem is the high cost of vehicles that was driven by government regulation and enabled by the housing ATM. Too many manufacturers ran upscale when lower cost competition entered the market. Now that credit and the ATM are gone they need to return to traditional financing models, just like homes.
When my daughter's friends get in my truck and see the hand window cranks, they are absolutely floored...Never saw such a thing, didn't know it existed. But they all think it's pretty cool...
"rps writes:
I'm gonna ask Don the car repairshop owner if he's going to go public and be offering IPO's in the near future. His shop is ALWAYS busy with older cars. Independent car repairshops is the next best place to invest for the next five years"
rps: my wife was an auto mechanic before going into accounting. She's saw the writing on the wall last year and has been fussing about opening up her own shop.
Bob Dobbs | Homepage | 12.03.08 - 12:29 pm | # For that price you get no sound system, air conditioning, and for all I know you have to crank the windows yourself...
funny story Bob was when i was in Ga commuting 160 miles a day to an AF base, went to buy an economical toyota from carmax... stripped bare of any factory options, hell the seat wouldnt even move... 9000 bucks, took it home and my then 4 and 6 yr old boys eagerly jumped in the back and strapped in for the ride in the new car...
before i backed out my boys yelled "daddy daddy whats this" and i turned around and they were pointing at the door... "what ?" i said and my oldest touch the crank, and i laughed, just like a dial on a TV or on a phone, my children had never seen one....
a day later i took it back, and got that 01 sebring convertable instead...
trail writes:
When my daughter's friends get in my truck and see the hand window cranks, they are absolutely floored...Never saw such a thing, didn't know it existed. But they all think it's pretty cool...
if AIG is too big to fail, and supported to all expenses by bailout money... and their stock is at a buck 80, why wouldn't i buy a million shares?
You need to understand where shareholders stand in the capital structure. I wrote something on this topic here. When the gov't injects capital, it stands ahead of the common shares.
my wife was an auto mechanic before going into accounting. She's saw the writing on the wall last year and has been fussing about opening up her own shop.
I will not covet my neighbor's wife.
I will not covet my neighbor's wife.
I will not covet my neighbor's wife.
dont laugh, when i would do shut downs at the GM plants the UAW workers wouldnt allow my personal rodeo on th eproperty and were pissed my work trucks were volvo's even when i explained that GM owned Volvo and UAW workers in Indian might be pissed off to find out their boys in Atlanta didnt consider their vehicles american made...
U.S. oil inventories drop unexpectedly: EIA. subcommander doom
Since Aug '08 the Strategic Petroleum Reserve has NOT purchased oil. January 09 they will restart purchasing. I remember that Congress & Bush agreed to halt purchases until Jan '09. I think the SPR was purchasing 77,000 barrels per week.
as far as comman shares of AIG, i understand but how long will that last... after they pay off the govt loan reap the rewards, what this tells me is that groups of investors know they will fail.... stocks are long term inc=vestments right?
I know it's hard to accurately gauge on that chart, but Dec. 2005, 2006 and 2007's numbers are awfully close to one another. Is that when fleet sales are counted? There can't be that many people parking cars with big bows on them in their driveways.
what this tells me is that groups of investors know they will fail.
They have already failed. AIG is insolvent, and anybody that is still in the stock either is betting that on the gov't (Obama) buying off shareholders, or does not understand capital structure.
USG should pay owners $$$ to crush, drown, or otherwise destroy their SUVs and other gas-guzzling cars. It's green, it's main street, and it's sure to increase auto sales.
This is bad...real bad. Everything just stopped in October across the board. By next summer tenS of millions of unemployed in the US.
The service sectors are now cutting down like there is no tomorrow. Manufacturing sectors are going to follow soon. What is left? Selling lemonade? This is already Greater Global Depression.
I think that moving product lines back down into affordable(financeable) price points will be key to automakers' future wellbeing. Every new foreign automaker entering the US market started out with low end models with bare bones specs and then switched to bigger, more expensive designs to capture higher profit margins. Look at the difference between a Toyota Camry built in 1980 versus today. It's not surprising that Toyota is suffering sales declines along with the Big 3. They don't sell affordable cars anymore. They sell reliable, well made cars but buying one new requires a hefty down payment and long term financing.
Another farcical example is the Volkswagen Beetle. The first version of this was cheap, easy to maintain and reliable. It was no frills, but it got you around. When VW brought it back, it came back as an overpriced toy car for nostalgic 40 and older types.
How much of that sales volume in 2004-07 was buyers using refi and heloc money? I'd guess millions of people still have (relatively) new, paid for SUVs and monster trucks and won't buy another until they completely fall apart. Could be 4-5 years of declining sales ahead.
YTL: Judging by your comments lately, you're on the upswing to peak thoughfulness and eloquence.
thanks. I'm just more introspective of late, although that's probably pretty obvious.
I'm trying to put things in perspective, what's important and what's not. (to me)
There's a saying "you can't see the forest for the trees".
I'm trying to see the forest and the trees. but that's not enough. I also need to ponder the rain and soil that created them, and the resultant wood that was used to build and heat my home which keeps me alive. and that upon my death I will return to that soil and continue the cycle. it's all interconnected. but hard to see.
I want to feel the forest and the trees. with all senses. hokey, huh? it's like a mid-life crisis, but in a good way.
the CR crowd is amazing at amassing the details (trees), and also of putting it together (the forest), but sometimes there is a lack of emotion. analysis can strip the data of it's soul. so at times I feel like I'm looking at a picture of the forest and the trees, and not sitting in the forest and trees.
So I guess perhaps I'm an economic philosopher... at least for now. the non-poetic Pavel?
Sinomania! writes:
How much of that sales volume in 2004-07 was buyers using refi and heloc money?
A lot in the DC MSA.. you caan grab some great deals from some who are desperate to make a cpl of mortgage payments... 2006 and 7 title in hand, but need "OBO" even some must sell by this weekend...
"I will not covet my neighbor's wife.
JP | 12.03.08 - 12:41 pm"
Hehe. Oh she should not be coveted for that reason alone -- I'm the guy who has to deal with all of our car issues. On the other hand, hmmm... I do have a mechanic I can trust! Gold.
the CR crowd is amazing at amassing the details (trees), and also of putting it together (the forest), but sometimes there is a lack of emotion. analysis can strip the data of it's soul. so at times I feel like I'm looking at a picture of the forest and the trees, and not sitting in the forest and trees.
YTL: Actually if you think back it was emotion that made this blog so successful. We felt something wasnt right, we could see something wasnt right...
I want a NON-manga-cake car(Unrated) writes:
What I'd love is a simple, no-gimicks and geegaws car, with the modern safety features, but without all the unnecessary "comfort" features like heated radio-knobs and hydrallic cup-holders. One with a basic, non-computer controlled engine, with easy access to change the oil filter myself, etc. And it only comes in black, and uses standard over-the-counter parts that don't change every year.
I want a NON-manga-cake car | 12.03.08 - 12:10 pm | #
I want - SCHNAPS has the car for you (see his Link above)... LMFAO!!!
"I think that moving product lines back down into affordable(financeable) price points will be key to automakers' future wellbeing. Every new foreign automaker entering the US market started out with low end models with bare bones specs and then switched to bigger, more expensive designs to capture higher profit margins."
Yeah, a new Civic today is bigger than an Accord 10-12 years back. That's why Honda, Nissan, Toyota all inserted new subcompact cars below their old no-longer-subcompact models a couple of years ago. The Honda Fit, in size and form factor, is essentially a mid-80s Honda Civic wagon.
". . . went to Craigslist and bought a 1990 Jeep cherokee in Fairfax VA, one owner, for 800 bucks... had it for a month and does well on my daily 40 mile RT outside the beltway..."
Warning: I had a similar Cherokee for 14 years. Ran good, etc., BUT it had no air bags nor any other crash minimizing stuff. So you are at risk in an accident—more so than almost any other vehicle. Later Cherokees had air bags, but I don't know if they were otherwise re-engineered.
YTL: Actually if you think back it was emotion that made this blog so successful. We felt something wasnt right, we could see something wasnt right...
actually you are right. I retract my original statement.
I think part of what made me say this was that CR has changed. not for the better or worse, it is just different.
more posts, more posters. data flying by. and it's huge swings, hard to comprehend. it becomes numbing.
remember the days when we'd get just 1-2 CR posts all day, and have all day to mull it over, and it might be an hour between posts? we might ONLY have rock blogging to discuss all weekend?
it left time for analysis, and since it was all predictions for the future it was more theoretical.
now the posts go by so blisteringly fast, and the number of responses is breathtaking.
the added information is definitely welcome, but it is somehow slightly less personal.
which is why I'm sure, many people really gravitate towards the intelligent posters (rich, dryfly, rob dawg, many more omitted) or the more colorful (conjure, CSC).
and that said, a lot of the "old" color is still present in the wee hours of the night... although it's been a while since I've seen a squirrel recipe.
but things are as they are. and CR is by far the best blog out there, for seeing the trees and the forest. and yes, even feeling the forest.
it's all interconnected. but hard to see.Yearning To Learn
I'm thinking Aspens
I feel like I'm looking at a picture of the forest and the trees, and not sitting in the forest and trees.Yearning To Learn
I'm wondering if a store fails in a mall, will it make a sound?!!!!
I'm thinking that most of us are prescient and were screaming 6 years ago and even some who saw it coming during the Nixon years of going bankrupt on the Vietnam War and Nixon unilaterally canceled the Bretton Woods system and stopped the direct convertibility of the United States dollar to gold. We've been waiting a very long time for stragglers to catch-up to the rest-of-us and responsible adults in charge of the gubermint. Presently, we're in the "no go status quo" bailout phase. Still waiting for real long-term solutions versus squandering taxpayer dollars on the greedy bastards who created this mess. Heads up to Bailout Bob Rubin and the 1999 repeal of the Glass Steagall Act. Don't get me started on that greedy old fool Greenspan.
Yeah, as an intro to the blog it stated "we're interested in truth, and we're willing to contemplate things to see the forest and the trees." The new form is cleaner and more business like, but it carries the false impression that the numbers will tell you what you need to know. (I also wonder if the trees had a calming effect on the commenters who were itching for a fight.)
Good job, I feel the same way! I even am guilty of irrelavant posting, back when questions were a learning exerience. back when their were less than 20 posters... yeah i remember... I learned so much and was able to confirm so much with the "intelligent why" from the folks with so much inside knowledge. My problem is I got to where i changed my Name: everyday an dont even remeber who i was... maybe "Sybil" is a name i should stick with...
I too miss our conversations. But times have changed, and we went from "is anybody else see their houses selling 6X's PCI" to big 3 bailouts....
And we all laughed when he said "this is strictly contained to subrime" seems like years ago and it was june?
But the inventory glut in Long Beach is not limited to imported cars. There has also been a sharp drop in demand for the portÂ’s single largest export: recycled cardboard and paper products.
This material typically goes to China, where it is used to make boxes for new electronics and other products that are sent back to the United States. But Chinese factories reacting to sharply falling demand are slowing production, so they need less cardboard. Tons of paper are piling up recycling businesses around the port, the detritus of economies on hold.
Very nice, YTL. But initially I didn't get the metaphor, so my first thought was, "If you sit in my forest and touch the trees, you're gonna get a bad case of poison ivy." Here in Alpharetta it isn't just the banks you've got to watch out for...
the CR crowd is amazing at amassing the details (trees), and also of putting it together (the forest), but sometimes there is a lack of emotion.
It's a situation where the appropriate level of emotion turns you into Jas Jain or the Unabomber. Neither really contributes to a solution.
Also, there's no doubt many people here have feelings about this and strategies for dealing with it. Tanta didn't get quoted by Federal Reserve researchers 'cause she sent them a monograph for their opinion.
Keep in mind people need to keep their game faces on so you can't later match an identity to the comments and retrospectively read their mind / strategic thinking. Imagine the investment opportunities if you knew which regular poster was a Fed president.
at times I feel like I'm looking at a picture of the forest and the trees, and not sitting in the forest and trees.
there is something greatly ironic about the US gov't working so aggressivily to forestall house price drops to match the compressing wages associated with all this retructuring and bailouts. So not only will the minions be unemployed but they will never be able to buy the house either. And ythat low interest rate does nothing to get you the new 20% down.
FRED(Excellent) writes: there is something greatly ironic about the US gov't working so aggressivily to forestall house price drops to match the compressing wages associated with all this retructuring and bailouts.
Bah, what is this, consideration of second-order & unintended consequences. If you don't spend the last few auctionable megagrandchildren worth of debt obligations the USG can incur, you just don't understand the consequences.
Haven't you gotten the memo? We'll of course make a new emergency program to solve the problems created by the current emergency programs. Soon, everything will be taken care of, and it'll be back to entitled prosperity and unexamined arrogance for the American Republic.
It feels like we're all a bunch of blind men each holding a different part of the elephant's big toe -- one thinking "It's a rat," another, "it's a pig's snout" while the maharaja laughs himself to tears, riding high above.
There are actually institutions set up to study complexity. The only practical knowledge I've ever seen (could be tons, just what I've seen) is from an economist that had decided that economists need to pay far more attention to psychology if they really want to understand. Santa Fe Institute worries me in particular. They had a very prominent mortgage guy and some other dubious characters sitting on their board last I checked last year.
The bailout of AIG represents the last desperate rearguard action by the CDS dealers and the happy squirrels at ISDA, the keepers of the flame of Wall Street financial engineering. Hopefully somebody will pull President-elect Obama aside and give him the facts on this mess before reality bites us all in the collective arse with, say, a bankruptcy filing by GM (NYSE:GM).
You see, there are trillions of dollars in outstanding CDS contracts for the Big Three automakers, their suppliers and financing vehicles. A filing by GM is not only going to put the real economy into cardiac arrest but will also start a chain reaction meltdown in the CDS markets as other automakers, vendors and finance units like GMAC are also sucked into the quicksand of bankruptcy. You knew when the vendor insurers pulled back from GM a few weeks ago that the jig was up.
And many of these CDS contracts were written two, three and four years ago, at annual spreads and upfront fees far smaller than the 90 plus percent payouts that will likely be required upon a GM default.
Porsches can be had cheap right now. The cayman s 2008 sticker price is $15k below 2006 sticker price, if paying cash you could probably knock another $7k off easy.
Comrade Byzantine_Ruins writes:
...
Imagine the investment opportunities if you knew which regular poster was a Fed president.
...
Comrade Byzantine_Ruins | Homepage | 12.03.08 - 1:33 pm |
When the folks in the union job bank lose their do-nothing salaries, do they get counted as newly unemployed?
"The UAW, scrambling to preserve jobs and benefits that could disappear with an automaker collapse, agreed at an emergency meeting in Detroit to delay the companies' payments to a multibillion-dollar, union-run health care trust and scale back a jobs bank in which laid-off workers are paid most of their salaries."
Remember seeing that. Don't know if the bailout will prevent the CDS domino effect or more likely allow it to teeter precipitously until it cascades into a downspiraling pit. Nonetheless, they will deliberately sweep unions into the dustbin at the same time and achieve their dream of returning to the slave labor model.
Jett Rink(Unrated) writes: So, Jas is a Fed president?
That would make the FOMC meeting minutes awesome. Would they include all caps segments?
The committee belives that the risks to the economy posed by GANGSTERS on one hand and BORN AND BRED AMERICAN DOPES on the other hand are roughly equal.
gn writes:
USG should pay owners $$$ to crush, drown, or otherwise destroy their SUVs and other gas-guzzling cars. It's green, it's main street, and it's sure to increase auto sales.
I'll go with that. Where do I sing up? I think my '93 Suburban is worth, oh, say, $15,000?
Do you have it painted and rebadged as a Panzer? It is a tank after all. When you get it broken in circa 300k miles you might consider a first service call.
Rob Dawg- I think you are falling into the conventional economics trap. If consumers were willing to delay purchases because they were going to be cheaper in the future why would any of them charge a purchase to a credit and pay upward of 20% interest effectively a 10% price increase if it takes a year to payoff the purchase.
This whole deflation meme assumes a degree of consumer self control that simply doesn't exist. Consumers will delay purchases because they don't have the credit but it won't be because of prices. We are a society of instant gratification which is why we are in the mess.
the discussion on CDS to say the least has been disappointing. AIG was unique in the CDS because it was a large NET writer of protection based solely on its credit standing. It essentially anchored one end of the CDS chain. The other net writers e.g. hedge funds were much smaller and all were required to post collateral. For the rest of the intermediaries their aggregate exposure is large but their net exposures are relatively small.
crazyvermonter writes:
Rob Dawg- I think you are falling into the conventional economics trap. If consumers were willing to delay purchases because they were going to be cheaper in the future why would any of them charge a purchase to a credit and pay upward of 20% interest effectively a 10% price increase if it takes a year to payoff the purchase.
This harkens back to some of my earliest posts on CR. The oversimplified concept is called "the monthly nut." Debt didn't matter only debt service. I don't think there's as much onerous consumer credit as you suggest. I carry huge balances. I'm a bad boy. I have 1.99% balances that are also on deposit as 3.67% short term CDs. Anything I charge that has a real rate, I pay off every month. Still, I cycle relatively high balances.
If Tanta were here she'd set you straight for suggesting I ever think in terms of conventional economics.
The problem is people were spending beyond their means and not saving. When you do that, everything unravels because it's unsustainable and the day of reckoning will come (as we're seeing) when you won't be able to buy anymore and are struggling to pay off your obligations from yesterday.
This is the problem you get into when you try to borrow and spend your way to prosperity, beyond your actual means to pay for it (i.e. income).
The effects are already moving back up the chain, the owners of a local mill (largest employer of a small town), that makes cardboard used in boxes, has announced it will shut down for a week. Everyone will be laid off for that week except for a few salaried office people. Just the beginning, I imagine.
OT but indicative of slowdown: Amtrak's long distance west coast train, the Coast Starlight, & the short distance train(s), the Cascades, have seen an increase in OTP (the Cascades had 90%+ OTP one week recently)--& it's at least partly due to the decreased number of freight trains run by the host freight railroads.
"You see, there are trillions of dollars in outstanding CDS contracts for the Big Three automakers..."
Easily fixed. The government buys out the 1 percent of CDS contracts that are true hedges. As for the other 99 percent that are pure speculation? Declare them illegal gambling. Fine the holders of these contracts. Build concentration camps.
Lost your Job? Facing Foreclosure? Get the Credit you and your family needs in order to survive! Show Proof of income and employment even if you are not working! If you are in a personal recession, dont lose it all.. replenish your arsonal with this payroll paystub program!
firsstt
We're on a road to nowhere...
For most, you can't buy a car if you can't get a loan.
ugh
Oops - Road to nowhere
Vanishing point
somebody needs to start redoing all the economic charts on the planet to have them go below zero.
at least they'll have a job for awhile, hee hee.
Dow up now.. +65.. amazing.
Let us declare the first inning over. Welcome to the top of the second.
We'll know the third inning (final?) has begun when the dread feedback loop leads to a new round of financial institution failures and further house price declines.
If the third inning isn't the final inning, well, we'll have put the political back into political economics and the perspectives of people like Lukacs and Gramschi will again be of interest.
anyone else fired up about adding to shorts on a day like this? am i crazy? anyone? beuller? beuller?
many are only now, for the first time in 25yrs, discovering that the ride of a car that they associated with a new car, is in fact, associated with new TIRES - keep the "old" car, and get new tires - now about getting that "new car smell"........
CR, any way to know how much the inability to secure financing is responsible for the fall-off in demand?
Ummm,where IS that fire escape?
starting to feel like a bottom of sorts is setting in - would not surprise me
If you were really God, you would know for sure if the bottom was in. IMPOSTER!
ot even God can call a bottom...... Only tops...
"starting to feel like a bottom of sorts is setting in - would not surprise me
God | 12.03.08 - 11:08 am | #"
Based on what exactly? What kind of actual fundamentals would lead you to that conclusion? I do not see the slide in home prices stopping anytime soon. What economic activity gives you the basis for calling a bottom?
Nah, no pump action on S&P 500 futures:
Quote.com U.S. Markets - Futures Quotes and Charts - Chart for ES Z8
Hilarious!
Capitulation is just days away, it seems. Does it come with Friday's job loss report of 400-500K?
God, quick question for you..
Platypuses: what were you thinkin?
At first I was worried now I'm fearfull. Fortunately my Japanese masters have assured me not to worry. On the bright side, due to our flexibility, manpower has been shifted from less demanded products (large trucks) to "relatively" more demanded products. Also instead of swinging the axe extensive training programs have been implimented for employees, though it is more geared towards specific human capital vice general.....worst case we could retool and start making Amish buggies..
anyone else fired up about adding to shorts on a day like this? am i crazy? anyone? beuller? beuller?
Just bought another chunk of SRS myself. I'm hoping the born and bred dopes keep sending it lower.
"New Car" Is a sent that comes in a bottle. Well known to hucksters everywhere.
I'd bet that heavy truck sales are even worse than autos.
The concept of deflation is now firmly in the mind of the consumer. It will be very difficult to dislodge. Why buy now when it will be cheaper next month?
I may add to my position in QID. Though the action I am seeing indicates my predictions in the first place are not going to pan out, in which case I should close the entire position.
I have a friend that works for an company that manufactures auto parts for the assembly of new cars. They have customers like Toyota, Nissan, Ford, and so forth. In their company's entire 20+ year history, this is the first year ever that Toyota has canceled an order placed earlier in the year.
ToyotaJoe:
Amish buggies?
Dude, your labor costs aren't that low. Unless you've got the 12 year old children working on the line with you.
The Amish would kick your ass, but they're non-violent (unless you've played ice hockey with their teens...).
Scott writes:
I have a friend that works for an company that manufactures auto parts for the assembly of new cars. They have customers like Toyota, Nissan, Ford, and so forth. In their company's entire 20+ year history, this is the first year ever that Toyota has canceled an order placed earlier in the year.
Scott | 12.03.08 - 11:17 am | #
The order has gone out to extend the life of many things, Services that were once performed offsite are now being brought in house
Just glancing at the chart, it looks like one of those that exaggerates the move by not being zero-based. But it is zero-based. Gulp.
Can someone explain to me why the Japanese will keep their plants in America if new car sales continue to decline like this?
This is why I am a bit in support of some type of bailout for our Big 3.
BofA Reportedly Could Cut 30,000 Jobs
Tiny URL - create a shorter link
franko writes:
many are only now, for the first time in 25yrs, discovering that the ride of a car that they associated with a new car, is in fact, associated with new TIRES - keep the "old" car, and get new tires - now about getting that "new car smell"........
3M spray adhesive. Use it to glue two peices of automotive carpet, stick it under a front seat. bam insta new car smell and an easy extra grand in final sales price.
Dawg:
The concept of deflation is now firmly in the mind of the consumer. It will be very difficult to dislodge. Why buy now when it will be cheaper next month?
Not until I see it in housing. Mortgage apps doubled last month, so there are still too many knifecatchers out there.
--
I thought that autos were not as overbuilt (or overbought) as CRE and CRE was not as overbuilt as RRE.
What % of GDP is due to autos, CRE and RRE? USG needs to buy autos, CRE and homes, demolish where necessary and dump in the nearest oceans. And people complain that I don't provide solutions.
Jas
the new national bank will have lots of business making loans to fill the void of the lost credit creation which was coming from outside of the traditional fed controlled banking system. people and firms will be begging for those loans (kibble) at ever higher interest rates.
abstract finance has become a disproportionately large part of the economy. finance serves commerce, not the other way around.
the leverage monster we created is starving and will consume any feed.
They will at the only bank left in town.
the credit creation reflected in the non cash money supply of the shadow banking system did a lot of things for people an built a lot of over capacity.
the credit creation reflected in the non cash money supply of the shadow banking system did a lot of nice things for people an built a lot of excess capacity.
that excess capacity has a lot of inertia.
the problem is the huge inertia from the old system is now feeding the negative spiral. the old system had mass that is in flux right now, convulsing, and SHRINKING.
all the little debt colonies we called category killer retail are collapsing under their own appetite for debt.
if the retail numbers for the fourth quarter come in at 15% decline or more, most retailers will fold.
services and consumption are, um, like 70% of GDP.
JP, do you know how many were new instead of refinancings?
JP, how can you possibly be so jaded?
Rev. Elmer Gantry -- very funny.
OT--Market may be up, in part, because John Chambers was upbeat in opening comments at an investor presentation. But in Q&A he said not sure when downturn would be over. Would not update guidance.
Also, over on Naked Cap. there was an article about how the Chinese devaluation might have the same effects as the Smoot Hawley Act back in the GD. Anyone have any thoughts on this? Thanks!
Can someone explain to me why the Japanese will keep their plants in America if new car sales continue to decline like this?
They're modern, efficient, and less subject to currency and tariff risk?
Who cares about news.... JUST BUY 'EM....
I'm pretty sure I can get some of our Nachi robots to hand churn some butter.... Amish labor costs are low?? I grew up in PA an amish furniture is an arm and a leg...probably about 2.5 horses though
i am so high.
"Based on what exactly? What kind of actual fundamentals would lead you to that conclusion? I do not see the slide in home prices stopping anytime soon. What economic activity gives you the basis for calling a bottom?"
God's affiliated with several companies - all are feeling the "pain", but most are still making a lot of money as cost pressures somehwat offset the sales slowdown. Also, several of these companies are buying in fully secured debt at cents on the dollar. One company has more cash than debt and just bought in some debt from a desperate seller at a huge discount. Makes no sense.
Things will get worse, but its starting to feel like a bottom as I said.
In this type of market no one is going to make money - the shorts and longs will both get buried. The longs have felt the pain for the past 6 months - now its time for the bears to get flushed down the toilet. Its been too easy to make money on the short side. Thats changing and both the extreme bulls and extreme bears need to disappear for the market to make any sense.
Deflation is in the mind of this consumer, in relation to autos. We have an 11 yo and a 7 yo car, and a big credit from a GMAC card which is obviously not long for this world. We're thinking about buying a car, but frankly I expect the fire sales to lower the price more than my GM discount (plus both cars (Chevrolets) run fine). So we're not buying.
Why is the stock market rallying? Goldman Sachs is up 6% after being down earlier in the morning. What's up?
@homedad: LOL.
@clause: Refinancings = 70% according to here:
The article requested is no longer available.
Every day I pass the same BMW dealership the same time of day. Last year, there were always customers walking the lot, but in the last 2 months, I have not seen one person walking the lot- not a single one.
Why is the stock market rallying? Goldman Sachs is up 6% after being down earlier in the morning. What's up?
Unemployment is up. Take the market on that.
Deflation is in the mind of this consumer, in relation to autos. We have an 11 yo and a 7 yo car, and a big credit from a GMAC card which is obviously not long for this world. We're thinking about buying a car, but frankly I expect the fire sales to lower the price more than my GM discount (plus both cars (Chevrolets) run fine). So we're not buying.
I would not buy another GM car if they were giving them away for free..peaces of 36,000 mile junk.
Unemployment is up. Take the market on that.
Eric | 12.03.08 - 11:28 am | #
So payroll is down, and then PROFITS WILL GO UP! Hooray!
Wait a minute...
ToyotaJoe:
The markups might be incredible, but the labor costs are very low.
Many Amish are turning to manufacturing since the farms have been subdivided to point that most are not economically viable.
And because they believe that the children learn best at the elbows of the adults, there are operations with early teens working alongside their parents. 12 years old was a joke, but since school for them legally ends in the 8th grade, it's not long afterwards until they join the family operation.
Periodically see in paper that some family is pursuing labor department waiver via Senator/Rep's office in order to let youngsters work.
But yeah, the markups are wild at times and since they're amish, they get it...
Remember that this volume decline is hitting an industry with huge fixed costs, and that these are decreases relative to 2007. GM, for example, reported a loss of $38.7 billion for 2007. That's billion, with a "b". Back when things were good.
I believe that lost income and jobs in the auto sector tipped the U.S. economy into recession this summer, and we may be on the cusp of much more dramatic adjustments in this sector than anything seen so far. The wrenching changes that might be immediately ahead could mark the beginning of a frightening new phase in the economic downturn. - Hamilton
There's somebody else that's using the CUSP word. That's really comforting.
So payroll is down, and then PROFITS WILL GO UP! Hooray!
Wait a minute...
Hey, it makes about as much sense as "our debt got downgraded, and that's positive for earnings".
CUSP = CLIFF
an economic cusp to the side of the head?
Take a breath, everyone. What other result than the economy falling off a cliff could be reasonably expected after the shocks of Sept-Dec? We were told that the end of the (economic) world was nigh. That was an hysterical statement by our leaders and it invoked an hysterical response.
Did anyone really expect consumers to go out and spend?
On a happy note, we have a Loch Ness Monster pattern on the Dow Chart now, not sure what that means really, but it must be positive!
What's a brother got to do to get a "nothingburger" comment these days?
Tom Stone writes:
Ummm,where IS that fire escape?
That's what the window ledge is there for....
Hey 12th. I see that today's low for SRS is $120, which was your stated entry point. Was that you?
I suppose the market could go any direction from here over the short term. But as this very bad economic news keeps multiplying, the market has become a witches' brew setting up for a big fall at some point.
My guess is that it's being driven almost totally by professional leveraged traders and black boxes at this point, with hedge fund and mutual fund money continuing to flow out steadily. So, the leverage is sitting on a very thin base.
I'd prefer to bet on the side of the witches' brew and stay short, but I can understand if you'd rather sit this market out. It's definitely weird.
I'll just say, though, don't miss the coming run-up in PMs and commodities. It could happen a lot sooner than you think.
ah, but is it "contained"?
All those newly unemployed MBAs should go get retrained as mechanics.
The new meme will be that college is a waste of family resources so go learn a useful trade.
On a happy note, we have a Loch Ness Monster pattern on the Dow Chart now, not sure what that means really, but it must be positive!
Comrade Kristina | 12.03.08 - 11:32 am | #
And just what makes you so sure it isn't the beginning of another middle finger formation?
Here's why CNN says the rally occurred:
"Stocks rallied Tuesday on indications that the automakers might get a bailout after all. GE also helped sentiment after it said it will keep its dividend intact and work to sustain its top-tier debt rating despite the poor economy."
CNNMoney.com Market Report - Dec. 3, 2008
I think many people underestimate the contractionary, shock impact of super high gasoline prices. This looks a lot like what happened in 1973 with the oil embargo. Unfortunately with the housing/banking mess and crushing debt, I'm not sure the girders are going to stand the stress like they did in 1975.
homedad43:
There is now way anyone could compete with the Amish... I admire them... had to work with them , got to eat dinner with them a couple of times.
I just wish I could get some nice furniture that doesn't turn into a blob of cardboard when it gets wet...
Back on topic though our North American exec's don't seem to be too worried...
YSLP: the US is the single largest market for Japanese automakers...plus their vehicles produced here are designed for American roads and buyer tastes. Many models would not fit well in Japanese traffic and wouldn't appeal to Japanese tastes.
Japan is getting killed economically by these upheavals as much as China; but isn't getting as much press because China is the big new kid on the block. Due to cultural/historical factors, Japan is far less likely to experience violent social unrest/revolt than China.
The yen/dollar rate has been suppressed for a long time as the Japanese govt looked on as carry trade took place. This benefited Japanese exporters. Now the rate is moving up to a more realistic value based on purchasing power parity and related factors.
The FED induced flattening of the yield curve in Treasuries might drive some investors back to stocks, hoping that in the long run they will give a better return from current valuations.
Something to consider
RDO
No offense, Rich, but are you like a senior executive at the Perth Mint?
JP, it would have to be a middle finger with warts
rich,
What is your run thesis based on? An end of the dollar synthetic short squeeze or commodity distribution issues or...?
Aha. The witch's middle finger. I'm afraid that's the worst kind. LOL.
The auto manufacturers are toast. We should not give them money to burn. Next year will be even worse than this year. For some reason, the Asian manufacturers don't need a bailout. Why do you think that is? Check out GloomBoom.com.
Assisting the Poor and Middle Class by Clearing the Air and Assisting Auto Companies
The glut of cars in the U.S. provides an opportunity to remove old polluting cars from the roads and help the working poor and middle class. France recently bought old cars from owners to permanently remove them as a way to improve air quality. Unfortunately older cars are owned by people who cannot afford to replace their cars with newer models. So the impact of a government purchase program is limited, especially in suburban, exurban and rural regions of the country where mass transit is not available.
The auto industry is overloaded with new and used cars that it needs to sell. Every day the value of these cars is falling and prospects for selling these vehicles are dim. What if people could trade their old (ten years or older) cars in for a used (5 to 7 years old) car? That would allow owners to continue to drive, but would take the polluting cars off the road. These polluting cars would have to be destroyed and materials recycled. Title transfer would be to owners or the financing company of the old car. Although the value of the car will go up, payments will not increase and interest rates will fall under federal guidance for financing companies that participate in the program.
The federal government could also create a second tier subsidy for owners of cars 5 to 7 years old, allowing them to trade up for a new car much like a rebate. Government would pay the difference to the dealers. The auto industry would do its part in reducing the base cost of the cars to the dealers, who would have to operate on a lower margin to make the project successful. This program would have a 12 to 18 month lifespan depending on the state of the economy. This program would allow the auto industry the time to retool for green transportation.
Auto companies and dealerships would receive tax credits on a portion of their lost margins that would not expire for several years, which would help them as the economy recovers in the future.
ItÂ’s apparent that this program will cause price distortions in the auto markets, but it would be temporary; the current auto inventory would disappear and the air quality would improve.
The chance that a bailout won't happen is zero. Won't change a thing. The only way the small three survive is a return to "I have a pulse" lending.
OMG.
It's a double half-batman...showing the middle finger to the Loch Ness monster.
Ancient Chinese Secret:
True, we busted our butts trying to bring an american made car to the japanese market...the "voltz"... instead we switched the steering column to the left side and now call it a "pontiac vibe" ....ironic
hey rich-
been waiting for you to show up....what do you think of DJP?
I'll just say, though, don't miss the coming run-up in PMs and commodities. It could happen a lot sooner than you think.
rich | 12.03.08 - 11:34 am | #
Uhhhh...how much are you down now? So far you have been wrong in a big way on this trade....just saying
As JHK says: "Most people don't know it yet, but they probably have bought their last car"
Americans should be getting ready for a huge change in lifestyle. For some it will be a change for the worse but for most it can be a change for the better. I don't relish the idea of children living in cardboard boxes but for most of us we will be getting used to the new lifestyle of walking instead of driving, spending the evening on the porch with the neighbors instead of in front of the hdtv and making our own bread rather than buying it at Panera. And for many of us, this will truly be a change for the better.
Does anyone remember how clear and blue the skies got after the jets were grounded in 2001? Personally, that is worth more to me than the ability to rapidly move from region to region, or to get South American grapes in December.
Well, it obvious you should be long something in this market.
I just bought some SRS.
Given this bar graph, why would anyone attempt to save this sinking ship? There is not enough money in the treasury to keep the Big Three alive with these sales numbers. BK, the American Way!
Why not let the Amish make cars?
Introducing the 2010 Shoo-fly! Now with theft reducing fender reins to tie your car to the hitching post!
commodities will continue their downward spiral...look at freeport today. timber!
And for the younger set, the 2010 Runspringa (which can easily convert to a station wagon when you get married).
Oops.
RuMspringa. My bad.
homedad43 writes:
Why not let the Amish make cars?
Introducing the 2010 Shoo-fly! Now with theft reducing fender reins to tie your car to the hitching post!
homedad43 | Homepage | 12.03.08 - 11:42 am | #
Their products would definately be better than anything GM would put out...I actually saw a buggy "pimped" out once with brass rivits and purple velvet interior....
ItÂ’s apparent that this program will cause price distortions in the auto markets, but it would be temporary; the current auto inventory would disappear and the air quality would improve.
are you kidding? taking old cars off the road doesn't help if you are making more cars than are needed.
the production of cars itself creates quite the pollution (mining manufacturing transportation etc), although not necessarily in the same locale where the end product is driven.
in the end:
WE HAVE TOO MANY CARS.
c&c,
Freeport cut out its divvy today...
franko(Unrated) writes:
many are only now, for the first time in 25yrs, discovering that the ride of a car that they associated with a new car, is in fact, associated with new TIRES - keep the "old" car, and get new tires - now about getting that "new car smell"........
franko | 12.03.08 - 11:07 am | #
Half right - usually requires new or adjusted rocker arms (or at least bushings & bearings) and sometimes new shocks and steering rack/pinion.
Then if necessary an engine tune (even modern EFI engines can benefit from occasional cleaning & 'tuning').
All combined w/ the new tires might be a couple grand or so. Do that and the 'new car feel' is pretty much totally restored.
I've always said - if you own cars you will either pay bankers & car salesman OR you will pay mechanics - one or the other. Now compare where & how the bankers & salesman live vs the mechanics and decide which one costs more to 'support'?
My cars are all over 150K miles so you know my opinion on the issue.
Eric:
You crack me up every time!!
We tried to rent a Tahoe for our camping trip in the Sierras this summer but Enterprise was out of them and had to give us an Escallade instead. That car was fantastic.
I love my 10 year old Honda, but if I had 50Gs to waste on a car that is one GM car I would buy. I still smile thinking about how great that ride was.
I just bought some SRS.
Rats, now I have to fire up the C++ compiler and add a special case for that stock...... I had my trading app showing my net delta $ long and $ short, the delta for SRS clearly should be 100% like other stocks.
Last night I was at the Toyota dealer for some service, and I saw the finance-rate blackboard out on the sales floor. Interest rates varied by FICO score. for a 60 month loan, FICO 720 and above got a 7.7 percent interest rate. By the time you were down into the lower 600s, it was 14 percent. FICO Mid 500's? 22 percent.
Aside from every other problem the car companies have -- how many people who don't have the cash in hand are going to buy a car under those terms these days?
toyotaJoe:
yeah, when the teens haven't joined the church yet, they give 'em free rein for a while to get it out of their system.
When I was a teen, some of the sweetest wheels in town belonged to Amish teens who would keep 'em behind the local garage until Friday and Saturday nights.
Nicest was an early '70s GTO.
Just a weird sight to see teenage Amish boys driving around bopping their heads a la Wayne and Garth to AC/DC or Foghat.
citizen energyecon - didn't they lower guidance also?
OnTheRun,
You don't need a pulse.
Freeport cut out its divvy today...
yeah, because commodity prices crashed and they are in trouble.
I have no crystal ball about commodities. I still have long oil and gold/silver positions from long ago that I haven't bothered closing, but otherwise I'm out out out of everything.
there's just no logic IMO.
I've heard rationale for why PM's can boom (the comex issue as example) and also for why they might crash. (continued deleveraging). who can say anymore.
That would allow owners to continue to drive, but would take the polluting cars off the road.George Kalogridis
Don't know where you live, but in Illinois emissions testing is mandatory. Can't get a license vehicle sticker without the emissions test and mandatory repairs if needed. You can't avoid the emissions test because NO-ONE escapes ticket(s) for out of date license plate due to no emissions test. It's a moneymaker for the state
clearly should be 100%
Shouldn't be. I'll shut up now.
With or without the credit issues I have no reason to buy a new vehicle. The new ones are loaded up with safety crap, computers and black boxes that are waiting for lawyers. Even my sons in their 20's have seen the light and have bought 80's vehicles that are simpler to maintain, work on and a LOT cheaper. Frugality means keeping what you have in good condition so it last 30+ years. Now, what is the manufacturing volume requirements for this demand model?
The government has had a hand in driving the industry over a cliff.
So far you have been wrong in a big way on this trade....just saying
You are right and are not addressing me but C&C have you ever seen something go down in price and not be able to get your hands on. There does seem to be a disconnect between reality and the "paper electronic price". It does not make sense, there are reports all over the world about physical shortages. Maybe manipulation but which way? To get suckers like me to buy or sell?
c&c,
No doubt they did.
YTL,
My thesis on hard commodity price moves are currency, not demand related. Ag commodities are possibly both due to extremly low cereal stocks. Time will tell.
homedad43:
Best part is when an Amish buggy pulls into the local beer distributor ...how do you card them???
Maybe we could take some lessons from the Cubans on how to make a car last 50 years on homemade parts.
It isn't about how long the car lasts, its all about how many cars we have to build to have full employment.
As I mrntioned yesterday, we are scroomed. We are throwing money at a Black Hole:
• Marshall Plan: Cost: $12.7 billion / Inflation Adjusted Cost: $115.3 billion
• Louisiana Purchase: Cost: $15 million / Inflation Adjusted Cost: $217 billion
• Race to the Moon: Cost: $36.4 billion / Inflation Adjusted Cost: $237 billion
• S&L Crisis: Cost: $153 billion / Inflation Adjusted Cost: $256 billion
• Korean War: Cost: $54 billion / Inflation Adjusted Cost: $454 billion
• The New Deal: Cost: $32 billion (Est) / Inflation Adjusted Cost: $500 billion (Est)
• Invasion of Iraq: Cost: $551 billion / Inflation Adjusted Cost: $597 billion
• Vietnam War: Cost: $111 billion, Inflation Adjusted Cost: $698 billion
• NASA: Cost: $416.7 billion, Inflation Adjusted Cost: $851.2 billion
Total: US$ 3.92 trillion (inflation adjusted)
According to Bianco, “The only single American event in history that even comes close to matching the cost of the credit crisis is World War II: Original Cost: US$ 288 billion, Inflation Adjusted Cost: US$ 3.6 trillion.”
On a happy note, we have a Loch Ness Monster pattern on the Dow Chart now . . .
You people really need to brush up on chart reading. The Dow is tracing out a recumbent Virgin of Guadalupe pattern -- because her face is in partial occultation, the outcome is surely bullish.
Can't get a license vehicle sticker without the emissions test and mandatory repairs if needed
correct. but it is far more ecofriendly to make repairs on a high emission vehicle than to scrap it and create a new vehicle.
the program in Illinois does not necessarily decrease overall pollution, it reduces pollution where the end product (car) is driven, like I said above.
Even if it's a "green" vehicle (like a Prius). If I recall, from the start of production to scrapping a Prius actually uses MORE overall energy than a Chevy Tahoe. Now this is energy and not pollution... but the point is that creating cars is HIGHLY energy intensive and pollution productive.
I just think it's a horrible idea to base a Detroit bailout as some sort of "green" initiative, if it were implemented in the manner above.
Better in some ways would be to allow them to fail as auto manufacturers and set up a retraining program to have the ex-car employees create something similar but different, like the oft-loved green technologies.
Ummm. I have a Modest Proposal.
Assume we have $350b left. Allocate 30-60k apiece to underwater homeowners. Whether or not they are behind or not. First come, first serve. After proof--tax assessment values perhaps, or appraisals, I leave it up to regulators--the allocated money is sent to the bank. If that suffices to bring a loan current, fine, if not the homeowner could chip in. If current it comes off the principal balance. Owers get bailed, banks get money, good payers are rewarded along with deadbeats. If you are still underwater, too bad, keep making payments someday you make break the surface.
For adjustibles and neg am, lenders must keep payment the same for a year after the adjustment and eat any neg am for a year. Which they'd never collect anyway.
toyotaJoe writes:
homedad43:
There is now way anyone could compete with the Amish...
Sure there is. Plug in an extension cord.
"God" wants a reason that the stock is going up(sic). Here's what Martin Wolf says in the FT this morning:
"Some argue that an attempt by countries with external deficits to promote export-led growth, via exchange-rate depreciation, is a beggar-my-neighbour policy. This is the reverse of the truth. It is a policy aimed at returning to balance. The beggar-my-neighbour policy is for countries with huge external surpluses to allow a collapse in domestic demand. They are then exporting unemployment. If the countries with massive surpluses allow this to occur they cannot be surprised if deficit countries even resort to protectionist measures."
Protection for auto makers, yes?.
I beg to differ.
SLW is up 15% today.
GLD and SLV have been about flat.
Down quite a bit on DBA and DBE. But feeling pretty good about holding them right here, all through 2009.
My strategy has been to hedge short stocks vs. long commodities, with frequent rebalancing. So far, it's just holding its own. But at some point, they break apart and go back to historical negative correlation. And I'm betting it will be PMs/commodities up and stocks down.
Not having a bad year at all. Very interesting times.
The painful discovery of 2009, I am afraid, is that the word 'bailout' as now used does not mean what most people think it means. To politicians today it means 'postponement', whereas to most people it means 'fix'.
4shzl writes:
On a happy note, we have a Loch Ness Monster pattern on the Dow Chart now . . .
You people really need to brush up on chart reading.
Actually, it's a Johnny (the Wad)Holmes pattern forming. We all know how he ended up
Perhaps we are now at peak complexity.
SRS well in the money Jan calls. Getting more now.
I will be skiing more this year.
You people really need to brush up on chart reading. The Dow is tracing out a recumbent Virgin of Guadalupe pattern -- because her face is in partial occultation, the outcome is surely bullish.
And since her feast day is next Friday, WATCH OUT!
(If next Friday was op-ex too, we'd hit 400,000 on the DOW......)
My 2000 Saturn; 72,0000mi is in the repair shop once a month. I'm spending a minimum of $300 per month. Today, the idiot light was on....again. The 02 sensor failed....whatever that means. Over $300 out of the pocket. I'm holding off on buying new and 5 years of car payments.
I laugh every time I hear a Lexus commercial advertising their December to Remember sale. I doubt any dealer will want to remember the numbers that will be announced for Dec., or Jan, or Feb.,....
rich - have been right on many things...agree!
However, the commodity boom is over. It was driven by two things excessive leverage and speculation. Those two things are not coming back anytime soo
The 02 sensor failed....
Oxygen sensor. Used to be an easy fix. New sensor $10, 30 mins. labor.
rps, my friend's Saturn has the very same difficulties, and he's in the same fix as you. My sympathies.
"The government has had a hand in driving the industry over a cliff.
MPinCO | 12.03.08 - 11:49 am | #"
The domestic auto industry put in quite a bit of effort in guiding that hand with such things as CAFE standard exclusions for SUVs.
I wish Porsche was losing money so they would make better deals.
Looking at Corvettes now.
//Comrade Kristina writes:
On a happy note, we have a Loch Ness Monster pattern on the Dow Chart now, not sure what that means really, but it must be positive!
Indeed, Cthulhu Rising pattern must be more positive than negative.
" rps writes:
My 2000 Saturn; 72,0000mi is in the repair shop once a month. I'm spending a minimum of $300 per month. Today, the idiot light was on....again. The 02 sensor failed....whatever that means. Over $300 out of the pocket. I'm holding off on buying new and 5 years of car payments.
rps | 12.03.08 - 12:00 pm | # "
Find a seven-year-old Civic with low miles. With luck, you'll still be driving it in ten years.
They did, Blackhalo. They drove their own industry right into the ground while simultaneously thumbing their nose at economy, efficiency, low operating costs and the public good in general. The deserve jail, not money.
Perhaps we are now at peak complexity.
Not sure if this were meant as a joke, but I've often wondered about this.
The human mind can only handle a certain amount of information, and process so many details at a given time.
An aggregate of human minds can hold and process even more.
but at a certain point even the aggregate human processing ability is breached. we may have come to that point.
The various securities are so complex now that each individual and firm only knows a small microcosm of "the market". due to this, trading becomes difficult as there is massive information assymetry. at times, there are likely times when neither side has the necessary information.
as buffett said, one must read 750,000 pages of papers just to understand one CDO.
does anybody think that the rating's agencies could really do that? could Pimco? could Cerebrus? and so on?
it worked for a time because everything went up, so it hid the problems inherent in the system. and that built trust and confidence.
but now the game is exposed. the situation may be un-knowable to the aggregate human mind.
thus we may need to reset everything.
that sounds painful.
you don't have to take it to the shop every time the idiot light comes on. Mine has been on continuously for the last 100,000 miles...
"Some argue that an attempt by countries with external deficits to promote export-led growth, via exchange-rate depreciation, is a beggar-my-neighbour policy. This is the reverse of the truth. It is a policy aimed at returning to balance. The beggar-my-neighbour policy is for countries with huge external surpluses to allow a collapse in domestic demand. They are then exporting unemployment. If the countries with massive surpluses allow this to occur they cannot be surprised if deficit countries even resort to protectionist measures."-Martin Wolf
Protection for auto makers, yes?.
trader walt
Not just automakers specifically. But, like I mentioned in the last thread, the shields are about to be energized soon, and it won't just be us doing it. It's trade-war II coming to a globe near you.
Can one get a Prius yet or is there still a long wait?
trail writes:
you don't have to take it to the shop every time the idiot light comes on.
My idiot light came on. When to dealer. They told my idiot light was broke $200. I'm such an idiot.
I'm gonna ask Don the car repairshop owner if he's going to go public and be offering IPO's in the near future. His shop is ALWAYS busy with older cars. Independent car repairshops is the next best place to invest for the next five years
About stock picks from rich, i love it. rich can't be right always but he is brave enough to post what he thinks. To me, that's what matters.
I'm on the same side of the trade as Rich, short, with half of my capital in cash. I can sleep at night, with some medication. If the unemployment numbers, car numbers, house sales, foreclosures, and ten and thirty year figures are building a base, I think its a lot further down than the current DJIA indicates. Things are crashing too fast to plan more than a quarter ahead. Maybe two, if you want to gamble.
I agreee with Rich about oil. whats being pumped now is probably old oil, whose cost still make it proitable to sell. As that evaporates, higher cost oil will replace it. Nobody is in the give away business for long.
And as far as Plaxico Burress, I believe his story. He was carrying the gun to protect his bling and cash at, are you ready for this, at Applebees. Wife and I will be going to Dennys tonite, so I'll be packing too.
On a far happier note, CITI has found a buyer. At least we can believe the Pirates. (Parody)
Somali Pirates to acquire Citigroup
December 2, 2008 – 5:57 pm
(hat tip Walnuts)
November, 2008 (Bloomberg) — The Somali pirates, renegade Somalis known for hijacking ships for ransom in the Gulf of Aden, are negotiating a purchase of Citigroup.
The pirates would buy Citigroup with new debt and their existing cash stockpiles, earned from hijacking numerous ships, including most recently a $100 million Saudi Arabian oil tanker. The Somali pirates are offering up to $0.10 per share for Citigroup, pirate spokesman Sugule Ali said earlier today. The negotiations have entered the final stage, Ali said. ”You may not like our price, but we are not in the business of paying for things. Be happy we are in the mood to offer the shareholders anything,” said Ali.
The pirates will finance part of the purchase by selling new Pirate Ransom Backed Securities. The PRBSÂ’s are backed by the cash flows from future ransom payments from hijackings in the Gulf of Aden. MoodyÂ’s and S&P have already issued a AAA investment grade rating for the PRBSÂ’s.
Head pirate, Ubu Kalid Shandu, said “We need a bank so that we have a place to keep all of our ransom money. Thankfully, the dislocations in the capital markets have allowed us to purchase Citigroup at an attractive valuation and to take advantage of TARP capital to grow the business even faster.”
Shandu added, “We don’t call ourselves pirates. We are coast guards and this will just allow us to guard our coasts better.”
Bloomberg News 10:24 AM
CITI IN TALKS WITH SOMALI PIRATES FOR POSSIBLE CAPITAL INFUSION
WILL REQUIRE ALL CITI EMPLOYEES TO WEAR PATCH OVER ONE EYE
SOMALIAN PIRATES APPLY TO BECOME BANK TO ACCESS TARP
PAULSON: TARP PIRATE EQUITY IS AN “INVESTMENT”, WILL PAY OFF
KASHKARI SAYS “SOMALI PIRATES ARE ‘FUNDAMENTALLY SOUND’”
MOODYÂ’S UPGRADE SOMALI PIRATES TO AAA
HUD SAYS SOMALI DHOW FORECLOSURE PROGRAM HAD “VERY LOW” PARTICPATION *
FED OFFICIALS: AGGRESSIVE EASING WOULD CUT SOMALI PIRATE RISK
FED AGREED TODAY TO TAKE “WHATEVER STEPS” NEEDED FOR SOMALI PIRATES
@dryfly: I've always said - if you own cars you will either pay bankers & car salesman OR you will pay mechanics - one or the other. Now compare where & how the bankers & salesman live vs the mechanics and decide which one costs more to 'support'?
Thank you for crystalizing that thought in my head.
@crispy: I'd be curious what your commodities readout is.
FWIW: I'm no goldbug, and I don't have a horse in the race. But I do think that eventually we will see inflation. (When? My guess today is mid 2010.) Around that point, I suspect commodities will increase in value. So I wouldn't touch them until late '09, and I'd still take a careful look around before leaping.
I'd welcome counter opinions (but not gold religion or Ron Paulism.)
What I'd love is a simple, no-gimicks and geegaws car, with the modern safety features, but without all the unnecessary "comfort" features like heated radio-knobs and hydrallic cup-holders. One with a basic, non-computer controlled engine, with easy access to change the oil filter myself, etc. And it only comes in black, and uses standard over-the-counter parts that don't change every year.
Rich
Just wondering, Being that we've seen over the last year a collapse of vitually every asset class(housing, equities, copper, gold, silver, oil, grains, etc), why you think there will be a diconnect going forward between equities and the others? Up to this point the de-leveraging process has killed all of them.
Hey everyone Chairman Ben and Sec Paulson plan on measures to stimulate the credit market... whew! Now what exactly was that first 4 Trillion for again? Someone needs to say stop! enough is enough... well someone besides us...
From Bloomberg...
Even as Congress leans toward approving a controversial auto industry bailout and Democrats prepare a massive stimulus package, the heads of the Federal Reserve and Treasury are signaling that they, too, are planning more steps to ease credit and jump-start the economy.
With most economists expecting the Fed to cut the federal funds rate again at its mid-December meeting, the big buzz involves what new credit-easing measures may be in the works.
What the Fed Can Do Besides Cut Rates
Thus far this week, both Treasury Secretary Henry Paulson and Fed Chairman Chairman Ben Bernanke have either hinted at or made vague references to new measures. And given their use of innovative tools in trying to manage the crisis to date, itÂ’s likely the two policymakers will continue to try as many things as possible.
Given that cars were even easier to finance than houses, it really shouldn't be a surprise that a chart of new car sales is starting to look a lot like a chart of new home sales. It's been 26 years since we've had a real recession - this is what they look like.
....I guess the 12-miles a week I put on a vehicle isn't even charted anymore...
Cross posted this over at Econobrowser:
It really is extraordinary.
"The new meme will be that college is a waste of family resources so go learn a useful trade."
w | 12.03.08 - 11:36 am | #
Couldn't happen to a nicer bunch of overpaid people (academia).
And it only comes in black, and uses standard over-the-counter parts that don't change every year.
Never happen. That car company was swallowed up a long time ago, if it ever existed.
This was (and is) a global margin call----
Oil and distillates inventories are down (report just released)--
Let us see where we stand when we get to the other side of the wall we are about to crash into.
"Perhaps we are now at peak complexity."
Complex systems are usually not redundant or robust; they are prone to catastrophic failure due to minor breakdowns.
Tom Stone writes:
Ummm,where IS that fire escape?
That's what the window ledge is there for....
soxx
..... go toward the light.....
Yearning To Learn writes:
Perhaps we are now at peak complexity. Â… at a certain point even the aggregate human processing ability is breached. we may have come to that point.
Â…
I recommend the Easy Button by Acme. You can get them at Staples.
Shouldn't this have been an expected follow up to the sharp decline seen in October by general retail (ex auto).
I would not be surprised to see a less drastic decline (which some might call an improvement) in December.
I'm suddenly thinking of why it is that mansion houses of old had big old oak trees around them. The trees were a status symbol, as in, "Look how rich I am. My family didn't NEED to cut down these trees for fuel."
Wondering what the new status symbols will be 100 years from now. Will zaftig beauties be back in style? ("Look at how rich I am. I can afford to eat!")
deflation now; hyperinflation later.
I'll look forward to trading in my 2010 Chrysler Rickshaw Z-type for a pre-owned 2012 Pelosi GTxiSS/Rt Sport Edition
sometime in the summer of 2014.
Hopefully, I can get some decent aftermarket machine-gun turrets.
[It's been 26 years since we've had a real recession]
What we have now only resembles the recessions of a generation ago in the GDP contraction. Previous recessions were characterized by inventory builds & solved by low rates and production contractions until the levels got back into line.
With JIT manufacturing (such as it is in America) and everything lean this one is a totally different animal. A service economy can whack jobs at will...
Homedad (Totally OT):
homedad43 writes:
toyotaJoe:
yeah, when the teens haven't joined the church yet, they give 'em free rein for a while to get it out of their system.
When I was a teen, some of the sweetest wheels in town belonged to Amish teens who would keep 'em behind the local garage until Friday and Saturday nights.
Nicest was an early '70s GTO.
Just a weird sight to see teenage Amish boys driving around bopping their heads a la Wayne and Garth to AC/DC or Foghat.
homedad43 | Homepage | 12.03.08 - 11:47 am | #
A recent memory re Amish is a drive I took down a country road in MD where I came upon a drop-dead blonde beauty who was driving a three-horse plow or whatever, bare feet and all. If I were an Amish boy, I would not stray very far from the hearth.
...And it only comes in black, and uses standard over-the-counter parts that don't change every year...
Hey! Its a Model T!
ok, rally over... back to swingin in the trees
If I just wanted to double my money in the next four years and not pay attention to the markets I don't think there is any doubt in my mind I'd just sink it all in oil.
"Wondering what the new status symbols will be 100 years from now."
Depends on what robots, cyborgs and chimeras consider status symbols.
Since gas prices have drastically dropped, I'm wondering why the big 3 aren't able to sell the gas guzzlers? The cause & effect was fuel cost. Is the love affair with SUV's at an end or is everyone tapped out?
When does Israel whack Iran ? I thought it was Dec ?
Wally,
So true. I still remember being an innocent young competitive intelligence analyst at a telecom company in mid-2001, trying to reconcile what I saw in our abysmal balance sheets and shrivelling customer lists with the cheerful optimism and convoluted explanations involving EBITDA and burn rates coming from our CEO. I chalked it up to my inability as a humanities/marketing major to understand the intricacies of corporate finance and leading edge broadmand technology--until the company went TU and the CEO was indicted. It was a powerful lesson--it wasn't that I was too dumb to understand how finance works, the PTB invented overcomplicated instruments to make me and other observers think we were just too stupid to get it, while they were using investors' and media's fear of asking "stupid questions" to cover for their malfeasance and stupidity.
Somewhere along the line families and companies forgot the first rule of accounting--ultimately you have to take in as much or more than you expend to thrive as a going concern. If you can't do that, no amount of HELOCs, ARMS, or Credit Default Swaps will save you.
wally
yeah for the "want of a nail..."
trail writes: Hey! Its a Model T!
Toyota sort of has this mindset with the Scion line. One or two factory options per model, along with exterior color options. That way, thay can just turn the crank and minimize production cost. I think that is is a very smart move. They market these cars to kids who dont have a lot of extra $$$. Considering that J6P wont have a lot of extra $$$ in the coming years, I think you may see the successful auto makers adopt this model. If we are goign to stick with one color, I recommend white or tan though. Black is a PITA.
i can tell you this: as one simple minded consumer, cash rich, debt free decent credit, member of a credit union... blah blah..
I lost my tranny in my 99 Expedition it still sits in my garage, threw a rod in my 2001 sebring covertable (just towed to charity)... Wife has Envoy.. So i need new ride, right?
Tell wife i dont want car payments any more, not now...
went to Craigslist and bought a 1990 Jeep cherokee in Fairfax VA, one owner, for 800 bucks... had it for a month and does well on my daily 40 mile RT outside the beltway...
Figured its paid for itself already...
Why would anyone want a new car now? Deal with the finance manager that knows your a qualified buyer , 2nd one he's seen all month, he needs his commission, starts f'ing with your interest rate or extended warranty...
like i feel for the 75 dollar an hour union worker, or the FM at the dealer who now has to sell his boat and slip cause times are yougher than last year... F' em i say. Take bailout money, i'll never buy a car from you again, you should give me one, it's my money...
I state that the first phase of the depression is over. How bad the second phase gets depends on the repercussion impact of the first phase. If we experience severe contraction in Q1/2009, the bailouts to date are likely an expensive delay tactic.
It seems a bit arrogant to presume that a Keynes et al approach is superior. Where is the debate and discussion on this?
Imagine Bernanke years from now stating "I was wrong again!"
"Toyota sort of has this mindset with the Scion line. One or two factory options per model, along with exterior color options. That way, thay can just turn the crank and minimize production cost. I think that is is a very smart move."
Both Nissan and one of the Korean car makers just rolled out sub-10000 MSRP versions of their compacts (Nissan's was the Versa). For that price you get no sound system, air conditioning, and for all I know you have to crank the windows yourself.
But the running gear is the same as higher-priced models. I see these as becoming popular. Maybe by necessity.
rps writes:
Since gas prices have drastically dropped, I'm wondering why the big 3 aren't able to sell the gas guzzlers? The cause & effect was fuel cost. Is the love affair with SUV's at an end or is everyone tapped out?
Fuel costs just aren't that important. Try to buy a 2006 Civic at 32mpg versus a 2006 Explorer at 16mpg. $8000 even at $4 was 2000 gallons. Heck the $8000 would throw off $30/mo interest while buying down the gas difference.
No, it was consumer preference and credit and something we haven't talked about; retained value. That 2006 Civic? $19k new, $16k now with 70k miles. The Explorer? Do you need to ask?
New Car Smell Spray
(AP) The Ford Escape Hybrid SUV being driven to Washington D.C. by Ford CEO Alan Mulally has broken down outside of Wheeling, W.V. The tow truck dispatched to aid the disabled vehicle and Ford CEO was a GM product. Ford CEO Mulally became agitated and didn't allow the GM vehicle to tow the disabled Ford vehicle.
rps writes:
Since gas prices have drastically dropped, I'm wondering why the big 3 aren't able to sell the gas guzzlers? The cause & effect was fuel cost. Is the love affair with SUV's at an end or is everyone tapped out?
rps | 12.03.08 - 12:23 pm | #
The decline in gas prices occured so quickly that the general population believes the opposite could happen just as quickly. Basically it is a trust issue.
American's love big cars/SUVs. If gas prices stay low for a year or more I suspect you will see an uptick in SUV sales. As a side note I would love to drive a full size truck again. However I am waiting until a truly fuel efficient (30+ MPG city, more eco friendly, version is developed.
and to my more knowledgable investor friends here... explain me this..
if AIG is too big to fail, and supported to all expenses by bailout money... and their stock is at a buck 80, why wouldn't i buy a million shares? OK half a million? chances are I'll see them again at 10 bucks????
Does Michelle Cabrerra have an Adam's Apple ? She looks like one of those women Crocodile Dundee said you need to do a reach-around on, just to be sure.
"For that price you get no...
air conditioning..."
You'd have to be a masochist to drive without air conditioning in a DC summer. Or maybe someone who works in a ship's engine room when not on the beach.
Anon,
"(AP) The Ford Escape Hybrid SUV being driven to Washington D.C. by Ford CEO Alan Mulally has broken down outside of Wheeling, W.V. The tow truck dispatched to aid the disabled vehicle and Ford CEO was a GM product. Ford CEO Mulally became agitated and didn't allow the GM vehicle to tow the disabled Ford vehicle."
This sounds fake, no link either and google news search comes up with anything. Someone is trying to start a rumor.
YTL: Judging by your comments lately, you're on the upswing to peak thoughfulness and eloquence.
rps writes:
Since gas prices have drastically dropped, I'm wondering why the big 3 aren't able to sell the gas guzzlers? The cause & effect was fuel cost. Is the love affair with SUV's at an end or is everyone tapped out?
Well Ford is increasing production of the F150 Expired
As for SUV's, they are today's station wagons so the "love affair" with family size vehicles will continue unless your for defining a 'family' as no more than 2 people.
I think the real problem is the high cost of vehicles that was driven by government regulation and enabled by the housing ATM. Too many manufacturers ran upscale when lower cost competition entered the market. Now that credit and the ATM are gone they need to return to traditional financing models, just like homes.
When my daughter's friends get in my truck and see the hand window cranks, they are absolutely floored...Never saw such a thing, didn't know it existed. But they all think it's pretty cool...
Trail: heck, one of my phones is still a rotary phone, I bet that would blow their tiny minds!
"rps writes:
I'm gonna ask Don the car repairshop owner if he's going to go public and be offering IPO's in the near future. His shop is ALWAYS busy with older cars. Independent car repairshops is the next best place to invest for the next five years"
rps: my wife was an auto mechanic before going into accounting. She's saw the writing on the wall last year and has been fussing about opening up her own shop.
Bob Dobbs | Homepage | 12.03.08 - 12:29 pm | # For that price you get no sound system, air conditioning, and for all I know you have to crank the windows yourself...
funny story Bob was when i was in Ga commuting 160 miles a day to an AF base, went to buy an economical toyota from carmax... stripped bare of any factory options, hell the seat wouldnt even move... 9000 bucks, took it home and my then 4 and 6 yr old boys eagerly jumped in the back and strapped in for the ride in the new car...
before i backed out my boys yelled "daddy daddy whats this" and i turned around and they were pointing at the door... "what ?" i said and my oldest touch the crank, and i laughed, just like a dial on a TV or on a phone, my children had never seen one....
a day later i took it back, and got that 01 sebring convertable instead...
trail writes:
When my daughter's friends get in my truck and see the hand window cranks, they are absolutely floored...Never saw such a thing, didn't know it existed. But they all think it's pretty cool...
What about the vent windows
if AIG is too big to fail, and supported to all expenses by bailout money... and their stock is at a buck 80, why wouldn't i buy a million shares?
You need to understand where shareholders stand in the capital structure. I wrote something on this topic here. When the gov't injects capital, it stands ahead of the common shares.
Since gas prices have drastically dropped, I'm wondering why the big 3 aren't able to sell the gas guzzlers?
I don't know anyone who thinks gas will remain at these prices for too long. Escalades and Tahoes will be painful to the wallet again soon.
my wife was an auto mechanic before going into accounting. She's saw the writing on the wall last year and has been fussing about opening up her own shop.
I will not covet my neighbor's wife.
I will not covet my neighbor's wife.
I will not covet my neighbor's wife.
® | 12.03.08 - 12:34 pm | #
dont laugh, when i would do shut downs at the GM plants the UAW workers wouldnt allow my personal rodeo on th eproperty and were pissed my work trucks were volvo's even when i explained that GM owned Volvo and UAW workers in Indian might be pissed off to find out their boys in Atlanta didnt consider their vehicles american made...
dorks...
Goldman's results? :-
Jesse's Café Américain: Is Goldman Sachs Managing Its Earning Expectations?
U.S. oil inventories drop unexpectedly: EIA. subcommander doom
Since Aug '08 the Strategic Petroleum Reserve has NOT purchased oil. January 09 they will restart purchasing. I remember that Congress & Bush agreed to halt purchases until Jan '09. I think the SPR was purchasing 77,000 barrels per week.
Strategic Petroleum Reserve Inventory 2005
great one JP... the wife thingy
as far as comman shares of AIG, i understand but how long will that last... after they pay off the govt loan reap the rewards, what this tells me is that groups of investors know they will fail.... stocks are long term inc=vestments right?
I know it's hard to accurately gauge on that chart, but Dec. 2005, 2006 and 2007's numbers are awfully close to one another. Is that when fleet sales are counted? There can't be that many people parking cars with big bows on them in their driveways.
what this tells me is that groups of investors know they will fail.
They have already failed. AIG is insolvent, and anybody that is still in the stock either is betting that on the gov't (Obama) buying off shareholders, or does not understand capital structure.
I'm betting on the latter.
USG should pay owners $$$ to crush, drown, or otherwise destroy their SUVs and other gas-guzzling cars. It's green, it's main street, and it's sure to increase auto sales.
You heard it here first.
This is bad...real bad. Everything just stopped in October across the board. By next summer tenS of millions of unemployed in the US.
The service sectors are now cutting down like there is no tomorrow. Manufacturing sectors are going to follow soon. What is left? Selling lemonade? This is already Greater Global Depression.
Bob Dobbs,
I think that moving product lines back down into affordable(financeable) price points will be key to automakers' future wellbeing. Every new foreign automaker entering the US market started out with low end models with bare bones specs and then switched to bigger, more expensive designs to capture higher profit margins. Look at the difference between a Toyota Camry built in 1980 versus today. It's not surprising that Toyota is suffering sales declines along with the Big 3. They don't sell affordable cars anymore. They sell reliable, well made cars but buying one new requires a hefty down payment and long term financing.
Another farcical example is the Volkswagen Beetle. The first version of this was cheap, easy to maintain and reliable. It was no frills, but it got you around. When VW brought it back, it came back as an overpriced toy car for nostalgic 40 and older types.
@® (really hate that handle, btw):
Was Mr.Mulally also was quoted as saying he'd "rather push a Ford than drive a Chevy"?
heck, one of my phones is still a rotary phone, I bet that would blow their tiny minds!
mal
It was interesting for me to hear someone tell me how cool it was that vinyl LP's had "data" on both sides of the disc.
JP, I concur, AIG and the likes ARE insolvent Citi is insolvent. Ford and def GM, insolvent....
This is why we have bankruptcy...
How much of that sales volume in 2004-07 was buyers using refi and heloc money? I'd guess millions of people still have (relatively) new, paid for SUVs and monster trucks and won't buy another until they completely fall apart. Could be 4-5 years of declining sales ahead.
YTL: Judging by your comments lately, you're on the upswing to peak thoughfulness and eloquence.
thanks. I'm just more introspective of late, although that's probably pretty obvious.
I'm trying to put things in perspective, what's important and what's not. (to me)
There's a saying "you can't see the forest for the trees".
I'm trying to see the forest and the trees. but that's not enough. I also need to ponder the rain and soil that created them, and the resultant wood that was used to build and heat my home which keeps me alive. and that upon my death I will return to that soil and continue the cycle. it's all interconnected. but hard to see.
I want to feel the forest and the trees. with all senses. hokey, huh? it's like a mid-life crisis, but in a good way.
the CR crowd is amazing at amassing the details (trees), and also of putting it together (the forest), but sometimes there is a lack of emotion. analysis can strip the data of it's soul. so at times I feel like I'm looking at a picture of the forest and the trees, and not sitting in the forest and trees.
So I guess perhaps I'm an economic philosopher... at least for now. the non-poetic Pavel?
Sinomania! writes:
How much of that sales volume in 2004-07 was buyers using refi and heloc money?
A lot in the DC MSA.. you caan grab some great deals from some who are desperate to make a cpl of mortgage payments... 2006 and 7 title in hand, but need "OBO" even some must sell by this weekend...
"I will not covet my neighbor's wife.
JP | 12.03.08 - 12:41 pm"
Hehe. Oh she should not be coveted for that reason alone -- I'm the guy who has to deal with all of our car issues. On the other hand, hmmm... I do have a mechanic I can trust! Gold.
the CR crowd is amazing at amassing the details (trees), and also of putting it together (the forest), but sometimes there is a lack of emotion. analysis can strip the data of it's soul. so at times I feel like I'm looking at a picture of the forest and the trees, and not sitting in the forest and trees.
YTL: Actually if you think back it was emotion that made this blog so successful. We felt something wasnt right, we could see something wasnt right...
though the data and economist said otherwise....
you were part of that...
What about the vent windows
MPinCO
Never understood why vent windows disappeared.
JP, I concur, AIG and the likes ARE insolvent Citi is insolvent. Ford and def GM, insolvent....
I'm guessing the "Debt is the new wealth" model is passe and replaced with the 1979 vintage model; bailouts
I want a NON-manga-cake car(Unrated) writes:
What I'd love is a simple, no-gimicks and geegaws car, with the modern safety features, but without all the unnecessary "comfort" features like heated radio-knobs and hydrallic cup-holders. One with a basic, non-computer controlled engine, with easy access to change the oil filter myself, etc. And it only comes in black, and uses standard over-the-counter parts that don't change every year.
I want a NON-manga-cake car | 12.03.08 - 12:10 pm | #
I want - SCHNAPS has the car for you (see his Link above)... LMFAO!!!
"I think that moving product lines back down into affordable(financeable) price points will be key to automakers' future wellbeing. Every new foreign automaker entering the US market started out with low end models with bare bones specs and then switched to bigger, more expensive designs to capture higher profit margins."
Yeah, a new Civic today is bigger than an Accord 10-12 years back. That's why Honda, Nissan, Toyota all inserted new subcompact cars below their old no-longer-subcompact models a couple of years ago. The Honda Fit, in size and form factor, is essentially a mid-80s Honda Civic wagon.
so at times I feel like I'm looking at a picture of the forest and the trees, and not sitting in the forest and trees.
... don't pine for me argentina ?
Prof. H.
Love your textbook. But, could you make the next edition a bit lighter in weight?
". . . went to Craigslist and bought a 1990 Jeep cherokee in Fairfax VA, one owner, for 800 bucks... had it for a month and does well on my daily 40 mile RT outside the beltway..."
Warning: I had a similar Cherokee for 14 years. Ran good, etc., BUT it had no air bags nor any other crash minimizing stuff. So you are at risk in an accident—more so than almost any other vehicle. Later Cherokees had air bags, but I don't know if they were otherwise re-engineered.
The world moved past the inefficient dynamics of both union and management LONG AGO.
Silicon Valley is far from perfect, but the rate of advancement is wonderfully impressive. Business formation and liquidation is far more efficient.
The mentalities of Wall Street, Washington, and Detroit require liquidation.
so at times I feel like I'm looking at a picture of the forest and the trees, and not sitting in the forest and trees.
Lucky you. Is it the photo that CR took off the masthead?
YTL: Actually if you think back it was emotion that made this blog so successful. We felt something wasnt right, we could see something wasnt right...
actually you are right. I retract my original statement.
I think part of what made me say this was that CR has changed. not for the better or worse, it is just different.
more posts, more posters. data flying by. and it's huge swings, hard to comprehend. it becomes numbing.
remember the days when we'd get just 1-2 CR posts all day, and have all day to mull it over, and it might be an hour between posts? we might ONLY have rock blogging to discuss all weekend?
it left time for analysis, and since it was all predictions for the future it was more theoretical.
now the posts go by so blisteringly fast, and the number of responses is breathtaking.
the added information is definitely welcome, but it is somehow slightly less personal.
which is why I'm sure, many people really gravitate towards the intelligent posters (rich, dryfly, rob dawg, many more omitted) or the more colorful (conjure, CSC).
and that said, a lot of the "old" color is still present in the wee hours of the night... although it's been a while since I've seen a squirrel recipe.
but things are as they are. and CR is by far the best blog out there, for seeing the trees and the forest. and yes, even feeling the forest.
Wow, not replacing our cars every three years, what concept.
I'm still driving a 1996 Voyager. Where the hell is my hybrid minivan I've been waiting for for years now, Detroit?
Poor babies.
Lucky you. Is it the photo that CR took off the masthead?
ROFL.
that is probably one of the most insightful posts of the day!
I still REALLY miss that header... I've never understood why he took it off or why he never brought it back after we begged and begged!
it's all interconnected. but hard to see.Yearning To Learn
I'm thinking Aspens
I feel like I'm looking at a picture of the forest and the trees, and not sitting in the forest and trees.Yearning To Learn
I'm wondering if a store fails in a mall, will it make a sound?!!!!
I'm thinking that most of us are prescient and were screaming 6 years ago and even some who saw it coming during the Nixon years of going bankrupt on the Vietnam War and Nixon unilaterally canceled the Bretton Woods system and stopped the direct convertibility of the United States dollar to gold. We've been waiting a very long time for stragglers to catch-up to the rest-of-us and responsible adults in charge of the gubermint. Presently, we're in the "no go status quo" bailout phase. Still waiting for real long-term solutions versus squandering taxpayer dollars on the greedy bastards who created this mess. Heads up to Bailout Bob Rubin and the 1999 repeal of the Glass Steagall Act. Don't get me started on that greedy old fool Greenspan.
Allan: Silicon Valley is far from perfect, but the rate of advancement is wonderfully impressive.
It will be interesting to see SV operation in the new era, where cash is king and companies must be profitable.
Really the only worthwhile responses to these numbers:
YouTube - BORAT WANTS A HUMMER (read discription)
YouTube - Borat on What Women Like
Yeah, as an intro to the blog it stated "we're interested in truth, and we're willing to contemplate things to see the forest and the trees." The new form is cleaner and more business like, but it carries the false impression that the numbers will tell you what you need to know. (I also wonder if the trees had a calming effect on the commenters who were itching for a fight.)
Oh, apparently there are like 30 acres of cars stacked up at the port of Long Beach:
News - KTLA
YTL...
Good job, I feel the same way! I even am guilty of irrelavant posting, back when questions were a learning exerience. back when their were less than 20 posters... yeah i remember... I learned so much and was able to confirm so much with the "intelligent why" from the folks with so much inside knowledge. My problem is I got to where i changed my Name: everyday an dont even remeber who i was... maybe "Sybil" is a name i should stick with...
I too miss our conversations. But times have changed, and we went from "is anybody else see their houses selling 6X's PCI" to big 3 bailouts....
And we all laughed when he said "this is strictly contained to subrime" seems like years ago and it was june?
@ donna, "Oh, apparently there are like 30 acres of cars stacked up at the port of Long Beach"
See the NY Times's photo: A Sea of Unwanted Imports.
It's the reverse cardboard trade that's scariest:
But the inventory glut in Long Beach is not limited to imported cars. There has also been a sharp drop in demand for the portÂ’s single largest export: recycled cardboard and paper products.
This material typically goes to China, where it is used to make boxes for new electronics and other products that are sent back to the United States. But Chinese factories reacting to sharply falling demand are slowing production, so they need less cardboard. Tons of paper are piling up recycling businesses around the port, the detritus of economies on hold.
Very nice, YTL. But initially I didn't get the metaphor, so my first thought was, "If you sit in my forest and touch the trees, you're gonna get a bad case of poison ivy." Here in Alpharetta it isn't just the banks you've got to watch out for...
the CR crowd is amazing at amassing the details (trees), and also of putting it together (the forest), but sometimes there is a lack of emotion.
It's a situation where the appropriate level of emotion turns you into Jas Jain or the Unabomber. Neither really contributes to a solution.
Also, there's no doubt many people here have feelings about this and strategies for dealing with it. Tanta didn't get quoted by Federal Reserve researchers 'cause she sent them a monograph for their opinion.
Keep in mind people need to keep their game faces on so you can't later match an identity to the comments and retrospectively read their mind / strategic thinking. Imagine the investment opportunities if you knew which regular poster was a Fed president.
at times I feel like I'm looking at a picture of the forest and the trees, and not sitting in the forest and trees.
You are always doing both. =)
Not giving up my '93 Camry.
6 with fuel injection. Power. Sunroof. Good mileage. Fast. AC, and a CD player, too.
Not giving it up. And you can't make me, so there.
Not buying a new car, not buying a "new" used car, not now, not ever.
I will fix anything that wears out or breaks, and I will do it until the Earth is consumed by the final expansion and heat death of the Sun.
Just saw a poll where only 61% of Americans opposed the bailout for the Big Three. This means it is shoe-in.
there is something greatly ironic about the US gov't working so aggressivily to forestall house price drops to match the compressing wages associated with all this retructuring and bailouts. So not only will the minions be unemployed but they will never be able to buy the house either. And ythat low interest rate does nothing to get you the new 20% down.
FRED(Excellent) writes:
there is something greatly ironic about the US gov't working so aggressivily to forestall house price drops to match the compressing wages associated with all this retructuring and bailouts.
Bah, what is this, consideration of second-order & unintended consequences. If you don't spend the last few auctionable megagrandchildren worth of debt obligations the USG can incur, you just don't understand the consequences.
Haven't you gotten the memo? We'll of course make a new emergency program to solve the problems created by the current emergency programs. Soon, everything will be taken care of, and it'll be back to entitled prosperity and unexamined arrogance for the American Republic.
mangled metaphor warning
It feels like we're all a bunch of blind men each holding a different part of the elephant's big toe -- one thinking "It's a rat," another, "it's a pig's snout" while the maharaja laughs himself to tears, riding high above.
There are actually institutions set up to study complexity. The only practical knowledge I've ever seen (could be tons, just what I've seen) is from an economist that had decided that economists need to pay far more attention to psychology if they really want to understand. Santa Fe Institute worries me in particular. They had a very prominent mortgage guy and some other dubious characters sitting on their board last I checked last year.
The real argument for a Big 3 bailout:
The bailout of AIG represents the last desperate rearguard action by the CDS dealers and the happy squirrels at ISDA, the keepers of the flame of Wall Street financial engineering. Hopefully somebody will pull President-elect Obama aside and give him the facts on this mess before reality bites us all in the collective arse with, say, a bankruptcy filing by GM (NYSE:GM).
You see, there are trillions of dollars in outstanding CDS contracts for the Big Three automakers, their suppliers and financing vehicles. A filing by GM is not only going to put the real economy into cardiac arrest but will also start a chain reaction meltdown in the CDS markets as other automakers, vendors and finance units like GMAC are also sucked into the quicksand of bankruptcy. You knew when the vendor insurers pulled back from GM a few weeks ago that the jig was up.
And many of these CDS contracts were written two, three and four years ago, at annual spreads and upfront fees far smaller than the 90 plus percent payouts that will likely be required upon a GM default.
window vents went bye bye because of break ins.
Porsches can be had cheap right now. The cayman s 2008 sticker price is $15k below 2006 sticker price, if paying cash you could probably knock another $7k off easy.
Stratonovich calculus writes:
...The real argument for a Big 3 bailout...
And you really think a "small 3" bailout will stemm that 50 billion CDS avalanche ?
Comrade Byzantine_Ruins writes:
...
Imagine the investment opportunities if you knew which regular poster was a Fed president.
...
Comrade Byzantine_Ruins | Homepage | 12.03.08 - 1:33 pm |
So, Jas is a Fed president?
When the folks in the union job bank lose their do-nothing salaries, do they get counted as newly unemployed?
"The UAW, scrambling to preserve jobs and benefits that could disappear with an automaker collapse, agreed at an emergency meeting in Detroit to delay the companies' payments to a multibillion-dollar, union-run health care trust and scale back a jobs bank in which laid-off workers are paid most of their salaries."
Stratonovich calculus,
Remember seeing that. Don't know if the bailout will prevent the CDS domino effect or more likely allow it to teeter precipitously until it cascades into a downspiraling pit. Nonetheless, they will deliberately sweep unions into the dustbin at the same time and achieve their dream of returning to the slave labor model.
Jett Rink(Unrated) writes:
So, Jas is a Fed president?
That would make the FOMC meeting minutes awesome. Would they include all caps segments?
The committee belives that the risks to the economy posed by GANGSTERS on one hand and BORN AND BRED AMERICAN DOPES on the other hand are roughly equal.
gn writes:
USG should pay owners $$$ to crush, drown, or otherwise destroy their SUVs and other gas-guzzling cars. It's green, it's main street, and it's sure to increase auto sales.
I'll go with that. Where do I sing up? I think my '93 Suburban is worth, oh, say, $15,000?
byz: ha!
@ Werner, 'you really think a "small 3" bailout will stemm that 50 billion CDS avalanche?'
No, but others are making this argument in print, and no doubt in private.
threetorches - I'm in your league with vehicles -
1990 Mercedes E300D and 1994 F250 diesel both running on waste vegoil, and 2000 Honda Accord
1990 Mercedes E300D
Do you have it painted and rebadged as a Panzer? It is a tank after all. When you get it broken in circa 300k miles you might consider a first service call.
Rob Dawg- I think you are falling into the conventional economics trap. If consumers were willing to delay purchases because they were going to be cheaper in the future why would any of them charge a purchase to a credit and pay upward of 20% interest effectively a 10% price increase if it takes a year to payoff the purchase.
This whole deflation meme assumes a degree of consumer self control that simply doesn't exist. Consumers will delay purchases because they don't have the credit but it won't be because of prices. We are a society of instant gratification which is why we are in the mess.
the discussion on CDS to say the least has been disappointing. AIG was unique in the CDS because it was a large NET writer of protection based solely on its credit standing. It essentially anchored one end of the CDS chain. The other net writers e.g. hedge funds were much smaller and all were required to post collateral. For the rest of the intermediaries their aggregate exposure is large but their net exposures are relatively small.
crazyvermonter writes:
Rob Dawg- I think you are falling into the conventional economics trap. If consumers were willing to delay purchases because they were going to be cheaper in the future why would any of them charge a purchase to a credit and pay upward of 20% interest effectively a 10% price increase if it takes a year to payoff the purchase.
This harkens back to some of my earliest posts on CR. The oversimplified concept is called "the monthly nut." Debt didn't matter only debt service. I don't think there's as much onerous consumer credit as you suggest. I carry huge balances. I'm a bad boy. I have 1.99% balances that are also on deposit as 3.67% short term CDs. Anything I charge that has a real rate, I pay off every month. Still, I cycle relatively high balances.
If Tanta were here she'd set you straight for suggesting I ever think in terms of conventional economics.
The problem is people were spending beyond their means and not saving. When you do that, everything unravels because it's unsustainable and the day of reckoning will come (as we're seeing) when you won't be able to buy anymore and are struggling to pay off your obligations from yesterday.
This is the problem you get into when you try to borrow and spend your way to prosperity, beyond your actual means to pay for it (i.e. income).
SC @ 1:25pm
The effects are already moving back up the chain, the owners of a local mill (largest employer of a small town), that makes cardboard used in boxes, has announced it will shut down for a week. Everyone will be laid off for that week except for a few salaried office people. Just the beginning, I imagine.
OT but indicative of slowdown: Amtrak's long distance west coast train, the Coast Starlight, & the short distance train(s), the Cascades, have seen an increase in OTP (the Cascades had 90%+ OTP one week recently)--& it's at least partly due to the decreased number of freight trains run by the host freight railroads.
"You see, there are trillions of dollars in outstanding CDS contracts for the Big Three automakers..."
Easily fixed. The government buys out the 1 percent of CDS contracts that are true hedges. As for the other 99 percent that are pure speculation? Declare them illegal gambling. Fine the holders of these contracts. Build concentration camps.
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