Monday, December 01, 2008
Throw The "D"(epression)
For unexplainable reasons, I find myself listening to a lot of late-80s/early-90s hip-hop -- of the Ice Cube/N.W.A. variety. Who knows, maybe it's because that was the last serious economic downturn (the '00 tech bubble and '01 dips don't count for a variety of reasons).
In any event, as the Dow Jones plunged another 679 points Monday (ending a five-day fakeout rally), it's looking like this recession is going to make the '90-'91 one look like a walk in the park.
So much for that.
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In any event, as the Dow Jones plunged another 679 points Monday (ending a five-day fakeout rally), it's looking like this recession is going to make the '90-'91 one look like a walk in the park.
- According to the National Bureau of Economic Research (NBER), the United States economy has been in recession since Dec 2007. Why does that not surprise me? I can't believe we are paying seven prominent economists, who make up the NBER, to tell us something most of us already know and have felt as we watched our investments wither away in value.While that "D" word is being tossed around, Peggy Noonan seconds my view that Obama might as well forget about his presidential honeymoon. More precisely, his "honeymoon" is now -- trying to balance a position of no power, except that is to calm the markets. That seemed to work for a few days as his economic team was being rolled out.
- Mr. Bernanke, in a speech today, warned that the economy would "probably remain weak for a time," with particular problems ahead for exports and household spending. Another piece of insight that I am sure we all did not already know. He went on to make another blatantly obvious statement - "Judging the effectiveness of the Federal Reserve's liquidity programs is difficult". Here's my judgement - the bailout and rescue plans have NOT worked! By the time they take effect we may all be broke.
- More analysts have stopped calling a market bottom, instead changing their talk to how low the market can go. Is Dow 5000 in sight as I wrote a few weeks ago? Just last week a number of these overpaid analysts were saying that the market has bottomed. Also, you know when the CNBC "experts" start getting pessimistic about equities in a broad sense, then things are really bad.
- The manufacturing sector of the U.S. economy slumped at the fastest pace in 27 years in November. Further, manufacturing gauges in China, the euro zone and the U.K. each showed significant drops, with the Chinese and British gauges dropping to record lows. Clearly folks all over the world are not buying things, and so the companies that make things either are going to seek government assistance or go bust. Either way, it paints a dark scenario in terms of employment and economic growth for the year ahead.
- Crude oil futures plunged 8% to trade below $50 a barrel, amid economic concerns and as OPEC chose to postpone further production cuts. Normally this would be a good thing, but in an ironic twist, Oil has become a barometer for the future health of the economy. Falling oil prices are a signal that global demand and growth are contracting. Here's hoping to higher oil prices!
- The National Retail Federation estimated that shoppers spent 7.2% more than last year during Black Friday and Thanksgiving weekend shopping, but another poll found that 70% of consumers only purchased deeply-discounted merchandise. This means that while the sales volume's were higher, the profit margins of the retailers did not benefit. And a company that does not make money, cannot stay in business long. Unless you are a US automaker that is.
- Oppenheimer's leading and well known analyst Meredith Whitney said, "Credit Card companies will reduce lending by more than $2 trillion over the next 18 months in a dangerous and unprecedented move for U.S. consumer spending. There are signs of "broad-based declines" in consumer access to capital". So the primarily business credit crunch, will become a full blown consumer credit crunch. With consumer spending driving more than 60% of US GDP, this is a grim prognosis. While the longer term impacts of reducing our dependence on credit will be a good thing, short term it will be brutal to our already weakened economy.
So much for that.
Labels: depression, U.S. economy
Monday, November 24, 2008
Obama's Sells Out The Liberals...
Before election day!!!
Glenn Greenwald is stunned by the outrage on the left at some of Obama's picks. Kirsten PowersSenate Democratic conference. Not even sworn into office yet and Obama seems to be throwing his left-wing overboard.
My gut tells me that it is far too early to make a true judgment about that -- though it is telling that it is the left more troubled by Obama's picks than the centrist Democratic Leadership Council
Of course, the fact that his economic team appears about as centrist as his prospective foreign policy squad, is undoubtedly likely to cause even more agita in the progressive communities.
Obama appears to be focusing on "named quality" in assembling his administration. This is, arguably, a "best and the brightest" group that he has put together. My only concern might be that that was -- on paper -- the perception of George W. Bush's Cabinet when first named: Dick Cheney, Colin Powell, Don Rumsfeld, etc., were initially seen as an All-Star squad of foreign policy adults that would keep the ship of state sailing in a calm direction under the untested George W. Bush.
Obviously, things didn't quite work out that way.
expands further on Obama's apparent decision to govern as a moderate -- including keeping Joe Lieberman around in the
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Glenn Greenwald is stunned by the outrage on the left at some of Obama's picks. Kirsten PowersSenate Democratic conference. Not even sworn into office yet and Obama seems to be throwing his left-wing overboard.
My gut tells me that it is far too early to make a true judgment about that -- though it is telling that it is the left more troubled by Obama's picks than the centrist Democratic Leadership Council
Of course, the fact that his economic team appears about as centrist as his prospective foreign policy squad, is undoubtedly likely to cause even more agita in the progressive communities.
Obama appears to be focusing on "named quality" in assembling his administration. This is, arguably, a "best and the brightest" group that he has put together. My only concern might be that that was -- on paper -- the perception of George W. Bush's Cabinet when first named: Dick Cheney, Colin Powell, Don Rumsfeld, etc., were initially seen as an All-Star squad of foreign policy adults that would keep the ship of state sailing in a calm direction under the untested George W. Bush.
Obviously, things didn't quite work out that way.
expands further on Obama's apparent decision to govern as a moderate -- including keeping Joe Lieberman around in the
Labels: Barack Obama, U.S. economy
Tuesday, October 21, 2008
Feasting At The Spread
Ross Douthat has a couple of posts up on the intricacies and efficacy of the "spread the wealth" argument -- against Obama and in general.
Joe the Plumber's insta-celebrity aside, I think there's a very simple reason why the "socialism" label isn't sticking to Obama right now. It's not his seeming teflon hide: It has to do with the economic mess the country is in. My hunch is that, yes, a certain portion of the electorate feels that there needs to be greater role of the government in this age of instability.
But there's another sentiment as well: It's not envy of the wealthy right now, but just plain resentment. While it is true that subprime loans -- and the failure to pay them -- is one reason for the near credit meltdown. But, it is the uber-trading of derivatives and Texas Hold 'Em-type financial gambling that the average person can't even pretend to understand ("credit-default swaps"? $63 trillion liability?) that put the entire system in danger.
In this sort of atmosphere, is it any wonder that the average person might think --"Look what these corporate a-holes have done with this obscene wealth!?!? Damn right it should be spread around!!"
Again, that's not an endorsement of socialism, but it is a human reaction to a sense of plutocracy run amok.
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Joe the Plumber's insta-celebrity aside, I think there's a very simple reason why the "socialism" label isn't sticking to Obama right now. It's not his seeming teflon hide: It has to do with the economic mess the country is in. My hunch is that, yes, a certain portion of the electorate feels that there needs to be greater role of the government in this age of instability.
But there's another sentiment as well: It's not envy of the wealthy right now, but just plain resentment. While it is true that subprime loans -- and the failure to pay them -- is one reason for the near credit meltdown. But, it is the uber-trading of derivatives and Texas Hold 'Em-type financial gambling that the average person can't even pretend to understand ("credit-default swaps"? $63 trillion liability?) that put the entire system in danger.
In this sort of atmosphere, is it any wonder that the average person might think --"Look what these corporate a-holes have done with this obscene wealth!?!? Damn right it should be spread around!!"
Again, that's not an endorsement of socialism, but it is a human reaction to a sense of plutocracy run amok.
Labels: socialism, U.S. economy, Wall Street
Friday, October 10, 2008
Ragged Depressing/-ion Thoughts
Yeah, it's difficult to have the usual happy-go-lucky attitude when one wakes up to yet another day of Wall Street in meltdown, the outgoing President Clueless having no idea what to do to reassure either the markets or the public and the aspirants for his job don't exactly sound like they have magic bullets with which to fix the situation. And the stock market goes on its daily roller-coaster ride (a 1000 point swing today, from minus-700 to plus-300 before settling down "only" 128 points).
1) Iceland is bankrupt. In light of everything else, perhaps that's not a major issue (Pakistan's problems are far greater in the big picture). However, the fact that the United States is clearly not in any position to try to help -- but Russia (despite sliding oil prices) is -- really underscores the US's suddenly weakened poisition as an economic player.
Gotta love that great refrain, "Anger is an energy, anger is an energy, anger is an energy..."
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Though this is usally a politics-obsessed blog, I'm not going to just aimlessly talk about whether McCain is whipping up his crowds into an Obama-hating frenzy or whether Obama should have distanced himself from Bill Ayers 15 years ago.
Instead, even though (or perhaps, because) I'm not an economics or financial expert, I thought I would just post some items that have caught my eye in recent days touching upon the enormity of the problems facing the country (and world).
1) Iceland is bankrupt. In light of everything else, perhaps that's not a major issue (Pakistan's problems are far greater in the big picture). However, the fact that the United States is clearly not in any position to try to help -- but Russia (despite sliding oil prices) is -- really underscores the US's suddenly weakened poisition as an economic player.
2) Italy's Berlusconi says that the world leaders are considering briefly closing down the financial markets. I do believe that the Depression equivalent of this was a "bank holiday." Not good (as a sign, I mean).
3) My friend and former Newt-world colleague Rich Galen says all that needs to be said about A.I.G. and their spa-going junket partiers. In words of one phrase, f**k 'em. Here's a sad thought: Paulson made the wrong gamble -- the US arguably should have bailed out Lehman Bros. and let A.I.G. sink, instead of the other way around. Had that happened, the current crunch might have been averted (given that Lehman's demise had a greater ripple effect on the credit markets than A.I.G.'s would have).
Finally, in honor of the GOP's collective heads exploding over the boost that the bad economy is giving to Barack Obama's presidency, let's head into the weekend with this classic from Public Image Ltd:
Gotta love that great refrain, "Anger is an energy, anger is an energy, anger is an energy..."
Labels: financial meltdown, U.S. economy, Wall Street
Monday, March 17, 2008
"Bear" Market
Okay, I will be the first to admit that I'm not a financial markets expert. This is predominantly a blog on politics, pop culture, sports, etc.
But there's one major national story today and it's not on on the above list. Trust in other investment banks are collapsing. The market fever is spreading into both the tech and energy sectors. Gold is looking good, though.
A CNBC talking head said this morning that the Fed has had the wrong answer to this ongoing crisis for the last year -- cutting interests rates (which European central banks have not done), helping fuel inflation and the ongoing collapse of the dollar?
Obviously, there are political implications. What I find fascinating is how the major candidates are falling into their stereotypical positions:
John McCain -- pushing his credentials as a foreign policy/national security person -- is traveling from Iraq to Israel.
Meanwhile Barack Obama is dealing with the continued fallout of his longterm relationship with Mr. Wright (yeah, pun intended) -- much to the glee of both right-wingers and Hillary Clinton (yeah, she will be the Dem nominee -- suck it up, everyone).
But, what do any of these candidates have to say about the collapse of a major investment bank?
That's what we should be looking at today -- of course, I wouldn't mind my new governor mentioning some of these things when he's sworn in today at 1 PM, cause, you know. Wall Street tumbling isn't exactly good for New York's local and state economy too.
Is it too early to say the sky is falling? Well, some New Yorkers have reason to take that literally given recent news that may be connected to concerns over over-construction.
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But there's one major national story today and it's not on on the above list. Trust in other investment banks are collapsing. The market fever is spreading into both the tech and energy sectors. Gold is looking good, though.
A CNBC talking head said this morning that the Fed has had the wrong answer to this ongoing crisis for the last year -- cutting interests rates (which European central banks have not done), helping fuel inflation and the ongoing collapse of the dollar?
Obviously, there are political implications. What I find fascinating is how the major candidates are falling into their stereotypical positions:
John McCain -- pushing his credentials as a foreign policy/national security person -- is traveling from Iraq to Israel.
Meanwhile Barack Obama is dealing with the continued fallout of his longterm relationship with Mr. Wright (yeah, pun intended) -- much to the glee of both right-wingers and Hillary Clinton (yeah, she will be the Dem nominee -- suck it up, everyone).
But, what do any of these candidates have to say about the collapse of a major investment bank?
That's what we should be looking at today -- of course, I wouldn't mind my new governor mentioning some of these things when he's sworn in today at 1 PM, cause, you know. Wall Street tumbling isn't exactly good for New York's local and state economy too.
Is it too early to say the sky is falling? Well, some New Yorkers have reason to take that literally given recent news that may be connected to concerns over over-construction.
Labels: Bear Stearns, U.S. economy, Wall Street
Monday, November 12, 2007
Dollars To Donuts
While the subprime meltdown and the subsequent havoc it is causing on Wall Street has dominated the headlines, the collapsing dollar hasn't gotten nearly enough attention.
That's beginning to change. The New York Sun discusses it in light of an exchange from this summer between Ron Paul and Fed Chief Ben Bernanke. The Sun notes that in July Paul was using the word "crisis" with respect to the dollar. Bernanke didn't see a crisis. The paper also surmises that Paul's prescience may be an explanation for his "surprising" campaign:
Clearly, Paul's principled stance against the war has a lot to do with it, but he is also the only person -- in either party -- talking about what to some is economic arcana.
On Sunday, my colleague Braden Keil addressed at length the real-world impact that the dollar imbalance is having on the New York economy -- as Europeans gobble everything up at (for them) rock-bottom prices:
Given some of the dire concerns raised in another Sun column, the end result of these trends may mean that, contrary to what the conventional wisdom driving the present political debate suggests, Iraq may actually rank a distant second to the economy as the critical issue in next year's election.
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That's beginning to change. The New York Sun discusses it in light of an exchange from this summer between Ron Paul and Fed Chief Ben Bernanke. The Sun notes that in July Paul was using the word "crisis" with respect to the dollar. Bernanke didn't see a crisis. The paper also surmises that Paul's prescience may be an explanation for his "surprising" campaign:
[W]e're of the view that it relates to the substance. We have a lot of differences with Mr. Paul, but on monetary matters, we've been covering him since his days, in the early 1980s, as a member of the United States Gold Commission, when he coauthored, with New York's own Lewis Lehrman, a minority report favoring a return to a version of the gold standard. What can be said about Mr. Paul is that he's not only ahead of Mr. Bernanke but also of his fellow Republicans, and he will eat into their standing until they address the question of the soundness of our currency.
Clearly, Paul's principled stance against the war has a lot to do with it, but he is also the only person -- in either party -- talking about what to some is economic arcana.
On Sunday, my colleague Braden Keil addressed at length the real-world impact that the dollar imbalance is having on the New York economy -- as Europeans gobble everything up at (for them) rock-bottom prices:
While it's positive for jobs that foreign money is pouring into our restaurants, hotels, retail stores and real estate, it's also pricing us out of our own market. Everything - from rentals to luxury goods to meals - is being kept artificially high by foreign visitors. That $50 entrée? Chump change to someone who got $2 for every pound they brought through customs. And don't think that the housing dip affecting the rest of the country means you might finally be able to afford a place in Manhattan - or even Brooklyn. Europeans are snapping up the “sales."Many on the left have decried what they see as America becoming "Walmart Nation" -- meaning that the Superstore's low prices that undercut the competition is driving "Mom and Pop" stores out of business. But, one could also say that the dollar fall has created a different form of "Walmart Nation" actually turned the U.S. into one large Walmart -- "always low prices."
Given some of the dire concerns raised in another Sun column, the end result of these trends may mean that, contrary to what the conventional wisdom driving the present political debate suggests, Iraq may actually rank a distant second to the economy as the critical issue in next year's election.
Labels: dollar depression, U.S. economy
