News Can the market alone fix the economy?

[WhoWee]

He has said this from the beginning - that we cannot continue on the current fiscal path indefinitely. Again this gets back to people not listening. The legitimate point of contention is how reduce the deficit. Obama is following a plan that seeks to reduce debt by maximizing GDP growth. A flat growth curve with no government spending could be more damaging than massive spending now aimed at ensuring long-term growth.

Anyone who thinks the Obama team is not well aware of the threat of inflation and excessive debt, is living with their head in the sand.

Also, China cannot allow us to fail - we are too big to fail! They need our purchasing power as much as we need their loans.

This is the first time I've heard Obama give this speech...do you have a previous link? His spending makes Bush look like a piker.

 

[mheslep]

They were manufactured in Brazil. If US companies and contractors are hoping for subsidies for "green power", it would be nice if the taxpayers that pay for the subsidies are also the ones being employed.

http://www.renewbl.com/2009/05/04/first-turbine-blades-delivered-to-eastport-in-maine.html

Yes, thanks. Its not clear how much role GE had in manufacturing. Apparently the turbines are the standard 1.5MW design, but GE says it has an agreement with Brazilian company EDP to make make a couple hundred turbines. GE claims its wholly owned manufacturing is in Germany, Spain, China, Canada, US.
http://www.ge-energy.com/about/press/en/2007_press/102307.htm

 

[turbo]

Yes, thanks. Its not clear how much role GE had in manufacturing. Apparently the turbines are the standard 1.5MW design, but GE says it has an agreement with Brazilian company EDP to make make a couple hundred turbines. GE claims its wholly owned manufacturing is in Germany, Spain, China, Canada, US.
http://www.ge-energy.com/about/press/en/2007_press/102307.htm

The point is that at some time (not too far from now) manufacturers will be looking for some sort of federal subsidies, and they should NOT be granted unless the manufacturing (not just assembly of foreign-made components) is done in the US.

 

[mheslep]

The point is that at some time (not too far from now) manufacturers will be looking for some sort of federal subsidies, and they should NOT be granted unless the manufacturing (not just assembly of foreign-made components) is done in the US.

Yes I understand your point.

 

[WhoWee]

Yes, thanks. Its not clear how much role GE had in manufacturing. Apparently the turbines are the standard 1.5MW design, but GE says it has an agreement with Brazilian company EDP to make make a couple hundred turbines. GE claims its wholly owned manufacturing is in Germany, Spain, China, Canada, US.
http://www.ge-energy.com/about/press/en/2007_press/102307.htm

Between green energy, healthcare, the "smart grid' and GE Capital (TARP) it seems GE is well positioned with the Obama administration. Maybe there is a legitimacy to the complaints that NBC is pro-Obama?

 

[WhoWee]

In the context of a tax incentive consulting project, I met with 3 unrelated manufacturing companies in western PA this week that are shutting down...about 5,000 workers. A fourth manufacturer was scheduled...but their phone was disconnected.

The first has 3 plants and sells to GM, the second manufacturers electrical controls and the third (surprisingly) makes industrial molds and last year geared up to focus on parts for wind turbines. They received a good deal of press and political pats on the back (visits to the plant by prominent politicians), but the strategy didn't work.

Also worth mentioning, about 1/2 of the manufacturers interviewed (about 50 total) are European based. They bought plants in the Rust Belt to take advantage of tax incentives...a few have implied that it might be time to re-think the overall investment strategy.

 

[WhoWee]

The United Auto Workers are obviously more important (to Obama) than owners of dealerships (small businesses with large at risk investments) and their employees (that outnumber UAW workers).

http://finance.yahoo.com/news/UAW-says-it-has-reached-deal-apf-15318645.html

50% of GM will be set aside for the UAW

"GM has about 61,000 hourly workers in the U.S. but plans to take that number down to 40,000 by 2010."

 

[WhoWee]

Quinn and Rose are always "fun" in the AM (Pgh based).
http://www.warroom.com/sample.mp3
This clip is from 5.20.09 and basically covers this topic (The Cloward/Piven Strategy of Economic Recovery) as it relates to Obama and the economy:

http://www.americanthinker.com/2009/02/the_clowardpiven_strategy_of_e.html
or
http://www.washingtontimes.com/news/2008/oct/15/the-cloward-piven-strategy/
or this (although I'm not sure WHO actually posted this?)
http://cloward-piven.com/

What was Arsinio Hall's line..."things that make you go hmmm"?

 

[B. Elliott]

Just ran across this on Yahoo News.

To cover both wars, Senate passes $91.3B bill

WASHINGTON – The Senate is backing President Barack Obama's efforts to ramp up the war in Afghanistan, granting his request for $91.3 billion for military and diplomatic operations there and in Iraq.

The spending bill, approved on an 86-3 vote Thursday night, goes to congressional negotiators to work out a compromise with a similar measure the House passed. Lawmakers expected to present a bill for Obama's signature next month.

http://news.yahoo.com/s/ap/20090522/ap_on_go_co/us_congress_war_funding

 

[mheslep]

Just ran across this on Yahoo News.

To cover both wars, Senate passes $91.3B bill

http://news.yahoo.com/s/ap/20090522/ap_on_go_co/us_congress_war_funding

I thought the President's plan was to now roll all the war spending into the main budget bill so that the budget reflected all spending. This is a separate bill?

 

[Astronuc]

I thought the President's plan was to now roll all the war spending into the main budget bill so that the budget reflected all spending. This is a separate bill?

I'm wondering that as well - it doesn't seem to be under the normal Defense Appropriations bill, so I expect it may be supplemental, especially since it's mid year.


And - Obama's Stimulus Projects Won't Amount to Major Infrastructure Overhaul
http://news.yahoo.com/s/usnews/obamasstimulusprojectswontamounttomajorinfrastructureoverhaul

Describing the $787 billion stimulus package, President Obama evokes the 1950s construction of the interstate system, conjuring images of highways, bridges, and orange cones. "Throughout our history, there have been times when a generation of Americans seized the chance to remake the face of this nation," he said last month. "And that's what we're doing today: building a 21st-century infrastructure." [Read Grading Obama's Stimulus Gamble]

This stems from the law's main purpose: creating jobs quickly. It prioritizes projects that will be completed within three years. Major highway construction typically takes 13 years from start to finish, reports the Federal Highway Administration.

However, it would appear that rather than creating new jobs, the stimulus bill simply maintains current jobs. So what happens to those jobs once the money is spent?

So more than three quarters of the approved highway projects' funds will go to repaving and widening roads, while less than 6 percent will pay for new construction, according to the investigative nonprofit ProPublica. Other reports show that smaller, rural projects, like bridges, often receive funding priority over those that might get more traffic, largely because they can be launched more quickly.

But as projects are chosen, it's becoming clear that the program may amount to little more than an infrastructure face-lift. Owing to the need for speed and to institutional obstacles, most stimulus transportation projects are small and localized. "Here and there, people will notice things," says Robert Poole, director of transportation policy at the libertarian Reason Foundation. He cites repaired potholes and new streetlights. "But I don't think the country as a whole will say, 'Wow, transportation is so much better,' " Poole says.

That doesn't necessarily make the spending ineffective. One quarter of major urban roads, for example, are in poor condition and would benefit from repairs. But it does mean that few projects will have sweeping effects.

I imagine the Stimulus funding will be largely short term. A major restructuring of the economy seems necessary.


Meanwhile - Job Losses Push Safer Mortgages to Foreclosure
http://www.nytimes.com/2009/05/25/business/economy/25foreclose.html

. . . .
With many economists anticipating that the unemployment rate will rise into the double digits from its current 8.9 percent, foreclosures are expected to accelerate. That could exacerbate bank losses, adding pressure to the financial system and the broader economy.

“We’re about to have a big problem,” said Morris A. Davis, a real estate expert at the University of Wisconsin. “Foreclosures were bad last year? It’s going to get worse.”

. . . .
Economy.com expects that 60 percent of the mortgage defaults this year will be set off primarily by unemployment, up from 29 percent last year.

. . . .

The statistics are troubling.

. . . .
From November to February, the number of prime mortgages that were delinquent at least 90 days, were in foreclosure or had deteriorated to the point that the lender took possession of the home increased more than 473,000, exceeding 1.5 million, according to a New York Times analysis of data provided by First American CoreLogic, a real estate research group. Those loans totaled more than $224 billion.

During the same period, subprime mortgages in those three categories increased by fewer than 14,000, reaching 1.65 million. The number of similarly troubled Alt-A loans — those given to people with slightly tainted credit — rose 159,000, to 836,000.

Over all, more than four million loans worth $717 billion were in the three distressed categories in February, a jump of more than 60 percent in dollar terms compared with a year earlier.

. . . .

 

[Astronuc]

GM bankruptcy may spell relief, not upset, for stocks
http://www.marketwatch.com/story/gm-bankruptcy-might-spell-relief-for-stocks

SAN FRANCISCO (MarketWatch) -- A bankruptcy filing by General Motors Corp., which approaches a key deadline with bondholders late Tuesday, may incur more relief than distress among stock investors, some analysts say.

"My feeling is that the market will welcome a bankruptcy filing by GM," said David Joy, chief market strategist at Minneapolis-based RiverSource Investments, which manages $128 billion.

The likelihood of a bankruptcy by the nation's largest automaker, buckling under unmanageable debt levels and sinking car sales, has increased in recent weeks.

. . . .

Consumers' confidence surges on brighter jobs view, BUT
U.S. home prices still falling at record pace

Unemployment is expected to worsen, but at a slower rate.

G.M. Bankruptcy Would Need Army of Advisers
http://www.nytimes.com/2009/05/26/business/26auto.html

DETROIT — The decline of General Motors may be putting thousands of auto workers and managers out of work, but it will be putting a lot of lawyers to work.

How many lawyers will end up working on G.M.’s expected bankruptcy case still is not clear, but in legal circles, the joke is that there may not be enough experienced bankruptcy lawyers available to handle the filing.

In part, that is because so many top lawyers are already running up lots of billable hours working on the Chrysler bankruptcy case, while others have been hired by the government, which is financing the way through bankruptcy for Chrysler and, presumably, G.M.

It is not just lawyers who will be busy handling a G.M. bankruptcy filing, which would be perhaps the biggest and most-watched in legal history. Because of its size and scope, the bankruptcy would be the most complicated that any American company has gone through — more complex than those of Chrysler and Lehman Brothers, two other notable bankruptcy cases now making their way through the system.

The G.M. filing, which is expected to occur by June 1 as part of a restructuring orchestrated by the federal government, will generate so much economic activity — like hotel bookings, restaurant dining and expanded office rentals — that Detroit is hoping that the case will be filed in the local bankruptcy court.

That is unlikely, however, as bankruptcy cases are typically handled in New York or Delaware, where many business are incorporated and the bankruptcy courts have more experience handling complex filings.

For law firms, big bankruptcies can be very lucrative. Weil, Gotshal & Manges, the New York firm handling the Lehman case, recently sought approval for billings for $55 million for just three months’ work from the bankruptcy court in that case. Weil Gotshal is one of the firms that will represent G.M., almost certainly ensuring tens of millions more in fees to represent the automaker.

. . . .

Now's a great time to be a bankruptcy lawyer.

 

[misgfool]

I find it unconfortable that the bombs don't appear to have been defused yet and the new accounting practises are obfuscating the picture. It's like we were in a free fall and then the government said stop, so everyone stopped. Now it's very very unclear what is going to happen next.

Inflation is already lurking behind the door as the oil price is going up. The increasing money supply (dollars) may be showing in prices of raw materials even if the currency values are not weakening rapidly. What is most concerning is the unemployment rate and it's sharp climb. It's beginning to be quite clear that the economy is not doing as well as it was predicted in the stress scenarios.

http://www.clevelandfed.org/research/trends/2009/0509/02banfin.cfm

Originally I was in favor of the US bailouts, but I don't like the way they are being directed. And it is starting to look like a bailout frenzy. So far there has been very few positive signs like the stock markets, but when and with what exactly is the US going to rebound?

 

[Astronuc]

Oil Is Plentiful, Demand Weak. Why Are Gas Prices Going Up?
http://news.yahoo.com/s/time/20090529/wl_time/08599190144600

Storage tankers across the globe may be brimming with oil that no one is buying because of the global economic downturn, but the traditional laws of supply and demand don't always apply to oil prices. Drivers have faced rising prices at the gas pump in recent months, as investors and oil-producing countries hoard supplies in anticipation of a global economic recovery later this year.

The 12 member countries of the OPEC cartel voted in Vienna on Thursday to maintain output at current levels rather than increase supplies in order to bring some relief to consumers, particularly in the gas-guzzling West. The OPEC oil ministers, whose countries account for about 40% of the world's entire crude-oil supply, also renewed their commitment to stick to their agreed quotas, rather than ship extra oil, as they began doing last April when several members ignored their agreed output limits. OPEC leaders, many of whose economies are heavily dependent on oil exports, have struggled to stabilize prices at a level that suits their own economic needs amid falling demand and rising supplies. Prices had rocketed to a record level of $147 a barrel last July before plummeting to $30 just five months later and beginning a new climb. (See pictures of South Africa's oil-from-coal refinery.)

Oil analysts believe OPEC's decisions on Thursday could help push oil prices even higher; oil futures on the New York Mercantile Exchange have risen 36% in just two months, to about $63.46 a barrel on Thursday. And that appears to be on track to achieve targets set by OPEC leaders. Saudi Oil Minister Ali al-Naimi - OPEC's key power player - said Wednesday that oil prices ought to rise to between $75 and $80 a barrel by the end of the year. "Demand is picking up, especially in Asia," he told reporters puffing alongside him as he jogged through the streets of Vienna. "The price rise is a function of optimism that better things are coming in the future."

. . . .

Rising energy prices will slow economic recovery. All the more reason to invest in domestic energy sources, including non-petroleum and renewable sources, and more efficient transportation and other products.

 

[misgfool]

Why is the US government handing taxpayer funds to GM creditors? Do they have too much money?

http://www.reuters.com/article/businessNews/idUSTRE54S4JX20090529?feedType=RSS&feedName=businessNews

 

[Astronuc]

Why is the US government handing taxpayer funds to GM creditors?

I don't believe that is necessarily the case. The US government gets equity in the 'new' GM, UAW (autoworkers) get some, and the creditors get some.

It is my understanding that -

The creditors (investors) are the one's who loaned the money to GM - in good faith. Some creditors are ordinary people who invested for a reasonable return, and in some cases, the bonds represent their retirement.

Those same creditors/investors are the one's who will finance GM in the future, and perhaps buy GM products, so the the government can recover the taxpayers investment. If the plan fails, and people desert the new GM, the government will lose some of the money already invested.

 

[bleedblue1234]

Whoever beleives the US economy is in any shape to recover is, I'm sorry to say... crazy. We are facing some of the worst inflationary periods we have faced in the past ~80-100 years with all of this excess debt piling up on the government and the tin can of the consumer economy we have.

If you want to look for sustainable REAL growth of industry in the next 10-20 years... look no further than China, Brasil, and India. These countries and others will be the heart of the global economy as the US is deemed less important..

 

[misgfool]

The creditors (investors) are the one's who loaned the money to GM - in good faith. Some creditors are ordinary people who invested for a reasonable return, and in some cases, the bonds represent their retirement.

Those same creditors/investors are the one's who will finance GM in the future, and perhaps buy GM products, so the the government can recover the taxpayers investment. If the plan fails, and people desert the new GM, the government will lose some of the money already invested.

I understand that, but shouldn't there be a risk in investing? If GM becomes viable in the future, it will attract money since eventually greed will overcome fear.

 

[Astronuc]

I understand that, but shouldn't there be a risk in investing? If GM becomes viable in the future, it will attract money since eventually greed will overcome fear.

While some might be motivated by greed, many other people simply want to save their money and loan it out at a reasonable interest rate so that they will have more money in future when they cannot work as hard. I heard of one bond holder who had pretty much invested his life savings in GM - that was his his retirement - and he stands to lose much of it.

If a person puts his or her money in the bank - that's called savings. The bank may loan it out at 10% or higher, but pay only 2, 3 or 4% interest on the savings account.

The greed part comes in where financiers earn more (with commissions and fees) from other peoples' monies, than the people who own the money. The people are taking a greater risk than the financier, but earn less.

 

[misgfool]

While some might be motivated by greed, many other people simply want to save their money and loan it out at a reasonable interest rate so that they will have more money in future when they cannot work as hard. I heard of one bond holder who had pretty much invested his life savings in GM - that was his his retirement - and he stands to lose much of it.

Is that fair towards those who have been more prudent in their investments?

 

[Astronuc]

Is that fair towards those who have been more prudent in their investments?

How does one define prudent? If the bonds were graded AAA or AA or whatever, that would be considered prudent. On the other hand, perhaps the ratings agencies didn't properly grade the bonds because they didn't perform due diligence.

It's been pretty obvious for a while (ref: Micheline Maynard, The End of Detroit, 2003) that GM, Ford and Chrysler were in trouble.

Some bondholders invested their own money, while other bondholders invested other peoples' money. Some did it on misguided faith, while for others it seems to be a calculated risk.

Relating to prudence, the bonds probably pay a higher rate than the rate of inflation. If one were to buy treasuries or fixed income/money market instruments that pay 2-3% interest annually, then one's money will not grow beyond the rate of inflation, and in fact may have less purchasing power in the future for some times, e.g. healthcare for which the cost seems to be escalating at 10%/yr.

Usually, the higher the rate of return, the higher the risk. Some people have the luck where they invest in something and it pays out at many times the investment. Many others are not so fortunate or lucky.

 

[rootX]

Is that fair towards those who have been more prudent in their investments?

I was just reading the following article:

http://www.theglobeandmail.com/news/opinions/article708243.ece

The bonds issued by Fannie and Freddie were widely thought to carry an implicit U.S. government guarantee. Even though there was no official guarantee, Washington's failure to come to the rescue could destroy confidence in government debt, and, by association, other financial paper as well.

Consider investors in Fannie and Freddie bonds. While the U.S. government never officially promised to bail them out, it did create a special agency, the Office of Federal Housing Enterprise Oversight, which was to assess their strength in an annual report. But this agency never even acknowledged there was a housing bubble. Government leaders gave no warnings. So can we really say that investors must suffer the full consequences of any losses? How can this be fair?

But obviously, it doesn't take a lots of brain to recognize the boom-busts.

Some 2000 articles from Wall Street Journal:

"New forces are powering US stock surge" - E.S. BROWING THE Wall Street Journal
One line from this article - "Today markets often are moved by ordinary people clicking a mouse"

"Internet stock frenzy is manias of manias" - GREG IP The Wall Street JournalWould you have believed these guys?

 

[OmCheeto]

I bought a new Ford yesterday. Does that help?

 

[Astronuc]

The Obama administration is set to announce the bankruptcy and restructuring of GM -

http://www.nytimes.com/2009/06/01/business/01auto.html

http://www.nytimes.com/interactive/2009/05/31/business/20090531_GM_TIMELINE.html


The current recession is unlike the last several - Once a Key to Recovery, Detroit Adds to Pain (NYTimes)

http://www.nytimes.com/2009/06/01/business/economy/01econ.html

With General Motors about to follow Chrysler into bankruptcy, the nation’s ability to bounce back from the steep recession is being hobbled.
. . . .
Even now, in its diminished state — representing only 11.5 percent of America’s output, down from 20 percent in 1980 — manufacturing could have a bigger impact than its size suggests, because of its tendency to respond quickly.

“Back then, it supercharged the recovery,” said Mark Zandi, chief economist at Moody’s Economy.com, “and today it could have played a decisive role if G.M. and Chrysler had remained viable companies. Without their contribution, the economy simply can’t recover as quickly as it has in the past.”

Those two giants [GM & Chrysler] alone accounted for 10 percent of the upturn after the early 1980s recession, Mr. Zandi said, but this time they will be a drain on growth rather than a contributor to it.
. . . .
“No other industry is stepping up to the plate to replace the Big Three and their suppliers as engines of growth,” said Nigel Gault, chief domestic economist for I.H.S. Global Insight, “and without the kick they once provided — resuming production and recalling workers faster than others — the recovery will be slow in coming and muted at best.”

Chrysler’s decision to shut down its factories and G.M.’s move to idle most of its locations this summer will inevitably have a domino effect on the nation’s 4,000 suppliers, most likely undoing the fledgling improvement that forecasters see in slightly stronger retail sales and consumer confidence.
. . . .
The damage already done by the auto industry is sobering. Of the 5.7 million jobs lost since this recession began 18 months ago, 1.6 million were in manufacturing, and 289,000 of those were in motor vehicles, split almost evenly between the assemblers and their supplier networks.
. . . .

http://news.yahoo.com/s/ap/us_automakers

GM's bankruptcy filing is the fourth-largest in U.S. history and the largest for an industrial company. The company said it has $172.81 billion in debt and $82.29 billion in assets.

$90 billion in the hole - now down the drain!

ibid.

GM shares fell as low as 27 cents in Monday morning trading, their lowest price in the company's 100-year history. The News Corp. unit that oversees the Dow Jones industrial average said GM will be kicked out of the index on June 8 and be replaced by Cisco Systems Inc. The index's rules prohibit it from including companies that have filed for bankruptcy.

 

[mheslep]

http://news.yahoo.com/s/ap/us_automakers

GM's bankruptcy filing is the fourth-largest in U.S. history and the largest for an industrial company. The company said it has $172.81 billion in debt and $82.29 billion in assets.

GM is the largest manufacturing failure in history and its impact I suspect is much different than the banks. The earlier bank failures ( e.g. Lehman) were larger only in the obligations on their books.

 

[Astronuc]

Some apparently good news on the energy side -

U.S. Gas Fields Go From Bust to Boom
http://online.wsj.com/article/SB124104549891270585.html

Look for opportunities to invest in gas leases or gas exploration/development companies.

 

[turbo]

Tough times in Maine's industrial sector. Wausau Paper had shut down one if its paper machines in Jay last year, and yesterday, they shut down the remaining machine. The equipment is being prepared for long-term storage in the hopes that it can be sold eventually. That mill was once (long ago) the largest producer of newsprint in the country, and it has been an important employer for that small town.

Sappi has 3 very modern high-speed on-line coated fine-paper machines a few miles from here (I was lead operator during the start-up of the first) and they can't afford to stockpile any more paper, so they are taking rolling shutdowns instead of laying off employees. Every week, a different paper machine is shut down and the other two produce paper. Since the down-time is of short duration, the employees don't qualify for unemployment assistance - they just have to live with the 1/3 cut in pay. That mill makes high-quality glossy stock that is used in publications where print quality is paramount, like Elle and other fashion magazines, and high-end catalogs. With the soft economy, sales are down.

 

[mheslep]

Uh oh. The yield on 10 year treasuries are climbing fast, up over 3.7% now. With the GDP still in the toilet that shouldn't be happening - unless - the market has decided the US government has and/or will be borrowing too much money, that is, inflation is thought to be on the way.
http://online.wsj.com/mdc/public/npage/2_3050.html?symb=&sid=1224040&page=bond&symbChange=aaaaa~0&time=3yr&freq=1dy&DrawChart.x=58&DrawChart.y=8&startdate=&enddate=&type=64&compidx=aaaaa~0&comp=Enter+a+symbol&ma=1&maval=100&lf=1&lf2=4&lf3=1024

 

[misgfool]

Tough times in Maine's industrial sector. Wausau Paper had shut down one if its paper machines in Jay last year, and yesterday, they shut down the remaining machine. The equipment is being prepared for long-term storage in the hopes that it can be sold eventually.

Coming from a country with a previously strong pulp and paper industry, it is more or less common knowledge that almost all paper qualities are overproduced.

 

[misgfool]

May figures came in. 9,4%.

http://www.nytimes.com/2009/06/06/business/economy/06jobs.html

 

[Astronuc]

Intel is moving ahead

Intel Buys a Software Company to Extend Chip Market
http://www.nytimes.com/2009/06/05/technology/companies/05chip.html

I listened to an interview with Intel's CEO a couple of months ago. He talked about a commitment to invest several $billion this year. So companies like Intel will maintain the economy and drive the recovery.

 

[mheslep]

Intel is moving ahead

Intel Buys a Software Company to Extend Chip Market
http://www.nytimes.com/2009/06/05/technology/companies/05chip.html

I listened to an interview with Intel's CEO a couple of months ago. He talked about a commitment to invest several $billion this year. So companies like Intel will maintain the economy and drive the recovery.

I am slightly suspicious of this decision. The company, VmWare, is a virtual operating system company that has been changing the nature of big server count data centers. That is, where there previously was ten hardware servers and ten Intel CPUs, now there's one or two servers hosting ten virtual servers. That is a big win for the user, but at some level it must be threatening Intel sales. Now Intel has much more control of the market.

 

[Astronuc]

Something to consider while we wait for the economy to be 'fixed'.

The Economy Is Still at the Brink
http://www.nytimes.com/2009/06/07/opinion/07cohanWEB.html

I think the US GDP should be reported with and without the government expenditures/investments so that we get a real picture of what the rest of the economy is doing. We cannot afford to live off Uncle Sam's credit cards.

 

[mheslep]

We're getting some early anecdotal experience on just who is going to be running the car companies, despite administration claims to the contrary:

http://online.wsj.com/article/SB124416281882387463.html

The latest self-appointed car czar is Massachusetts's own Barney Frank, who intervened this week to save a GM distribution center in Norton, Mass. The warehouse, which employs some 90 people, was slated for closure by the end of the year under GM's restructuring plan. But Mr. Frank put in a call to GM CEO Fritz Henderson and secured a new lease on life for the facility.

Mr. Frank's spokesman, Harry Gural, says the Congressman discussed, among other things, "the facility's value to GM." We'd have thought that would be something that GM might have considered when it decided to close the Norton center, but then a call from one of the most powerful Members of Congress can certainly cause a ward of the state to reconsider what qualifies as "value." A CEO who refuses the offer can soon find himself testifying under oath before Congress, or answering questions from the Government Accountability Office about his expense account. To that point, Mr. Henderson spent Wednesday with Chrysler President Jim Press being castigated by the Senate Commerce Committee for their plans to close 3,400 car dealerships. Every Senator wants dealerships closed in someone else's state.

As Mr. Gural put it, Mr. Frank was "just doing what any other Congressman would do" in looking out for the interests of his constituents. And that's the problem with industrial policy and government control of American business. In Washington, every Member of Congress now thinks he's a czar who can call ol' Fritz and tell him how to make cars.

Rep Frank is not new to pulling the strings of the government funded business; he also intervened some months w/ Sec. Geitner to save a Mass. bank by redirecting some TARP funds.
-This on top of the recent conversation the President had with the Mayor of Detroit to assure him that GM would not move its headquarters elsewhere in Michigan as GM had be discussing.

 

[Astronuc]

We're getting some early anecdotal experience on just who is going to be running the car companies, despite administration claims to the contrary:

http://online.wsj.com/article/SB124416281882387463.html
Rep Frank is not new to pulling the strings of the government funded business; he also intervened some months w/ Sec. Geitner to save a Mass. bank by redirecting some TARP funds.
-This on top of the recent conversation the President had with the Mayor of Detroit to assure him that GM would not move its headquarters elsewhere in Michigan as GM had be discussing.

That just seems plain wrong. I imagine one could make a case for coercion.

Referring back to the Constitution - Section 9 - Limits on Congress

No Preference shall be given by any Regulation of Commerce or Revenue to the Ports of one State over those of another: nor shall Vessels bound to, or from, one State, be obliged to enter, clear, or pay Duties in another.

It somehow seems to me that most earmarks for things like transportation in specific districts violate the spirit of the intent of the authors of the Constitution. I wonder if they foresaw favoritism in the form of 'earmarks'.

 

[mheslep]

Whoa, not so fast Government Motors! Here we go, a few hours ago today from the supreme Ginsburg, a very, very rare action:

Supreme Court of the United States
No. 08A1096
INDIANA STATE POLICE PENSION TRUST, ET AL.,
Applicants,
v.
CHRYSLER LLC, ET AL.

IT IS ORDERED that the orders of the Bankruptcy Court for the
Southern District of New York, case No. 09-50002, dated May 31 and June 1,
2009, are stayed pending further order of the undersigned or of the Court.

I never had understood all the statements in the press about how the federal government could just do whatever it wanted with TARP money, authorized by congress, or manhandle and mandate all of these bond holders to do whatever they wanted. There's a contract, there's the TARP law, and if you break it you get sued whether you are Joe Smith or Uncle Sam (aka Chysler/GM here). Apparently so.
http://online.wsj.com/public/resources/documents/08A1096INPolicePensionvChryslerOrder.pdf
http://online.wsj.com/article/SB124447718295294527.html#mod=testMod

I forecast some heavy government pejorative comments against the investors, though the one - Indiana State Teaches fund may escape.

 

[Astronuc]

An interesting article on the deficit(s)/debt.

How Trillion-Dollar Deficits Were Created
http://www.nytimes.com/interactive/2009/06/09/business/economy/20090610-leonhardt-graphic.html

and related article
America’s Sea of Red Ink Was Years in the Making
http://www.nytimes.com/2009/06/10/business/economy/10leonhardt.html

. . . .
The New York Times analyzed Congressional Budget Office reports going back almost a decade, with the aim of understanding how the federal government came to be far deeper in debt than it has been since the years just after World War II. This debt will constrain the country’s choices for years and could end up doing serious economic damage if foreign lenders become unwilling to finance it.
. . . .

That is one of my concerns. The other is that there does not seem to be a viable plan to reduce the deficit spending, and there are looming obligations, e.g., social security and Medicare, that are not being addressed.

 

[mheslep]

An interesting article on the deficit(s)/debt.

How Trillion-Dollar Deficits Were Created
http://www.nytimes.com/interactive/2009/06/09/business/economy/20090610-leonhardt-graphic.html

and related article
America’s Sea of Red Ink Was Years in the Making
http://www.nytimes.com/2009/06/10/business/economy/10leonhardt.html..

Ug. This NYT piece is sycophantic BS. It has all been 'years in the making'? Let's not look at the current deficit explosion because its been years in the making? Debt accumulation during the Bush years is attributed to "Bush Policies", but debt accumulation now is attributed to the "Current Recession".

"All the news that's fit to print." Please. This stuff on top of the bogus front page McCain affair article during the campaign, Pulitzer awards for bogus stories, etc. Maybe the NYT should be added to the PF banned sources list.

 

[Astronuc]

Energy is a critical factor in the future of the US and global economies.

A friend sent this to me.

The GOP's Energy Alternative
We need more nuclear power
http://online.wsj.com/article_email/SB124467604217304035-lMyQjAxMDI5NDE0MTYxNzE2Wj.html

I still have to work through the details. I am concered about the Henry Waxman and Edward Markey plan to establish a cap-and-trade system that will sharply limit carbon-dioxide emissions and increase energy prices. It may not work as they intend.

Plus the trading system just seems to be a way fo middlemen to make money for doing nothing but getting in the way. I'd just as soon see good technology used to reduce fuel consumption and CO₂ emissions.

 

[turbo]

Plus the trading system just seems to be a way fo middlemen to make money for doing nothing but getting in the way. I'd just as soon see good technology used to reduce fuel consumption and CO₂ emissions.

It would be nice to see the coal-fired plants in the midwest that give Maine mercury, acid-rain, and constant ozone alerts in the summer months be monitored AT THE STACK and be required to adhere to standards that allow down-wind citizens to have cleaner air to breath. Currently, the generators put the air-monitoring instrumentation close to the plants and build stacks that shoot the effluent so far into the atmosphere that the local sensors are totally by-passed. They pretend to behave properly, while passing the pollution down-wind.

 

[Astronuc]

Amid Recession, One Automaker Is Prospering
by Dan Bobkoff

http://www.npr.org/templates/story/story.php?storyId=105227106

More Cozy Coupes are sold each year in the U.S. than Toyota Camrys or Honda Accords.


Now, if only they came is adult sizes.

 

[mgb_phys]

More Cozy Coupes are sold each year in the U.S. than Toyota Camrys or Honda Accords.

Now, if only they came is adult sizes.

They do (or did), and made by BMW

 

[OmCheeto]

Did everyone miss the press release on the 2011 Corvette?

http://www.goodyblog.com/playing_house/images/2007/11/05/flinstonemobliejpg.jpg

 

[Astronuc]

They do (or did), and made by BMW

I was actually thinking of a larger plastic Cozy Coupe model with pedals and a windshield.

I've seen a few SmartCars around town, but I'd like something that uses pedal power as opposed to gasoline, and with a cover. That might get a bit warm in the middle of summer though.

http://www.smartusa.com/smart-fortwo-pure.aspx

 

[Ivan Seeking]

http://img196.imageshack.us/img196/1233/fortuneteller1.jpg

http://img196.imageshack.us/img196/8583/fortuneteller2.jpg

 

[Phrak]

Oddly enough, an 'economy' is destroyed by engaging money in activities that add lesser value or even produce none. Just as oddly, an 'economy' improves by engaging money in activities that add better value.

Is there anything else that need be said about how economies are damaged, and how economies recover from damage?

The magic bullet is labor in productive tasks. Why is this not obvious? Sitting at a computer and offering why is not one of them.

 

[mheslep]

http://img196.imageshack.us/img196/1233/fortuneteller1.jpg

http://img196.imageshack.us/img196/8583/fortuneteller2.jpg

 

[Astronuc]

Why more engineers are losing jobs

http://marketplace.publicradio.org/display/web/2009/06/17/pm_endangered_engineers/

Even in a recession, a lot of people think tech jobs are a safe bet. But American engineers are losing their jobs faster than any other professional sector. Janet Babin reports.

Kai Ryssdal: Engineers weren't always thought of as the coolest people in the room, the whole pocket-protector stereotype and all. They did usually have jobs, though, when it was tough for others to find work. The rise of the high-tech economy has finally given engineers a measure of respect. I mean, who doesn't love somebody who can figure out your computer networking problems on the fly?

But now engineers are losing their jobs faster than people in a lot of other professions are. Even graduates of the best schools are getting laid off as companies downsize and outsource operations to other countries. And the answer is not all about finding cheaper labor, either. Janet Babin has more from the Marketplace Innovation Desk at North Carolina Public Radio.
. . . .
Oechslin graduated from Stanford University last June with a master's in mechanical engineering. He specialized in electronic gadgets. He quickly landed a job as a systems engineer in the semi-conductor industry.

You're probably thinking boring. Actually, Oechslin designed robots. But it didn't last long. His job was soon outsourced to another country.
. . . .
According to industry trade group IEEE, engineers of all stripes are losing their jobs at a faster rate than other professions. When the economy sours and money's tight, research and development becomes expendable. So do the engineers that staff R&D.

Hewlett-Packard, Microsoft and IBM have shed thousands of jobs this year, many in technology. According to industry trade group IEEE, engineers of all stripes are losing their jobs at a faster rate than other professions. When the economy sours and money's tight, research and development becomes expendable, and so are the engineers that staff R&D.
. . . .

IBM engineer, Rick Clark thought his job was secure, but then he got laid off (like a lot of other IBMers I know).

That wasn't the only surprise. Clark's manager handed him a brochure about an IBM program called Project Match. It offers laid-off employees new positions with the company. But there're in emerging markets like India and China. Engineers there typically earn less than half the salary of their U.S. counterparts. IBM transplants like Clark would earn the going rate.

An engineer needs to be diversified with numerous skills. Even then one cannot count on job security.

 

[Astronuc]

Slow recovery rate for many U.S. cities

http://marketplace.publicradio.org/display/web/2009/06/17/pm_cities_recovery/

A report from the Brookings Institution says that only about 10 of the top 100 cities in the U.S. show signs of economic health. The institution's Alan Berube talks with Kai Ryssdal about how the nation's cities are recovering.
. . .
Kai Ryssdal: For all the talk of an economic recovery that you're hearing it helps to remember this: Most of the recovering that's going on out there is at the national level. Things like the entire economy losing fewer jobs. But you break it down a bit to states or even farther to cities, the recovery gets less clear. Some big metropolitan areas are doing all right. Others really aren't. In a report out today the Brookings Institution surveyed the country's top 100 cities. Only 10 of them are showing any signs of bouncing back at all. So for starters, I asked Alan Berube from Brookings' Metropolitan Policy Program why one of them, Austin, Tex., is doing so much better than others.

Alan Berube: Like a lot of the other better performing metropolitan areas, it's first about what they do. And Austin, of course, is a state capital so concentration in government has been a good thing. That's an industry that really hasn't shed many jobs over the course of the recession. And it's a university center as well. Home to a big one, if not the biggest public university in the nation, and that's a sector that's actually added jobs over the course of the recession. So what people do in Austin accounts for some of their performance.
. . . .
BERUBE: Yeah, that's right. I mean, there's of course been this relentless attention to the national figures coming out of Washington, the jobs, the GDP, the unemployment rate. And we think that tends to miss what is a tremendously diverse U.S. economy on the ground. And we look at that economy through the lens of metropolitan economies, our labor markets, our housing markets. When you look at it through that lens you find that, yeah, all metropolitan areas have been hurt to some degree but that pain is shared very, very unequally. So on the way down this is an uneven recession, which indicates that when we finally turn the corner it's going to be potentially a very uneven recovery.
. . . .

I've certainly seen it in the northeast and other parts of the country.

MetroMonitor: Tracking Economic Recession and Recovery in America’s 100 Largest Metropolitan Areas
http://www.brookings.edu/reports/2009/06_metro_monitor.aspx

June 2009 —
Beneath the constant drumbeat of headline numbers emanating from Washington on U.S. jobs, national unemployment, GDP, and home prices lies a complex, diverse set of 366 metropolitan economies. While no metro area has been immune from the current economic downturn, the pain is unevenly distributed. Some have felt only modest effects, and a few show early signs of recovery, while others are undergoing a wrenching restructuring that may fundamentally alter their economic trajectory.
. . . .

http://www.brookings.edu/~/media/Files/rc/reports/2009/06_metro_monitor/06_metromonitor.pdf

http://www.brookings.edu/metro/MetroMonitor.aspx

 

[mheslep]

http://marketplace.publicradio.org/display/web/2009/06/17/pm_cities_recovery/

I've certainly seen it in the northeast and other parts of the country.

MetroMonitor: Tracking Economic Recession and Recovery in America’s 100 Largest Metropolitan Areas
http://www.brookings.edu/reports/2009/06_metro_monitor.aspx

http://www.brookings.edu/~/media/Files/rc/reports/2009/06_metro_monitor/06_metromonitor.pdf

http://www.brookings.edu/metro/MetroMonitor.aspx

I heard that report - re the large variations in recession conditions among metropolitan areas. Detroit seems to be an utter disaster, experiencing 1930's depression unemployment. Retailers, large ones, just leaving town. It is akin to the 19th century ghost town examples. At the other end is Austin, Tx, doing quite well.