January 2009
73 posts
“We helped trigger the biggest financial and economic collapse in history through...”
– The price of everything: An open letter to the Western banking establishment
An open letter to the Western banking... →
— Pointed. When I grow up, I want to have a British sense of humor (er… humour).
General Motors to Invest $1 Billion in Brazil... →
— Found this via Mish. Bailout dollars at work … in Brazil. Just like banks not lending, this makes perfect sense for GM.
Calculated Risk: January Economic Summary in... →
— This is the single greatest summary of the current US economy I’ve seen. Look at all the pretty graphs.
1 tag
Another Day of Job Cuts
Still waiting. Today was bad for two reasons: Caterpillar and Michigan. The headlines:
Dow Chemical to cut 400-500 Mich. jobs — This is not what Michigan needs right now. These are actually part of previous announcements, but it’s a kick in the nuts.
Caterpillar to Cut Additional 2,110 Factory Workers — Things are bad when you announce 20,000 job cuts and then decide it...
2 tags
Bank Failure Friday
Ok, I warned that people should pull any uninsured deposits from Suburban. Guess what? Suburban Federal Savings Bank Failed. But wait … there’s more! So did Ocala National Bank and MagnetBank. Today’s a threefer, and it’s not even 5 o’clock on the west coast. Calculated Risk has posts here and here. Total cost to the FDIC fund today? Over $225 million. I’ll...
“If you somehow take that bonus out of the economy, it really will create...”
– Rudy Giuliani, who seems to have just defended exorbitant Wall Street bonuses as a welfare for the super rich.
(via squashed)
I think the most important thing here is that according to most economists, giving money to the wealthy in a time of economic crisis is ineffective because the money will...
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Boo Headline Changes
I just made a post joking about potential headline changes, and Bloomberg one-ups me. The current headline, Roubini Sees Global Gloom After Davos Vindication. I don’t know for certain, but I think this is the article that had the brief headline along the lines of “Davos Delusional after Trillions in Losses.” It was a pretty stinging headline, and I was going to link to it to...
Wall Street Bonuses May Go Way of Dodo Amid... →
— I think this headline could just as easily substituted “polio” or “black plague” for “Dodo.” It’s really a matter of perspective, don’t you think? Then again, maybe the Dodo was extremely unpopular.
GDP Down 3.8%, Beats Expectations
I’ll be honest, nothing is more boring to me than the official GDP report. Take into account that this is from a guy who enjoys reading the CPI, employment, and unemployment reports. Anyway, from the report:
Real gross domestic product — the output of goods and services produced by labor and property located in the United States — decreased at an annual rate of 3.8 percent in...
Japan Heads for Worst Postwar Slump as Output... →
— More of the “You think it’s bad here…” The jobless rate isn’t as bad as elsewhere, but things are deteriorating rapidly.
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Another Day of Job Cuts
Still waiting. Today actually wasn’t so bad (stupid Kodak!). The headlines:
Kodak to Cut Up to 4,500 Jobs, Restructure, Has Loss — 18% of their workforce, and includes executive positions. Those are deep cuts.
London Underground to Cut 1,000 Support Staff Jobs — UK jobs don’t count for my purposes, but I found this interesting. No rail workers’ jobs will likely...
3 tags
Regulator to Bank: Find Buyer or Else →
— This is a call for a bank run if ever there was one. If you know anyone in Maryland who uses Suburban Federal Savings, please make sure they are under the FDIC limits. Obviously this is more likely to impact small businesses with payrolls in Suburban. This bank run brought to you by Calculated Risk, the Baltimore Sun, and Federal Banking Regulators.
Unemployment Bad, Expected
Today’s weekly unemployment report was bad for a couple reasons. Bloomberg reports Unemployment Benefit Rolls in U.S. Soar to Record:
Continuing claims for benefits rose to 4.776 million in the week ended Jan. 17, the highest since record-keeping started in 1967, the Labor Department said today in Washington. First-time filings increased 3,000 to 588,000 in the week ended Jan. 24.
...
“[L]ess money will be coming out of government coffers straight off the bat, and...”
– Robot Heart Morning Edition - 10 Reasons to Whack Obama’s Stimulus Plan - Capital Commerce (usnews.com)
Click through to read the rest of Robot Heart’s analysis. I quoted this bit because it’s the only bit I disagree with. Shame on you Robot Heart: If anything, when a government...
Another Day of Job Cuts
Still waiting. Today’s job cuts were terrible again. The headlines:
UAW to End GM Jobs Bank on Feb. 2, Following Chrysler — Not exactly job cuts, but 1,600 new people collecting unemployment.
SAP to Cut More Than 3,000 Jobs Amid Global Slump — I’m guessing most of these cuts will be in Germany.
Boeing Plans to Cut 10,000 Jobs as Demand Weakens — 4,500 of those...
5 tags
Why Food Stamps Work
Recently you might have read about tax cuts being ineffective stimulus compared to food stamps. If your goal is to get poor people to spend more (make no mistake, this is the goal), this is true.
Food stamps are effective fiscal stimulus because they are targeted and limited. They are targeted at poor people who have their heads below water. They are also limited to grocery stores, which is...
3 tags
"With all due respect, Mr. President, that is not... →
(via jeffmiller)
That’s a respectable list. I wonder how much it would cost to mail out 1,000 neon signs that simply say, “Don’t Panic.”
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Another Day of Job Cuts
Still waiting. Today’s job cuts were not as bad as yesterday’s, but it was not a good day. The headlines:
Avery Dennison to Cut 10% of Jobs After Sales Decline — 3,600 jobs from “the world’s largest label maker.”
Target to Cut 9% of Headquarters Jobs, Shut Distribution Center — 1,100 jobs.
McGraw-Hill Profit Falls 18% on Costs to Cut Jobs, Credit...
Chastised Citigroup grounds plan for new plane →
— I’m disappointed that $50 million of taxpayer funds won’t be spent on a jet. How do people expect our banking system to work without executive jets?
UPDATE: I forgot about the maintenance and other costs. That’s roughly another million dollars a year.
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62,000 Jobs Are Cut by U.S. and Foreign Companies →
(via robot-heart-politics)
Just when I was starting to enjoy the part of my day when I look for the job cut announcements. Still waiting.
Scary Graphs
I’ve seen the series data for the St. Louis Adjusted Monetary Base posted by jeffmiller
and hilker. The graph is scary. This post isn’t to disagree (it is scary), but it is to point out that it probably isn’t the best way to view the data. Here’s the graph in question (well, my re-creation):
One problem with the graph is that even large percentage changes in the 30s...
U.K. Economy Shrinks Most Since 1980, in Recession →
— More of the “You think it’s bad here…”
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Bank Failure Friday
It’s that time again. From the FDIC Failed Bank List, 1st Centennial Bank in Redlands, CA failed. From the detail:
All insured non-brokered deposit accounts have been transferred to First California Bank, Westlake Village, CA (“assuming institution”) and will be available immediately. On Monday, January 26, 2009, the former 1st Centennial Bank locations will reopen as...
2 tags
Roubini, Edwards Predict Slump in S&P 500 on China →
S&P 500 to drop to 500? Now that’s pessimism.
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Another Day of Job Cuts
Still waiting. Today had some important job cut announcements. These were the ones I wanted to explicitly comment on:
Schlumberger Net Income Falls; Job Cuts Affect 5,000. When the leader of an industry announces layoffs, expect more layoffs in that industry. I think Schlumberger is interesting because they’re dealing with the flip side of cheap oil. Also, 5,000 jobs is a lot (though...
“Fully 84% of the public wants more money spent by the federal government — and...”
– Pollster Frank Luntz - Infrastructure: It’s Job 1 to Americans (via southpol)
I’d like to borrow an idea from George Carlin. Imagine if your tax forms let you specify where your tax dollars went (whether it was by ranking, or by explicit allocation). Unpopular programs would have small...
2 tags
Google's Profit Plummets 68% on Charges as Revenue... →
hilker:
wow.
Funny how different sources play it differently.
Yahoo: Google exceeds forecasts, though earnings drop
Bloomberg: Google Profit Tops Estimates as Web-Ad Sales Rise
TheStreet.com: Google Makes It Happen — This was the top link on Google Finance when I searched for GOOG.
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Another Day of Job Cuts
Still waiting. Today had the granddaddy of them all, though. Microsoft, who managed to avoid layoffs when the dot-com bubble popped, announced 5,000 job cuts. 1,400 people were notified today. That was the reason for the announcement before, instead of after, the bell. Apparently HR coordinated the termination notices with the market announcement.
Some other headlines:
TomTom to Eliminate...
75% Of YOUR BAILOUT MONEY Used To Pay Merrill...
hilker:
soupsoup:
Remember the latest Bank of America (BAC) bailout, the one we were all so steamed about last week? (The $20 billion of cash and $100+ billion of trash-asset guarantees that absolutely had to be given or else Bank of America shareholders might have lost everything?)
Yes, well, you probably thought that that cash would be used to bolster the bank’s capital or something. (We...
Whiplash
The futures were up slightly last night. This morning, Microsoft decided to announce before the opening bell instead of after the closing bell. They disappointed. 5,000 job cuts, no more guidance, and 47 vs expectations of 49 cents per share. This after Apple and IBM beat expectations. The stock responded by taking an immediate 8% hit (and then recovered a tiny amount before opening). The European...
1 tag
Another Day of Job Cuts
Still waiting. Today’s cuts include:
Eaton to Cut 5,200 Jobs in a 2nd Wave of Reductions — Ohio automotive jobs.
Ericsson Cuts More Jobs, Anticipating Client Cutbacks — 5,000 jobs, but it isn’t clear if any of them are in the US
Tribune’s Los Angeles Times to Cut More Jobs by March — No numbers, and technically this is from the 19th.
BHP Faces $1.7 Billion...
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Hedge Fund Run by Ex-Bondsman Is Ponzi Scam, SEC... →
— Another Wall Street Ponzi scheme. This one looks to be a few million dollars.
The King is Dead. Long Live the King!
Toyota Passes GM as Biggest Automaker Amid Global Sales Slump (Bloomberg):
Toyota Motor Corp. ended General Motors Corp.’s 77-year reign as the world’s largest automaker after avoiding the worst of the meltdown in global auto demand.
GM’s 2008 sales fell more than 11 percent to 8.35 million vehicles, according to a company statement today. Toyota posted a 4 percent drop to 8.92 million.
...
Chrysler Trades 35% Stake to Fiat for Cars,... →
— bizarre.
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Reversing Position
Well, I previously said I was giving up on a welcome rally. Now I’m reversing my position (again!). I moved back to perfectly hedged today. I sold my March SPY puts. When I move back to bearish, I’ll be buying June SPY puts. Given how fast and how much the market has declined recently, I would not be surprised if the market rallied 10% or more from here. Right now, the futures are...
Today Was Not The Day
I’m waiting for a day without significant job cuts. Today disappoints.
Warner Bros. to cut 800 jobs as Hollywood down:
Warner Bros. Entertainment plans to cut 800 jobs, or 10 percent of its worldwide staff, as Hollywood outsources and downsizes under the weight of the current recession.
Bose confirms layoffs:
Bose Corp., a Framingham company known for its audio products,...
California Finds Public-Works Spending No... →
barthel:
… previous posts omitted …
Uh…well, sure, if you think that defecit spending in and of itself is a bad thing, then I guess it makes sense to be against public works projects. But it’s not like they don’t desperately need to be done, recession or no recession. There haven’t been any major public works projects in 40 years, which in many cases includes even upkeep. ...
California Finds Public-Works Spending No... →
barthel:
crazynutjob:
— People are starting to realize that consumer-oriented jobs just aren’t coming back. Unfortunately, despite the fact that there’s a clear glut of construction jobs, the government spending to prop up that sector is viewed as a positive. Remember kids, there’s always a job in construction.
Why are construction jobs worth spending taxpayer money to save, but other jobs...
Nadel’s 32% Returns in Doubt as Manager Disappears →
— Another fund manager fraudster. $350 million in potential losses from this one. It’s much easier to find the fraud in bad times than in good times. Redemptions are the ultimate in enforcing transparency.
California Finds Public-Works Spending No... →
— People are starting to realize that consumer-oriented jobs just aren’t coming back. Unfortunately, despite the fact that there’s a clear glut of construction jobs, the government spending to prop up that sector is viewed as a positive. Remember kids, there’s always a job in construction.
Why are construction jobs worth spending taxpayer money to save, but other jobs are...
“Another factor in maintaining balance involves the element of time. As we peer...”
– Dwight D. Eisenhower, Farewall Address (via gcn) (via vruz)
From earning six figures to hoping for $7 an hour →
— This is sensationalized (life is tough, she had to stop smoking and taking her pets in for regular check-ups). I find that a little sad, because the raw numbers tell the human story without help from the writer: 1,200 applicants for 150 retail jobs. That’s a lot.
Another Bank
After checking the FDIC bank failure list, I met with some friends and ate, drank, and was merry. Before heading to bed, I checked the site again. Another bank failed. Bank of Clark County in Vancouver, WA failed. From the Press Release:
As of January 13, 2009, Bank of Clark County had total assets of $446.5 million and total deposits of $366.5 million. At the time of closing, there were...
Bank Failure Friday
National Bank of Commerce in Berkeley, IL, became the first bank of 2009 to fail. Here is the FDIC page. I’m sure there will be a post later at Calculated Risk. From the Official Press Release:
As of January 7, 2009, National Commerce Bank had total assets of $430.9 million and total deposits of $402.1 million. In addition to assuming all of the failed bank’s deposits, Republic...
One Day, Please
I just want one day (weekends don’t count, and MLK Day will only count if it’s negative) where I don’t see multiple job cut headlines when I go through the news. Here are the two from today (there were others). Both are from the AP via Yahoo Finance.
AMD to cut 1,100 workers, 9 pct of staff:
Advanced Micro Devices Inc. plans to cut 1,100 jobs, 9 percent of its global staff,...
Circuit City Will Be Fully Liquidated →
— This doesn’t surprise anyone. There’s too much risk for a purchase of the whole company to be priced at an acceptable level.
So much for 'recession proof' →
(via streetsofchicago)
— Tragic
Unemployment Back Up
Here’s a misleading headline: New jobless claims increase more than expected:
New claims for jobless benefits increased more than expected last week, reflecting continued weakness in the labor market in the new year that is not expected to ease anytime soon.
The Labor Department reported Thursday that first-time requests for unemployment insurance jumped to a seasonally adjusted...