Economic News of Note - 17 Oct 2009

Birth-Rate Study: In Recession, Fewer Women Having Kids - TIME

Another casualty of the recession: Birthrates. US Birthrate down more than 2%.

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Apple joins Chamber of Commerce exodus over climate change scepticism | Environment | guardian.co.uk

As fluffy as this may sound, this is a portent of bigger battles between companies that have historically benefited from externalized costs and those that seek a more accurate reflection of the true production costs.
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AIG's Benmosche: The tone deaf CEO - Oct. 6, 2009

AIG head is the most tone-deaf CEO out there. Ends with an interesting quote: "He called us idiots, he called us corrupt," said Sherman, the California lawmaker. "I do have to thank this guy for his insults. He caused us to wake up from being completely asleep." He had a hell of deal going (US taxpayers funding his business), but he's so goddamned greedy, he's screwing it up. He just can't help himself.
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Rolfe Winkler » Blog Archive » TARP deadbeats | Blogs |

US Taxpayers getting screwed by the bailouts. CITIGROUP amongst the deadbeat bailout recipients. Any talk of the US taxpayer 'making money on this deal' is total bull.
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THE CUNNING REALIST: "Shabby Secret"

Great discussion of what's driving the collapse of the dollar. There's no doubt that Obama's spending is causing international concern about the dollar. But just as important is the new status quo of "too big to fail" for the financial sector and what that means for various aspects of Federal Reserve policy. The implicit government guarantee of a few GSEs was an important factor in the financial crisis. There's now an explicit government guarantee of every large financial institution on Wall Street. Almost two years after the Bear Stearns debacle, there are still no plans by the government to unwind or repudiate that guarantee. He also makes a very good point that the current trend may have overplayed itself, at least in the short term.
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The Lost Generation - BusinessWeek

Huge unemployment rates for recent graduates. The market you graduate in makes a huge difference in your career. This could be one consequence of the Recession that lasts and lasts. I'm very glad I graduated when I did. Many friends of mine are not so lucky.
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China buys the world - Start your engines (8) - FORTUNE

China's global shopping list. The Rio Tinto escapades were particularly interesting.
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No shame in walking away from mortgage - The Big Money- msnbc.com

Walking away from mortgages is a legitimate tactic, or so the article argues. The system was designed to prevent debt slavery and to encourage banks to be careful about who they lend to.
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Quiet Atlantic hurricane season a boon for insurers | U.S. | Reuters

Insurance companies rake in huge profits on quiet hurricane season, thanks to El Nino.

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Ruling could undo thousands of foreclosures - BostonHerald.com

Thousands of foreclosures potentially overturned because of lost paperwork. Was the paperwork lost, or was it destroyed to hide a trail of criminal malfeasance by mortgage brokers?

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Emphasis on Growth Is Called Misguided - The New York Times

Poking holes in G.D.P. as a measure of economic health of a country
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Utility Snubbed by Banks Shows States Pay Too Much (Update2) - Bloomberg.com

Government entities get screwed when borrowing money. AAA government debt more expensive than AA- private debt. Utah (AAA rated) was charged 0.11% more on $500 million in bonds than Wal-Mart (AA2/AA). This is a huge disparity and I have no idea why it isn't covered more. Investing in government bonds is about the safest thing you can do and the returns are, in relation to the risk, surprisingly good, but never spectacular. Is there a reason for the institutional bias?

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Europe Richer Than America - Forbes.com

EU now richer than NAFTA. Europe, as a whole, has been hit less by the Recession than the US. _____________________

An Answer to "Where have all the Hueys gone?"

Huey
Originally uploaded by skooksie

In these days of "Corporate Communism", how come nobody is standing up against the Wall Street Welfare Queens? It's political red meat, but hardly anybody at all is kicking them where it hurts.

I'd say there are about two exceptions: Ron Paul (R-TX) and Alan Grayson (D-FL). Ron Paul has been at it for a while. Alan Grayson won a red district and has recently made the news for "Democrat with Balls"-style.

Paul and Grayson have teamed up on an "audit the Fed" bill. Some of the testimony has been very impressive:

Even some conservatives are giving him credit.

Other Republicans are scared stiff of a Democrat that actually stands up for what he believes in. Grayson is being attacked with unsourced allegations of antisemitism (in Florida? Please).

My favorite fighting words of Grayson: Republicans want to ban bacon!

Take the time to listen to some of his speeches and judge for yourself.

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*Title Reference and stolen photo. More Huey, please.

UPDATE- One More:


UPDATE 2-

Alan Grayson quotes Huey Long.

UPDATE 3- Yet more. Reublicans running scared...

Economic Mess

Bush's Philosophy Stoked Mortgage Bonfire. By the NY Times. Excellent reporting. It's being billed as a devastating indictment of Bush, and while it doesn't reflect very well on him, I personally thought Paulson took it on the chin in that article.

With Stevens' Fall, a Pipeline for Lobbyists is Shutting Off. More NY Times. One lobbyist wrote, "“For those of us long on the dole, the coming reality will take some getting used to.”"

Entergy caught with hand in the cookie jar. Not a peep of this from the Times-Picayune. Entergy was caught by the state of Mississippi using the fuel surcharge line item on bills (which they are legally prohibited from making a profit on) to pad their profits. Will their be an investigation in Louisiana? I doubt it. Too many of our Public Service Commissioners like getting generous campaign contributions from Entergy.

At Siemens, Bribery was a line item. This is an unfortunate reality in many overseas business ventures. Reminds me of Enron's Dabhol Power Plant in India.

Republicans Sink Auto Bailout

Expanding the unemployment rolls a few hundred thousand at a time...

Republicans admit they only shuttled the bailout to screw over the unions. " Senate negotiations as one last chance to bludgeon organized labor before the GOP minority shrinks " Fucking America one more time on the way out. More in the NY Times.

The quote of the day goes to the Morgan Johnson, UAW Louisiana. Speaking of Vitter's efforts to derail the package: "He'd rather pay a prostitute than pay auto workers."

Would that include Vitter paying auto workers for sex? Especially if they're named Wendy?

Auto Industry Bailout

The big news of the day is the auto bailout being debated in Congress and the effect it had on the markets (Down below 8,000 for the first time in over 5 years). Senator Vitter has made up his mind that he wants the auto industry to burn or if they are given a bailout, it should screw over the workers as much as possible.

I wrote my only useful congressperson (Vitter and $Bill being more useless than a condom dispenser in a convent) on some of my thoughts:

Dear Senator Landrieu,

I write to you because I've read that you haven't made up your mind on the Auto industry bailout proposal being finalized. I ask that you vote for this measure when it is finalized.

Not many Louisiana jobs are at risk. It's mostly taking our money to pay for others. There are very good reasons not to vote for a bailout for the auto industry. They've had many problems over the years. The quality control through the 1980's was non-existent. They've built gas guzzlers. Their CEO's are tone-deaf, out of touch, and make horrible business decisions. They've failed to embrace change.

But I think that that's overlooking recent changes. In 2007, there was a major breakthrough in labor costs. They got a new union contract. They've brought their quality in line with Toyota (don't take my word on it, ask The Truth About Cars). It's going to take a while to work undo the damage they did with their previous cars, but they were on the road back.

Then the Wall Street Crisis hit and they were unable to get loans to put their plans into practice. They're running out of cash. If they run out, they'll be forced to file bankruptcy. A company as complex as GM doesn't stand a good chance of coming out of a bankruptcy. It will probably be sold at pennies on the dollar with hundreds of thousands (millions?) added to the unemployment rolls in the middle of the biggest economic disruption since the Great Depression.

Make no mistake, if this bill fails, the repercussions will snowball through not just the auto industry, but the entire economy. Can the financial crisis get worse? Absolutely. Remember that the Great Depression wasn't fully felt until well after the 1929 crash. This bill failing could deepen the crisis like what happened after the Smoot-Hawley Act of 1930.

It will probably be cheaper in the long run, when you factor in unemployment payments, crime, pension fund guarantees by the government, bond ratings of the state of Michigan and Detroit, etc. The worst thing that happens is some money is lost and they go under in a few years. Even then, the economy will probably have recovered enough to take the dynamite blast of a GM bankruptcy reverberating through the markets. The best scenario is you give the auto industry a fighting chance to recover.

That's all I ask for: give them a fighting chance.


Thanks for your attention to this issue,
Clay __________

I was also going to include another thought of mine: the ones most strenuously opposed to the bailout are the ones most ignorant about the industry. Yeah, Rick Wagoner and Bob Lutz are assholes (especially for that "crock of shit" comment), but it's hard to imagine someone else doing appreciably better given the hand they were dealt. They are far and away better than Roger Smith, whose catastrophic tenure GM still hasn't recovered from. Yes, that is the same Roger Smith as Roger and Me fame.

As a side note, I've been pretty interested in the auto industry for a while. Every year at Tulane, I worked on the Mini-Baja car. When I was a sophomore, I almost went to Dresden for a semester abroad that could have ended with an internship at BMW's engine design department. Had things broken a little differently for me, I might be working in the auto industry right now. As it is, I've stayed a member of the Society of Automotive Engineers, just out of interest, even though I have nothing to do at work in the auto industry. My best wishes go to my fellow mechanical engineers in the auto industry, whatever company they're with. I fear they're going to need it.

Great Editorial Cartoon on Paulson Bailout

(click here to view)

Ed Stein Rocky Mountain News Sep 24, 2008 EditorialCartoonists.com

H/T to First Draft