Yesterday I read about how the folks at AIG will be getting their bonuses. Like many of you, this infuriated me to no end. Once more, failed business people gaining reward for their bad decisions. The shareholder has lost most of the value in the equity in the company. The taxpayer (and also now a shareholder) has actually gotten two punches in the gut, including diminishing share value they've also had to put up billions of dollars. Frankly enough is enough.
I have been saying for a long time now that housing was a leading component of the economy. Housing peaked in late 2005 - early 2006, long before the recession started in December 2007. Just as clearly, it is likely that housing will bottom first, and will be a primary component leading us out of this "Great Recession." By now housing is so far into the downturn that we ought to be able to make educated projections about housing prices and sales over the next several years.
Recently I noted that new home sales are falling so fast that they almost have to bottom this year - or come very close - unless you think that new homes sales will be 0 by early 2010!
But new home sales are a smaller part of the housing market. Existing home sales are much larger. In this post I will examine what I think are reasonable projections about the volume and prices of new home sales in 2009-2010 and beyond.
It's Friday Night! Party Time! Time to relax, put your feet up on the couch, lay back, and watch some detailed videos on economic policy!
Unless you have been hiding in a black box, you could not have missed hearing about Jon Stewart's attack on CNBC. Jim Cramer went on the Daily Show and here is the resulting interview:
There's a lot of talk about waste in the $787 Billion Stimulus bill. Yet there is almost no debate at all about a stimulus bill of near equal size that contains far more waste.
governments around the world are throwing billions into the one sector of their economies that will probably do the least good for the world: their military-industrial complexes.
For one thing the strikers weren't demanding more money, despite the fact that they only made $2 a week (adjusted for inflation, that would be $44 a week today). Their central demand was an 11-hour day (as opposed to the 13.5-hour days they were currently working), and only 9 hours on Saturday instead of a full day.
That in itself was significant enough. The first strike in American history to limit hours had happened only 7 years earlier, and was also in Paterson, New Jersey. That strike had been crushed after a week when the militia was called in.
The last couple of days we have been hearing from the CEOs of three of largest financial conglomerates (Citigroup, Bank of America and JP Morgan Chase). All three are talking up the profitability of their companies. And of course as a result of public statements about profitability the price of their respective stocks goes up. How convenient is that? Is this stock price manipulation? What they fail to mention is the hundreds of billions of dollars in toxic stuff still on their balance sheets.
There was a time when a person could get in trouble with the Securities and Exchange Commission (SEC) for making publicly misleading statements. But these CEOs statements are probably border line legal. Besides, I am sure that the SEC has its hands full with other matters.
Greetings everyone, and welcome to a new edition of the Manufacturing series! Been ill again, so haven't kept up. Rest assured, I'm in somewhat top form now. But enough about me, we got manufacturing stuff to talk about! Some interesting news out there, but first, of course the Numbers!
The Numbers
Times have been tough for manufacturing, we all know this. And the current business cycle has been especially cruel. Month after month of job losses, plant closures, the pairing down of work hours, you name it. In some places, this has sadly been old hat, just ask the folks around Detroit. It's as if you could amalgamate this country's industrial base as a very large person, say back to the middle of the last century, and is now looking like one of those sickly persons one sees in a famine. But could we start seeing a bottoming?
When I wrote my diary called Black September a few months ago, I termed it a "first draft of history": an attempt to explain how the shallow, Wall Street and housing-focused recession of early 2008 had suddenly morphed into a systemic economic collapse. I described it as an "autonomous consumer slowdown" that didn't have to happen, but did in large part due to the panicky response by government officials to admittedly serious body-blows to the financial system that occurred seemingly almost daily during last September (and secondly due to the meltdown of 401k assets during the market crash that did not occur until the first 10 days of October).
Now several mainstream economists have independently picked up on the idea, challenging the conventional wisdom that the subsequent economic free-fall is All Because Lehman Brothers was Allowed to Fail. And the conventional wisdom is fighting back.
Like bonds, which move in ~60 year interest rate cycles (called the Kondratieff cycle), stocks also have very long, secular cycles that become apparent when we step back for the 30,000 foot view. For example, there was a long-term bull market from 1946-1966, followed by a long-term bear market from 1966-1982, followed by a long-term bull market from 1982-2000. Now we are in the midst of another long-term down cycle.
In this diary I will compare past long-term declines to estimate how steep a similar decline in the stock market and the economy is likely in this long-term bear market.
It's Friday Night! Party Time! Time to relax, put your feet up on the couch, lay back, and watch some detailed videos on economic policy! 
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