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Manufacturing Tuesday: From bad numbers to bad chips

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Greetings, and welcome to new edition of Manufacturing Tuesday.  Normally there is a Manufacturing Monday, but sometimes we just can't get the edition out on time.  Still, the show must go on, as they say.

Now if manufacturing were a show, this would probably be either a Greek tragedy or a horror.  Because, folks, things aren't looking that great.  Some economic numbers out late last week point to industrial activity slowing down or stalling.  The current credit crisis is causing delays in payments.  Smaller industrial enterprises are suffering the most with their credit lines  cut down or completely frozen. 

 

By the numbers

Volcker Stands on Twin Peaks - New Report on Market Regulation

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Former Fed Chairman Paul Volcker and Jacob A. Frenkel (Group of 30) released a new report,

The Structure of Financial Supervison: Approaches and Challenges in a Global Marketplace

The attached paper recommends a restructuring on financial market supervision called Twin Peaks.

twin peaks red room dream sequence

Both Presidential campaigns have mentioned major structural and regulatory reforms of the financial systems. Volcker is advising Obama and please note, the other paper authors, many are from surviving financial institutions and yes, yet once again, Goldman Sachs is represented.

The American consumer capitulates

Back in August 2007 I wrote a diary entitled, Are Hard Times near? The Great Decline in interest rates is ending, that began:

The American consumer has had largely stagnant wages since 1974. While from 1980 through 2006, the median income of an American household has risen only from $39,700 to $48,200 in real terms, house prices for example have shot up form nearly $125,000 to $246,500. Consumers have responded generally by taking on more and more debt. Total household debt service has risen from 16% in 1980 to 19.4% in 2006.

Here Comes The Show - Congressional Hearings, Debt and Conjecture

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Multiple Screens! 360 Panavision! Let the shouting begin! The Committee on Oversight and Government Reform will hold hearings the next two days. Committee Chair Representative Waxman:

Lax oversight and reckless investments on Wall Street are causing massive disruption throughout our economy. Our hearings will examine what went wrong and who should be held to account.

Up on the executive chopping block are:

DAY 1: Causes and Effects of the Lehman Brothers Bankruptcy

  • Dr. Luigi Zingales, Professor of Finance, University of Chicago
  • Dr. Robert F. Wescott, President, Keybridge Research LLC
  • Nell Minow, Chairman of the Board and Editor, The Corporate Library
  • Gregory W. Smith, General Counsel, Colorado Public Employees’ Retirement Association

Hair of the Dog: The only thing we have to fear is easy credit

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On March 4, 1933, President-elect Franklin Roosevelt was greeted with grey, cold, overcast skies. The feeling of despair and hopelessness in Washington was so palpable in the air that First Lady-to be Eleanore Roosevelt later said she felt like crying during the Inauguration Parade down Pennsylvania Avenue.
No one realized it at the time, but the Great Depression was at its nadir. That nadir was marked by what was to be the greatest inauguration speech ever given. It was a message of hope, leadership, and fairness, as well as a denunciation of the "money changers" and the need for regulating the financial markets.

But mostly it was a call to do the exact opposite of what Congress chose to do this week.

Global Financial Calvinball

Both national and international finance over the last few weeks have appeared to degenerate into what could be called "Global Financial Calvinball":

For those of you who may not be familiar with the comic strip, "Calvin and Hobbes", Calvinball is an imaginary sport where the rules were made up on the fly by the players, and always of course to the detriment of the other player.

Whether it is the SEC in the US suddenly deciding that shorting financial stocks is not allowed, or the Irish and Greek governments insuring unlimited bank deposits, or the Dutch bailing out Fortis Bank, or the Chinese disallowing lending to US banks,not to mention the gargantuan, ill-thought-out $700 billion Wall Street bailout, national and international financial regulators are making up the rules week by week, and sometimes changing them day by day.

Friday Movie Night - Commanding From Wuthering Heights

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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!

This week we have a corporate biased, but very well done, PBS documentary Commanding Heights.   

Contained within this video are the Russian and 1997 Asian Financial Crisis, the Great Depression and Globalization. Also is the admittance that the interactions and dependencies of global markets, financial markets is not well understood.

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