Economic challenges ahead after the election.

[scrimmage]

The petty election season squabbling helps ease anxiety about other national matters,and take some attention away from America's imploding economy.
After 11/4 what'll the next president face economically,and how will events be created to take the public's attention away from the myriad problems to come in order to maintain control?

Excerpts below from:
http://www.321gold.com/editorials/cooke_r/cooke_r102008.html

If we want to construct a high probability scenario, we must develop a way to include all the probable economic factors in our recession equation, and then characterize the interaction of these factors with our culture. How will people, including governments, react to this crisis? And how will this reaction shape the probable outcome?
Let's summarize the "challenges" ahead....

• [SIZE=-1]Home loans[/SIZE][SIZE=-1]. Additional Option ARMs and Interest Only loans are scheduled to reset through 2012. Almost a trillion dollars of debt to roll over, and most of the original loans are "under water". Many home owners will chose to walk. It could be long into 2010 before we know the true value of our banking system's housing portfolio.
  [/SIZE][SIZE=-1].[/SIZE]
• [SIZE=-1]Housing[/SIZE][SIZE=-1]. In some areas, it will take several years for the market to recover. Start with excess inventory, factor in higher unemployment, and we have a recipe for sluggish sales.
  [/SIZE][SIZE=-1].[/SIZE]
• [SIZE=-1]Retail shops[/SIZE][SIZE=-1]. Landlords are currently working with retail tenants to keep the doors open through Christmas. Both struggle to make a buck. But in January, many retailers will throw in the towel. Look for a sharp increase in retail store vacancy signs, accompanied by higher unemployment. Building owners take a revenue hit. More questionable bank loans.
  [/SIZE][SIZE=-1].[/SIZE]
• [SIZE=-1]Office and Industrial space[/SIZE][SIZE=-1]. Escalating unemployment means increased vacancies. Corporate contraction is inevitable. "Downsizing" becomes a verb. Building owners take a revenue hit. Bankers buy TUMS by the barrel.
  [/SIZE][SIZE=-1].[/SIZE]
• [SIZE=-1]Commercial loans[/SIZE][SIZE=-1]. This will be an all-too<!---->-typical situation. The money has been loaned, and the construction has been completed. But there aren't enough tenants to carry the paper on a take out loan. Does that spell default? More bad debt on the books of our banking system?
  [/SIZE][SIZE=-1].[/SIZE]
• [SIZE=-1]Small businesses[/SIZE][SIZE=-1]. Typically undercapitalized, and unable to borrow enough money to meet payroll, small business failures will increase. More bad debt. Thousands of people out of work.
  [/SIZE][SIZE=-1].[/SIZE]
• [SIZE=-1]Debt defaults[/SIZE][SIZE=-1]. Look for a sharp increase in credit card and auto loan defaults through 2010. Not only will this add to the load of non-performing debt, it will change the economics of the Credit Card industry.
  [/SIZE][SIZE=-1].[/SIZE]
• [SIZE=-1]Credit[/SIZE][SIZE=-1]. We are in a cycle where a lack of credit triggers loan defaults, leading to even tighter credit markets. Without access to credit, businesses (large and small) are forced to curtail operations, leading to layoffs, expense reduction, and reduced capital investment.
  [/SIZE][SIZE=-1].[/SIZE]
• [SIZE=-1]Derivatives[/SIZE][SIZE=-1]. The $60 trillion Credit Default Swap mess is starting to unravel. The worst will hit in 2009. And we do not have adequate visibility as to how much other derivative junk will crash.
  [/SIZE][SIZE=-1].[/SIZE]
• [SIZE=-1]Hedge funds[/SIZE][SIZE=-1]. Redemptions are up, forcing asset sales. Unfortunately, many of these assets are worth less than their original book value.
  [/SIZE][SIZE=-1].[/SIZE]
• [SIZE=-1]Dollar[/SIZE][SIZE=-1]. Look for a further devaluation of the dollar. This will increase the cost of goods purchased from other nations, increase the cost of manufacturing in the United States, and increase the cost of goods distribution. Fixed asset depreciation in an era of soft goods inflation promises to be an economic disaster for low to middle income Americans.
  [/SIZE][SIZE=-1].[/SIZE]
• [SIZE=-1]Government response[/SIZE][SIZE=-1]. People are becoming really frustrated with the failure of our dysfunctional government institutions. There is a clash of political philosophies. Add in a tough job market and one has a recipe for political turmoil. Generally speaking, conflict is not good for the stock market.
  [/SIZE][SIZE=-1].[/SIZE]
• [SIZE=-1]Globalization[/SIZE][SIZE=-1]. This crisis is global in nature. If this were a sane world, the response would also be global in nature as governments worked together to resolve the crisis. Instead, look for self serving, politically expedient, and ultimately ineffective nationalistic responses.[/SIZE]

[SIZE=-1] Suffice it to say, these factors make an ugly contraction highly likely.[/SIZE]

A Look At History
[SIZE=-1]Do we have a historical model that gives us a clue as to what lies ahead? Yes. The panic of 1873. And I do mean panic. There was a v shaped stock market contraction. It took several years to reconstruct an over-extended banking system. Bankruptcies skyrocketed. Corporate profits were miserable. Real estate values fell. Credit dried up. Wages were cut. By 1876, unemployment had risen to 14%, sending tens of thousands into the streets. There were bloody riots. Employment frustration and lousy policy led to labor conflict. Crime increased. The panic of 1873 was accompanied by industrial consolidation, politically motivated violence, and a call for institutional nationalization. Welfare systems were overwhelmed. Millions took solace in the practice of fundamental religious beliefs. Aliens and Jews became scapegoats for a failed economy. Political systems were destabilized.[/SIZE]

Conclusion
[SIZE=-1]It is hard to construct an optimistic scenario. It is far more likely this crisis will not be resolved until 2012 - or later. Look for economic destitution accompanied by political conflict. Given the acceleration of this contraction, and the challenges listed above, a DOW under 5700 and a NASDAQ below 430 are perfectly feasible. These economic events will exacerbate the already deep philosophical divide between "Red" and "Blue" Americans. Debilitating cultural turmoil and bitter political confrontation are in the wind. No matter who wins the American elections, the next four years are going to be brutal.[/SIZE]
[SIZE=-1]But don't believe me. I could be wrong. Do your own homework.[/SIZE]
[SIZE=-1]And pray I am not being overly optimistic when I say - "We can get through this."[/SIZE]
[SIZE=-1]Ron[/SIZE]
[SIZE=-1]Ronald R. Cooke
website: The Cultural Economist
email: tce@tce.name[/SIZE]

 

[scrimmage]

Re: Economic challenges ahead after the election.

When the 2008 election trickery is finally over will there be a treat for the average citizen,or will the mask's come off and the realization of a new economic reality be revealed:

Terrifying

Posted on Oct 19, 2008

By Mike Luckovich



From:
http://www.truthdig.com/cartoon/item/20081019_terrifying/

​

 

[Nicolos_Darvas]

Re: Economic challenges ahead after the election.

Whoever gets elected I will hold to account -- I am tired of all their Bull Shit promises and then NO ACTION !!!

I will accept no excuses and I will pound them even harder.

The Republicans fucked up big time on the huge overspending from 2002-2006 and the mis-management of the war. I have been very consistent on this.

The Democrats fucked up big time on the huge overspending since they took control of congress in 2006. The Democrats also fucked up big time with the Fannie/Freddie Fiasco to the tune of $1.5 Trillion. That is all on the Democrats hands -- ALL OF IT !!

 

[scrimmage]

Re: Economic challenges ahead after the election.

Whoever gets elected I will hold to account -- I am tired of all their Bull Shit promises and then NO ACTION !!!

I will accept no excuses and I will pound them even harder.

The Republicans fucked up big time on the huge overspending from 2002-2006 and the mis-management of the war. I have been very consistent on this.

The Democrats fucked up big time on the huge overspending since they took control of congress in 2006. The Democrats also fucked up big time with the Fannie/Freddie Fiasco to the tune of $1.5 Trillion. That is all on the Democrats hands -- ALL OF IT !!

Nic,
How are you going to hold anyone to account,and pound them harder,by posting more diatribes on EOG?
Here's a story which gives practical advice on thinking outside the traditional investing box.
"Change",and hard economic times can offer opportunity in unexpected ways.

WARNING: This is not a recommendation to buy sell or hold any financial instrument, or alpacas.

Stillwell Family's 401(k) Is Herd Of Alpacas

Breeding Alpacas Can Sell For Thousands Of Dollars

POSTED: 3:27 pm CDT October 17, 2008​

STILLWELL, Kan. -- With the volatile stock market and shaky economy, the Swikard family said they are glad their 401(k) comes on four legs.

"They're just gentle, curious, fun-loving animals. (They're) safe around children," said Dave Swickard of Lonesome Dove Farm.

If you spend a little time around Swickard's herd, you'll
understand why he's sold on alpacas.

"You can see it's compounding without any more initial investment," Swickard said.

Swickard started three years ago with four breeding females. The Swickards now have 18 alpacas and two guard llamas.

"Breeding stock is where the profitability in the business is at," Swickard told KMBC's Bev Chapman.

Females sell for between $10,000 and $25,000. Stud-quality males have sold for six figures.

"You feel that density; you feel that fineness," Swickard said, referring to the quality of the animals' coats.

Swickard's goal as a breeder is to produce the thickest, softest fiber possible for a yarn that is lightweight, warm as wool, and non-allergenic. He'd also like to invest his money in something relatively safe.

"For about 3 percent of the value, you can insure the animal against theft, mortality or loss when you cannot insure your stocks portfolio from going down," Swickard said.

When Swickard isn't out tending to his animals, he has another job.

"Mortgages," Swickard said.

Alpacas are one of the oldest domesticated animals on the planet. Their history dates back to the Incas of the South American Andes.

While the investment is not without risks, it is on the upswing in the United States.
From:
http://www.kmbc.com/cnn-news/17741606/detail.html#-

On The Internet:
LonesomeDoveAlpacas.com

 

[?natin'on$'s]

Re: Economic challenges ahead after the election.

[SIZE=-1] No matter who wins the American elections, the next four years are going to be brutal.[/SIZE]

Pretty much. We can start the finger pointing charade again in 2012, but there is no doubt rough times ahead.

 

[scrimmage]

Re: Economic challenges ahead after the election.

Pretty much. We can start the finger pointing charade again in 2012, but there is no doubt rough times ahead.

With money being created like crazy out of thin air to prop up the finacial system the following 2 articles show describe where all the excess is going to end up,in "things" like Ferrari's.
All the new dollars flooding the economy will be chasing fewer goods being produced and inflation will ensue.

#1
The Panic of 2008
[SIZE=-1]Bob Moriarty[/SIZE]
[SIZE=-1]Archives[/SIZE]
[SIZE=-1]Oct 21, 2008[/SIZE]

[SIZE=-1]The United States dollar is going to default soon. We have known since late 2002 that the US was in deep trouble. Treasure Secretary Paul O'Neill revealed the United States Government had a real debt of $44 trillion and it was growing at a rate of $2-$4 trillion per year. As of last year the debt was up to $59.1 trillion.[/SIZE]

[SIZE=-1]Even before the government started throwing money around like a drunken sailor US spending was totally out of control. In the fiscal year ended September 30, 2008, the actual yearly deficit totaled $1.017 trillion. We are broke and anyone who passed Economics 101 has figured that out. Soon, very soon, the US will officially default on their obligations.[/SIZE]

[SIZE=-1]I've made mention many times the incredible figure of $596 trillion dollars worth of derivatives. The world economy is only $60 trillion dollars. It's a giant crap game where everyone is playing with Monopoly money. [/SIZE]

[SIZE=-1]Everyone believes that when the music stops, they will find a chair. But there are no chairs. The number of nearly $600 trillion is so large that it has to be fraud. Derivatives have doubled in two years. How? The world economy hasn't doubled in two years.[/SIZE]

[SIZE=-1]Soon there will be a mad rush into "things." There is no choice. You can buy TBills and frame them so you can mount them on your wall. Then you can point to them when your grandkids come over and say, "See that? That used to be considered money." TBills are toast.[/SIZE]

From:
http://www.321gold.com/editorials/moriarty/moriarty102108.html

#2
Where Inflation Came From
By Paul Craig Roberts

In the post-WW II period, the US has experienced dramatic increases in the growth of money and credit. One way to demonstrate the erosion of the purchasing power of money is to look at the change in the behavior of the prices of used Ferraris. In the 1950s, 1960s, and even the 1970s, Ferraris depreciated rapidly. Well-to-do playboys attracted by the unique cars wanted the latest model, and few other people wanted the maintenance expense associated with the high performance machines. It was not out of the question for a person with an ordinary income to become the second owner of a Ferrari.

Excepting a few models of high volume and undistinguished performance, today it is totally out of the question that a person lacking an out- sized income or a large inheritance could acquire a previously owned Ferrari.

For example, in 1973 when I left Stanford University I had an opportunity to purchase a 1967 Ferrari 330 GTS. It was a low mileage car in new condition. The asking price was $10,000 and could have been negotiated down. Unfortunately, the Scottish part of my ancestry prevailed, and I did not purchase the Ferrari. Recently at the Monterey auction a 330 GTS sold for $671,000, 67 times its 1973 used car price.

As an assistant professor of economics in 1967, I cut a road test out of Road & Track magazine and filed it. The test was one of a 1967 Ferrari 275 GTB/4. The new price was $14,500. I intended to find one in a few years at a substantially depreciated price. At a recent Monetary auction, a 1967 GTB/4 sold for $1,925,000.

What has happened to money that causes a 41-year-old used car to sell for 133 times its new car price?

The abundance of money from a fiat money/fractional reserve banking system raises the price of scarce items that are beautiful and unique, such as Ferraris and antiques. Few Ferrari models were produced in numbers greater than several hundred cars. Perhaps the most famous Ferrari is the 250 GTO. Less than 40 were produced. The GTO, which is street legal, dominated racing and won the World Manufacturers Championship in 1962, 1963, and 1964. The new car price was $18,000. In 1989 one sold for $13 million, This year one sold for $28 million. I have a friend who bought a used GTO in Europe in the mid-1960s for $9,000 and sold it six months later for the same price.

Ferraris became collectibles, a store of value, a role that the dollar no longer performs. Today collectible cars have become items for speculation. They are flipped in auctions with bids rising several hundred thousand dollars from auction to auction, just as real estate speculators bid up waterfront condo prices and hedge funds bid up oil futures contracts.

The cars are worth so much now that you will never see one on the road, not even in the playgrounds of the rich and famous. The more than 1,500-fold rise in the price of the GTO over the last 45 years makes gold?s 28-fold price rise seem insignificant. But both prices show the ruin inflicted on the dollar by our fiat money/fractional reserve system.
From:
http://www.informationclearinghouse.info/article21051.htm

Real things:
​

 

[scrimmage]

Re: Economic challenges ahead after the election.

New book suggests America's salad days as the worlds economic power may need to be rethought.Don Rumsfeld's idea stated in 2001 that we should change the way "they" live instead of the way we "live" won't fly anymore.
Colonel Bacevich however seems to believe the Bush administration's actions after 9/11 were designed to prevent another "attack" when in fact elements in,or connected to the admisitration helped assist and then used the 9/11 attacks to carry out the PNAC[Plan For a New american Century]Neo-Con agenda.
The Grand Illusion of American Power
By H.D.S. Greeway

October 21, 2008 - "Boston Globe" -- THE OTHER DAY I went to hear my favorite soldier-scholar, Andrew Bacevich, give a talk at Boston University, where he teaches. A retired colonel and Vietnam veteran, Bacevich's new book is called "The Limits of Power, The end of American Exceptionalism."

​

There is a mythical American narrative, according to Bacevich, that the United States is a nation "providentially set apart in the New World and wanting nothing more than to tend to its own affairs," only grudgingly responding to calls for global leadership "in order to preserve the possibility of freedom." In reality, the United States has sought expansion, first by pushing west until it reached the sea, then through a brief period of direct colonialism, and more recently through a ruthless if indirect imperial policy of control. It worked spectacularly. The United States became a great power replete with material abundance.

Right around the time of the Vietnam War, Bacevich argues, this began to unravel. Trade imbalances, federal deficits, "mushrooming entitlements, plummeting savings rates, and energy dependence" led us to become a debtor nation, counting on others to foot the bill. "The positive correlation between expansion, power, abundance, and freedom began to become undone . . . Further efforts at expansionism have led to the squandering of American power," according to Bacevich.

The actions of the Bush administration after 9/11 may have been designed to make the United States safe from another attack. But the chosen method was nothing less than to "assert American power throughout the Greater Middle East . . . to transform this region, to employ American power, both hard and soft, to impose order while ensuring stability, order, access, and adherence to American norms - in essence to establish unambiguous US hegemony so that the Islamic world will no longer serve as a breeding ground for terrorists who wish to kill us."

The grand illusion of American power as a transformative agent is evident in what Bush's lieutenants had to say. "We have a choice," said Donald Rumsfeld in September, 2001. Either we change the way we live, "which is unacceptable," or we "change the way they live, and we chose the latter. " Or as Douglas Feith would later put it: America's purpose was to "transform the Middle East and the broader world of Islam generally."

This grand imperial overreach never had a chance. Transforming Islam can only be done by Muslims themselves, in their own due time. The new "liberated" Iraq has not changed the Middle East. The passions of the Middle East have transformed Iraq, perhaps more stable now than a year ago but in no way destined to achieve what Bush, Rumsfeld, Condoleezza Rice, et al wanted and expected.

The net result is that much of the world now looks on the Bush administration's resurrection of Woodrow Wilson's ideals and the expansion of democracy as a cover for coercion and bare-knuckle dominance. As Bacevich says, Bush always confused strategy with ideology.

Militarily, we threw containment and deterrence out the window, banking on the "shock and awe" of preventive war. It hasn't worked. We are bogged down in two wars with an end to neither in sight.

Bacevich doesn't see the November election as necessarily producing a beneficial change. John McCain touts the stalemated Iraq war as a success, while Barack Obama calls for more effort in Afghanistan. In Bacevich's view, it is the entire doctrine of preventive war that has proved a failure. There has to be a better way than occupying Muslim countries.

Both McCain and Obama "implicitly endorse the global war on terror as the essential core of US policy," while in reality it's the entire concept that needs to be rethought.
Excerpts from:
http://www.informationclearinghouse.info/article21069.htm
H.D.S. Greeway's column appears regularly in the Globe.

 

[scrimmage]

Re: Economic challenges ahead after the election.

Citizen's around the world continue to adjust to new economic realities.With tighter household budgets there's less impulse shopping,and a search for factors like durabilty,quality,and value in purchases.Here's an example in the Xmas toy department,of less quantity possiblity not being so bad if what's presented gives more lasting satisfaction.

Lego heads for record year as parents ditch cheap Chinese toys in favour of quality

Lego, the toy company, is on track for a record year as British parents struggling with the economic downturn shun buying lots of cheaply-made toys in favour of one, well-made present for their children.

By Harry Wallop, Consumer Affairs Editor
Last Updated: 4:53PM BST 17 Oct 2008

​

Lego has been enjoying very strong sales in recent weeks Photo: JULIAN SIMMONDS

The toy industry is facing a very tough year, as parents and grandparents contemplate the previously unthinkable ? cutting back on presents for their children this Christmas. Sales fell in September by 3 per cent, compared with a year ago.

However, trading figures suggest that long-established companies are bucking the downturn as parent plump for brands they recognise and trust, with Lego and Playmobil both enjoying very strong sales in recent weeks.
According to John Lewis, sales of Lego are up 42 per cent, Playmobil is up 19 per cent.

Stuart Grant, buying director at The Entertainer, the country's largest chain on independent toy shops said: "All three brands are doing unbelievably well, despite the credit crunch. There is a real move from parents towards saying, 'I have just ?100 this year to spend on presents. I want something really good quality and not something that will end up being discarded on Boxing Day'."

Lego says that its sales are up 30 per cent in the UK so far this year and is on track to hit an annual turnover of ?95 million, which would be a record.
Marko Ilincic, the British managing director, said: "In the credit crunch it is all about trusted brands. Last year the toy industry was dogged by the Chinese product recalls. We are helped by the fact that our toys are made in eastern Europe mostly."

Playmobil, the other company that is doing very well, makes nearly all its toy buildings, vehicles and people in Germany.

Hazel Reynolds, toy buyer at John Lewis, said: "Customers are looking to buy toys of high quality and durability, made by recognised brands from their childhood."

The strong performance of the these firms, however, will not be enough to offset what could be a terrible Christmas for the toy industry.

Frederique Tutt, at NPD market research firm which monitors the market, said: "We're holding our breath. In the past parents tighten their own belts before they cut back on spending for their children. But we've never been in times like this before."
From:
http://www.telegraph.co.uk/news/ukn...-cheap-Chinese-toys-in-favour-of-quality.html

 

[scrimmage]

Re: Economic challenges ahead after the election.

Economic
From:
http://www.informationclearinghouse.info/article21087.htm
Down For The Count
"The whole system is contracting"

By Mike Whitney

"The great inter-war slumps were not acts of God or of blind forces. They were the sure and certain result of the concentration of too much economic power in the hands of too few men (who) felt no responsibility to the nation." From the 1945 UK Labour manifesto Let Us Face The Future

The US Treasury and Federal Reserve are now underwriting the entire financial system. The free market has been abandoned altogether. Everything from commercial paper to money markets is now backed by the "full faith and credit of the United States". Without that explicit government guarantee, the credit markets would still be frozen and the system would crash. But government guarantees do not address the real problem, which is toxic assets that must be accounted for and written down. All it does is take hundreds of billions of dollars in mortgage-backed garbage onto the nation's balance sheet and undermine the creditworthiness of the United States. Eventually, foreign central banks will see the folly of this maneuver and refuse to buy more US debt. When that happens, there will be a run on the dollar and a major dislocation in the bond market. Then, the financial system will grind to a standstill once again. ​

Secretary of the Treasury Henry Paulson's $125 billion capital "giveaway" to nine of the country's largest banks has helped to calm the credit markets, but it won't last. The "real economy" is beginning to stumble and the stock market is gyrating more wildly than anytime in history. Wall Street is consumed with fear and investors are ducking out the exits as fast as their feet will carry them. According to the New York Times, the banks probably won't even use Paulson's money to extend loans to consumers and businesses (as intended), but will hoard it to make sure they are sufficiently capitalized when their mortgage-backed assets are downgraded. Even worse, the banks may use the money to gobble up smaller local and regional banks. On Tuesday's [10/21/2008]Jim Lerher News Hour, New York Times journalist Andrew Ross Sorkin put it like this: "The other thing that some of them may do with that money is go out and make acquisitions and buy other banks, (which) means that you will not be getting this money into your pocket anytime soon....I think the larger issue is the economy and these banks, in terms of lending, are not going to start lending real money until the economy turns."​

Paulson knows what the banks are up to; after all, these are his friends. The truth is, the $125 billion was not given to the banks to soften the effects of the recession or increase lending. It was given to make the strong banks even stronger so they could monopolize the industry. Paulson's real plan is "more consolidation" and less competition, or as economist Michael Hudson says, "Big fish eat little fish". The Treasury Secretary is using his authority to reward his friends rather than doing what is best for the country.
. ​

​

 

[scrimmage]

Re: Economic challenges ahead after the election.

​

More digestible information from:
http://www.informationclearinghouse.info/article21087.htm

<TABLE width="90%" border=0><TBODY><TR><TD width="100%">Down For The Count
"The whole system is contracting"
By Mike Whitney

</TD></TR></TBODY></TABLE>
92 year old Anna Schwartz, who co-authored "A Monetary History of the United States" with Milton Friedman, said in a recent Wall Street Journal interview that Paulson and Bernanke "should not be recapitalizing firms that should be shut down." Rather, "firms that made wrong decisions should fail.... By keeping otherwise insolvent banks afloat, the Federal Reserve and the Treasury have actually prolonged the crisis." At the same time, they have not alleviated the uncertainty among lenders "that would-be borrowers have the resources to repay them."

This is the very heart of the matter; the distrust will remain until the bankrupt institutions are shut down and confidence is restored. The good banks have to be strengthened, the bad banks have to be closed, deposits have to be insured, foreclosures have to be reduced (to stabilize home prices), and consumers need immediate stimulus (including food stamps, extended unemployment insurance, infrastructure spending and aid to states) to rev up the economy. All of these have to be done as quickly as possible to avoid further damage to the economy and greater personal suffering.

According to an estimate by the UNs International Labour Organisation (ILO) "Twenty million jobs will disappear by the end of next year as a result of the impact of the financial crisis on the global economy...Construction, real estate, financial services, and the auto sector are most likely to be hit, according to the ILO's estimate which is based on International Monetary Fund projections for the world economy." It could be worse if the Bernanke and Paulson botch the rescue. ​

The FDIC's Sheila Bair has been the one "bright light" in the ongoing financial train-wreck. She has done a first-rate job of closing "sick" banks and renegotiating mortgages. Last week, Bair blasted Paulson for focusing all his attention on the banks and financial institutions instead of homeowners, many of who are now facing foreclosure. In an article in the Wall Street Journal, she said: "We're attacking it (the crisis) at the institution level as opposed to the borrower level, and it's the borrowers that are defaulting. That is what's causing the distress at the institution level...So why not tackle the borrower
problem?" ​

​

Unlike Paulson, Bair seems to grasp that the hemorrhaging in the financial sector cannot be stopped unless the rate of foreclosures is slowed and housing prices stabilize. The FDIC chief has taken a sensible approach to the crisis by writing down the face-value of mortgages and putting homeowners in conventional 30-year fixed rate loans that make it possible for them to avoid foreclosure....
... This gets to the root of the larger problem which is stopping the slide in housing prices so that the mortgage-backed securities market can normalize. ​

The actions of the Fed, the Treasury and the FDIC are likely to cost in excess of $2 trillion. That does not include the trillions in market capitalization that are wiped out by plummeting home and stock prices. Nor does it include the incalculable suffering from rising unemployment, falling living standards, and personal hardship. Eventually, the Fed's emergency measures will result in higher taxes, soaring deficits and slower growth. As America's "consumer-based" economy flags and the recession deepens, capital will flee US Treasurys and securities and create a funding crisis. This may be hard to imagine now that the dollar is strengthening and US Treasurys appear to be in great demand, but the handwriting is already on the wall.​

Brad Setser explains the dollar's surprising reversal in his latest blog-entry: "The dollar?s rise since July is part of a reversal in longstanding investment trends that prevailed during years of plentiful borrowing, strong growth and low financial-market volatility. ?Essentially, every large trade that built up a head of steam in the go-go years has blown up or is in the process of blowing up,? wrote Alan Ruskin, chief international strategist at RBS Greenwich Capital, in a report to clients. ?That goes for almost every asset class.?(Brad Setsers Blog) ​

The recent surge in US Treasurys is also misleading, much of it having to do with terrified investors that are dumping their shares in stocks, mutual funds and hedge funds for the perceived safety of US debt. Foreign investors, however, seem to be losing their enthusiasm for Treasurys as America's future continues to darken.​

 

[scrimmage]

Re: Economic challenges ahead after the election.

Citizen's around the world continue to adjust to new economic realities.With tighter household budgets there's less impulse shopping,and a search for factors like durabilty,quality,and value in purchases.Here's an example in the Xmas toy department,of less quantity possiblity not being so bad if what's presented gives more lasting satisfaction.

Lego heads for record year as parents ditch cheap Chinese toys in favour of quality

Lego, the toy company, is on track for a record year as British parents struggling with the economic downturn shun buying lots of cheaply-made toys in favour of one, well-made present for their children.

By Harry Wallop, Consumer Affairs Editor
Last Updated: 4:53PM BST 17 Oct 2008

​

Lego has been enjoying very strong sales in recent weeks Photo: JULIAN SIMMONDS

The toy industry is facing a very tough year, as parents and grandparents contemplate the previously unthinkable ? cutting back on presents for their children this Christmas. Sales fell in September by 3 per cent, compared with a year ago.

However, trading figures suggest that long-established companies are bucking the downturn as parent plump for brands they recognise and trust, with Lego and Playmobil both enjoying very strong sales in recent weeks.
According to John Lewis, sales of Lego are up 42 per cent, Playmobil is up 19 per cent.

Stuart Grant, buying director at The Entertainer, the country's largest chain on independent toy shops said: "All three brands are doing unbelievably well, despite the credit crunch. There is a real move from parents towards saying, 'I have just ?100 this year to spend on presents. I want something really good quality and not something that will end up being discarded on Boxing Day'."

Lego says that its sales are up 30 per cent in the UK so far this year and is on track to hit an annual turnover of ?95 million, which would be a record.
Marko Ilincic, the British managing director, said: "In the credit crunch it is all about trusted brands. Last year the toy industry was dogged by the Chinese product recalls. We are helped by the fact that our toys are made in eastern Europe mostly."

Playmobil, the other company that is doing very well, makes nearly all its toy buildings, vehicles and people in Germany.

Hazel Reynolds, toy buyer at John Lewis, said: "Customers are looking to buy toys of high quality and durability, made by recognised brands from their childhood."

The strong performance of the these firms, however, will not be enough to offset what could be a terrible Christmas for the toy industry.

Frederique Tutt, at NPD market research firm which monitors the market, said: "We're holding our breath. In the past parents tighten their own belts before they cut back on spending for their children. But we've never been in times like this before."
From:
http://www.telegraph.co.uk/news/ukn...-cheap-Chinese-toys-in-favour-of-quality.html

More toy story economic news as Mattel the "toy" car maker of the timeless Hot Wheels surpasses "real" car and formerly worlds biggest company General Motors in stock market value.
Its funny how the toy house building and auto business is doing so well at Lego and Mattel,compared to the real thing.
BTW notice how many times the brand is mentioned in just the few excerpts of the story below.

How a Tiny Toy Makes Big Bucks

Hot Wheels are hot again. Parent company Mattel is now worth more than GM. Got an old Beach Bomb VW model in the attic? You're rich!

​

PHOTOS

Little Big Car

Vintage and valuable toy vehicles from Hot Wheels

On weekends, Edwin Norman likes to hit the Richwood Flea Market in northern Kentucky with his sons, Ja'Mon, 5, and Julian, 6. But they don't come to pick up a set of hunting knives. The Cincinnati-area father and his sons are shopping for wheels. The kind that come in a plastic package and cost a buck. Today, the young boys see plenty they like as they rush the table at the Mo Collectibles booth, squealing and squirming over rows of shiny, tiny hot rods. Ja'Mon suddenly spots the car he likes?a metallic midnight-blue Suzuki?snatches it up and waves it in his brother's face. "I want to drive this car when I'm big," he says. Their father looks on wistfully. "This brings me back," says Norman, 50. "I played with Hot Wheels when I was a kid, and they look forward to getting new ones just like I did."

In the fad-driven fantasyland of toys, Hot Wheels has had an incredible ride. Those pocket rockets have been racing down their familiar orange tracks for four decades now and, unlike the real car market, show no signs of slowing down. Last year Hot Wheels set a record, as sales surged by 16 percent, and they continue to accelerate in 2008 even as the economy tanks. In fact, as Motown melts down, Hot Wheels is heating up. The tiny toy cars' parent company,Mattel, now has a market capitalization that surpasses General Motors. That's right?Wall Street thinks the maker of toy cars is worth more than the largest real carmaker in America.

And why not? Hot Wheels is still a growth engine that analysts say does $1 billion a year in global sales. In the $2.3 billion U.S. market for toy vehicles, Hot Wheels has been a leader for years, according to retail researcher NPD Group. Mattel says it has produced 4 billion Hot Wheels since 1968. And Hot Wheels suffers none of the age angst afflicting Mattel's other icon, Barbie, the Norma Desmond of dolls. Now Hot Wheels is getting the star treatment. There's a Saturday-morning cartoon, "Battle Force 5," debuting on Cartoon Network next fall. A Hot Wheels movie from "Matrix" producer Joel Silver and Warner Brothers is in the works. And Wal-Mart, America's No. 1 toy seller, is featuring two Hot Wheels sets, Trick Track and Beast Bash, in its big "Ten Under $10" holiday promotion. "Hot Wheels' basic fantasy is something that is timeless?it's cool, fast and powerful," says toy analyst Chris Byrne.

From and continued at:
http://www.newsweek.com/id/165377

 

[4625]

Re: Economic challenges ahead after the election.

Whoever gets elected I will hold to account -- I am tired of all their Bull Shit promises and then NO ACTION !!!

I will accept no excuses and I will pound them even harder.

The Republicans fucked up big time on the huge overspending from 2002-2006 and the mis-management of the war. I have been very consistent on this.

The Democrats fucked up big time on the huge overspending since they took control of congress in 2006. The Democrats also fucked up big time with the Fannie/Freddie Fiasco to the tune of $1.5 Trillion. That is all on the Democrats hands -- ALL OF IT !!

The Repugnants also fucked up by running such an incompetent campaign, that the Demorats will now control both Houses of Congress in addition to the Presidency. Nothing good comes from total one-party dominance.

 

[scrimmage]

Re: Economic challenges ahead after the election.

Where'd he come from?Seemed to relate to Post #8 in this thread somehow.It's synchronicity...

Pictured: The giant 8ft Lego man who washed up on the beach

By Daily Mail Reporter 30th October 2008

At 8ft tall and wearing a garish green jersey he's not the sort of chap to get lost down the sofa.

In fact, you'd think he was unlikely to get lost at all. But someone (possibly someone big), somewhere is missing a key bit of their Lego set.

The colourful character mysteriously washed up on Brighton beach yesterday spawning dozens of tales - soon to become local legend - about where he may have come from.



Stand-up comedy: Bemused children heave the brightly coloured figure upright

While some believe he floated from Denmark-where there is a Legoland park), others suggest he toppled off a ship. Of course, there's always the cynical possibility he's part of a publicity stunt.

Resident Gerry Turner, 34, said: 'It's very odd. God knows how it got here but people are saying it's from Holland because it's got some Dutch writing on it.
'It must have fallen off a boat of something. The kids love it.'

Children who helped stand the Lego man up on the beach were desperately curious about where it came from.
One said: 'It's great, but we don't know why it's here.'



Castaway: The giant Lego man lies where he washed up on Brighton beach

A spokesman for Brighton and Hove City Council said town hall officials had no idea of the origin of the Lego man, but added that they saw no difficulty in letting it stay on the beach where it washed up.
He said: 'There's no problem at all. It will be interesting to see how long the Lego man stays there for. We'll keep an eye on it.'
But Lego was insistent: 'We're bemused. He has nothing to do with us.'
The Lego giant's arrival on the East Sussex shingle yesterday morning comes two years after an armada of plastic ducks landed on British shores.
Borne on the ocean currents, the ducks had made a 17,000-mile odyssey from the Pacific where they had been washed from a container ship in a 1992 storm.
From:
http://www.dailymail.co.uk/news/article-1081751/Pictured-The-giant-8ft-Lego-man-washed-beach.html
​