Archive for November, 2008

Handbasket Report — Shipping News Update

30 November 2008

I just posted some more info and links under my original Nov. 14th report on the shipping news. But this is getting too good, i.e. bad, to hide in a comment.

This is from “Shipping Continues Its Downward Plunge” :

Exposure to derivatives and CDSs are significantly larger than they were in the same period in 2007, when the system was in a better state and thus the system has started to fall off a precipice with no sign of the bottom in sight. Once fallen, there is no stopping it unless the toxic financial bundles are purged from the system. The lack of will to do this is accelerating the systemic failure. There is not enough money on the planet to cover the derivatives market pure and simple. The Shipping industry is just another cog in the economic machine. As the machine grinds to a halt, the cogs inevitably stop turning.

Notice how many people are beginning to use the word “cliff” in their descriptions of our economic situation?

Cassandra

Handbasket Report — Shop till You Drop

29 November 2008

Considering the rising, if generally uninformed, financial hysteria in America, the headline “Wal-Mart Employee Trampled to Death” failed to surprise me. It certainly didn’t surprise me that people continued to pursue deals even after finding out that a human being had died and reacted with anger when asked to leave the store.

I mean, really, what’s important in America? Human life? Well, uh, maybe if it’s unborn. But a heavily pregnant woman was injured too, and there was apparently no remorse for endangering her unborn child either.

So what are American priorities? Did these shoppers not deserve deals? Had they not waited almost until opening time? Is it not the first priority of Americans to shop, to CHARGE?!

But now that Black Friday is over, is it time to reflect?

What do we know of this particular Wal-Mart, this place? When you heard/read of this incident, did you envision the community around this store?  If so, I’ll bet you imagined poverty.  Admit it.  If you’re middle class, that was probably your first thought.

So what is Valley Stream like?  Interested?  If so, click this link: Valley Stream on the Long Island Exchange Website. Some tidbits:

As of 2000 census, there were 36,368 people . . . . The median income for a household in the village is $189,243, and the median income for a family is $172,585. Males have a median income of $90,094 and only $56,260 for females.

Valley Stream is considered a middle-class community with so many lovely homes with different styles such as ranches, capes, colonials, and Tudors. Prices normally range from $300,000 up to $1.29 million.

Of course, those prices are most likely inaccurate given the current market.

And if you are at the Valley Stream site, you might want to click on the surrounding communities. Hmmm. Looks like a lot of them are poorer, much poorer–and heavily foreign born. I feel middle class fear rising as I type.

Of course, at the bottom of “Wal-Mart Employee Trampled to Death” is mention of another, less serious trampling at another Long Island Wal-Mart, one in Farmingdale,which is further out, and mostly “Italian, Irish, German, and Polish.”  This place is also much poorer–household median income $58,411–and the towns around it are also much poorer and whiter than those around Valley Stream.

So I guess this second assault wasn’t on one of the “better” Wal-Mart stores.

But the good news. Despite her cut leg, this plucky woman soldiered on. She shopped, checked out, and then she filed a report with the police. A true American, right?

Cassandra

Handbasket Report — Deflation

23 November 2008

One of the key points of deflationary times is that stuff gets cheaper and cheaper as sellers lower prices in order to entice buyers. Another key point is these potential buyers hold out longer and longer, hoping for even lower prices. If you’re a buyer, this sounds great, doesn’t it?

But ever wonder who’s on the point of the short end of this stick?

This’s from the “Fields of Grain and Losses,” published in the NY Times on Nov. 20, 2008:

In this lonesome stretch near the Texas border, farmers are getting an early taste of a deflationary world. They have finished planting next year’s winter wheat, turning the fields a brilliant emerald green. But it cost about $6 a bushel in fuel, seed and fertilizer to put the crop in. That is $1 more than they could sell it for today, and never mind other expenses like renting land.

Oh, yes, I can see that this’s going to be a mild recession. I can see good times a’comin’!

Have a Happy Thanksgiving!

Cassandra

P.S. Here’s another nice tidbit from Bloomberg dated Nov.21:

The Baltic Dry Index, a measure of shipping tariffs for commodities, fell 1.4 percent yesterday, its biggest loss since November 4.

Handbasket Report — The Shipping News

14 November 2008

The Baltic Dry Index.

Never heard of it? Until a few weeks ago, neither had I. So, to bring you up to speed, here’s a 2003 article from Slate“The Shipping News: The Best Economic Indicator You’ve Never Heard Of.”

In case you don’t want to read that, I’ll just say the BDI tracks the shipping of raw materials by sea. Sounds about as exciting as counting your heart beats, doesn’t it? Well, it is, because if you’re counting your own and that nice steady thumping slows and slows and slows, you may want to dial 911 before you faint and perhaps even stop breathing.

Money, the blood of commerce, has dried up, and shippers haven’t been able to get loans to move freight of late.  So in the past couple of months the BDI has gone from an overexcited thumpthumpthump to thump–thump———thump—————THUD.

The UK Times of November 13 says it’s down nearly 90% in the last few weeks. Other sources say it’s down even more.  But why should you care?

I like this simple explanation from LondonBanker:

If cargo trade stops, the wheat doesn’t get exported. If the wheat doesn’t get exported, the mill has nothing to grind into flour. If there is no flour, the bakeries and food processors can’t produce bread and pasta and other foods. If there are no foods shipped from the bakeries and factories, there are no foods in the shops. If there are no foods in the shops, people go hungry. If people go hungry their children go hungry. When children go hungry, people riot and governments fall.

Care now?

Cassandra

Handbasket Report — On Wheels

11 November 2008

Remember that scene at the end of Thelma and Louise where their 1964 blue Thunderbird sails off the cliff? Anybody else seeing that airborne car as representative of the whole American auto industry?

Of course, the actual Thunderbird from the movie survived to be auctioned off. So will there be an auction/buyout/bailout to save the US car industry? Should there be?

I say no because, no matter what anyone does, I’m not seeing a 2016 Silverado in anyone’s future. I feel for the millions who’ll be out of work when the industry collapses. I feel for me and all the others who are only remotely connected to the industry. Hey, this is America and ALL of us are at least remotely tied to the auto industry. It ain’t lookin’ good. It ain’t lookin’ good AT ALL.

But suck times–sometimes typos are happy accidents– require an assessment of reality and tough, unpopular decisions. In this case, it strikes me that saving the industry would require a Hollywood stunt. And our government may have play money and fancy sets but it isn’t Hollywood. Reality is going to rule here, as it tends to do. And in reality that Thunderbird would be an unrecognizable heap at the bottom of that cliff.

At least I’m not alone is this dismal call to action. Here’s a snippet of llargi’s Nov. 11 post at The Automaticearth:

I sincerely hope, for Obama and for the nation . . . will end up in letting GM follow in the steps of the dino and the dodo. The “not on my watch” theme forces the demise of GM -and probably Chrysler- to take place in between presidencies. Now is that time. Obama cannot carry GM on his back for four years. He needs to deflect the blame for the bankruptcy. Now is the time. Yes you can.

Yes you can. The sooner the better. Hit the throttle HARD and hang on, because this is going to HURT. [Insert screams and a loud SPLAT right here.] Get the agony over and start looking for salvage. Yes you can.

RIP American car industry. I thought you were foolish and greedy in 1980. I thought you were blithering stupid thereafter.

But profits dictate company direction. Big profits, big SUVs, BIG trucks.

And then the road ran out.

Cassandra