Economic Trends Key Findings
Spending Still Up – But Clouds Loom
· 67% of industry respondents say water spending will increase for next 12 months – a 14-pt decline since June 2007
U.S. Water Spending Trends
· Slower spending growth is seen for the private sector, and for federal and local governments
· By better than a 2-to-1 margin, respondents believe a U.S. recession will lead to decreased water project spending – with local governments the hardest hit
Water Sectors Attracting the Most Spending…
· Wastewater Treatment (Net Diff. Score = +39; up 17-pts)
· Water Infrastructure Repair & Replacement (+68; up 10-pts)
…And The Least Spending
· Water Filtration (+2; down 8-pts)
· Desalination (-24; up 2-pts)
Consumer gloom lightens in March | Euro News 24 – 04:10 The GfK/NOP consumer confidence barometer rose to a 10-month high of -30 in March from -35 in February, confounding expectations for an unchanged reading.The figures will provide some cheer for who is lagging in opinion polls and …
NewsDaily: Final Four fun overshadowed by Big Three gloom – The excitement of the Final Four was overshadowed by grim news for the Big Three automakers on Monday, pouring cold water on one of American sport’s biggest parties.
British consumer gloom lightens in March-GfK | Financial 24 – 03:39 LONDON, March 31 – British consumers grew less gloomy in March as lower mortgage repayments boosted disposable income even as the recession took an increasingly heavy toll on jobs, a survey showed on…
TAT LOOKing TO MIDdle EAST TO LIFT GLOOM – Nationmultimedia.com – The Nation – Thailand’s top English news website, Thai politics news , business update , Bangkok , Thailand Travel , News in video – nationmultimedia.com.
Doom and Gloom by David Wygant – The stock market is down 300 points… Unemployment reaches 10% in California… Foreclosures are at an all-time high…
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European “Credit Crunch” Crisis
European “Credit Crunch” crisis
It is worse for Europe and the finances of the European Union economies than even the US with Obama.
The EU and Switzerland have loant so much money to Eastern Europe – including Poland that not even the Swiss can bail out their Swiss banks.
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Again It can Be Said
Again it can be said that the lessons of the past often bring us valuable insights into the future – this is particularly true during these times of uncertainty – even more so during these times of appeasement and control by Mr. Obama and his host of cronies.
The past year was one of the most difficult periods for investors in over a generation – hearkening all the way back to the era of the 1930’s with the ” Great Depression”. A whole generation – and indeed our current’s crop of socialists mentors and emphatic teachers and bell weathers had their formative period stamped indelibly on their minds , values and outlook by the events of the “Great Depression” of the 1930’s. Mr. Stanley Knowles , a great Canadian parliamentarian seemed to be fixated in his mind on one story of the “poverty” being that terrible that a set of 3 brothers had only one pair of pants among them . Hence they could only go out and look for work ( if it existed in their area) one at a time. Hence unemployment became the major evil in his mind.
All of this led us to where we are today. Entitlements . Keynesian economics . The worst thing ever is unemployment – no matter what. So much for the economy , its power , its health , its efficiencies.
It can be said that in the former Soviet Union everyone had a job , but no one could eat. Long lines for poor consumer good were the order of the day. However this system could not be sustained. The major reason for the power of the current Russian regime is the value of its oil and minerals – and the foreign currencies that they earn from the outside.
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How did this All Happen – the Importance of Basic Economic Fundamentals
It can often as well as best be said that the “lessons from the past” often help to gain more than valuable insights , trend estimates and predictions into the future – our very futures . This cannot be stressed more than during times of uncertainty and indeed gloom.
Indeed uncertainty and gloom seem to be the order of the day – indeed the only order if one listened to the media. It can be said that like begets like . Not only it is in the eye of the beholder – but these again are often “self fulfilling prophecies”.
Doom and Gloom by David Wygant – The stock market is down 300 points… Unemployment reaches 10% in California… Foreclosures are at an all-time high…
Mary Quite Contrary: Chapter 7, Page 25 Doom and Gloom – Chapter 7, Page 25 Doom and Gloom. Depression of the seasons. There are times of year that are just bad for the mood. Dad seems to be especially affect by the spring thaw. Maybe it’s all that damp. Weather certainly seems to have some …
Stock Markets Move Past Gloom and Doom in Anticipation of the U.S. … – The recent stock market rally may not be a bear-market trap or a “dead cat bounce,” but may in fact be the first signs of dust from an oncoming and.
Gloom and Doom Returns to the Markets | The Traders Journal – FinancialSpiltMilk submits: I apologize for being radio silent for the past few days. Guests in from out of town, busy at work, letting people come back to.
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The past year of 2008 , and reaching into the current calendar year of 2009 are among the most , if not the most definitely memorable , if not disastrous for many if not most of our contemporaries .
We may have heard of such events in the past – the 1930’s an era deeply etched into the memories , patterns , habits and general outlook of many of our distant friends and relatives.
Yet we never thought that “it would happen to us”. Not only that but it now appears that we had ignored warning signs over and over , much to our peril. Its almost as if we had become immune to the warning bells and whistles – that they did not matter. The whole episode can be likened to a woman driving a car- seeing the low oil warning light – and then ignoring the warning light and even sounds ” hoping that it will go away”.
In the end it can be said that economies , economics and investment strategies are all basic in certain fundamentals. Simple as that.
Import Quotas
A tariff may not reduce imports to the degree hoped for by those who introduced it. The foreign exporters or the domestic importers, or both , may absorb most of the duties and foreign exchange costs. Because the foreign goods are offered to consumers at a little more than the former price and prices , the volume of sales may decline only slightly. Or even if the full price of the duty is added to the selling price , consumers may still buy practically as much as before. In either case domestic producers of similar goods do not derive much benefit or benefits from the tariff. Foreign goods may be selling in virtually the same quantities as before, the share of the market held by domestic producers will be little changed, if at all. Because of the possible consequences , a tariff imposed as a means if conserving foreign exchange , may similarly fail to produce the desired result or result, With the volume of imports down only slightly, if at all the expenditure of foreign exchange and forex currencies will the same as before or down just a small amount or percentage.
Consumer gloom lightens in March | Euro News 24 – 04:10 The GfK/NOP consumer confidence barometer rose to a 10-month high of -30 in March from -35 in February, confounding expectations for an unchanged reading.The figures will provide some cheer for who is lagging in opinion polls and …
NewsDaily: Final Four fun overshadowed by Big Three gloom – The excitement of the Final Four was overshadowed by grim news for the Big Three automakers on Monday, pouring cold water on one of American sport’s biggest parties.
British consumer gloom lightens in March-GfK | Financial 24 – 03:39 LONDON, March 31 – British consumers grew less gloomy in March as lower mortgage repayments boosted disposable income even as the recession took an increasingly heavy toll on jobs, a survey showed on…
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TAT LOOKing TO MIDdle EAST TO LIFT GLOOM – Nationmultimedia.com – The Nation – Thailand’s top English news website, Thai politics news , business update , Bangkok , Thailand Travel , News in video – nationmultimedia.com
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Doom and Gloom by David Wygant – The stock market is down 300 points… Unemployment reaches 10% in California… Foreclosures are at an all-time high…
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We Should All Be Grateful for Bear Market Rallies
We should all be grateful for the bear market rallies that followed, because they gave us another opportunity to lighten up on stocks and build cash in preparation for the real end of the bear market.
I hate to be the bearer of bad news, but the worst of the sub prime mortgage mess hasn’t even begun. We have more pain to go through before we can call the bottom.
Now, the post-rate-cut question is:
A) Do the worst offenders in the sub prime market have a liquidity problem?
Or…
B) Do the financial institutions heavy with sub prime debt — Washington Mutual (WM), National City Corporation (NCC), etc. — have a solvency problem?
The correct question to ask is B, and we should expect to see lower housing prices and more liquidation, a la Bear Stearns (BSC), before the “all clear” signal is sounded.
Before this is over, we’ll see more of these investment banks carried out in body bags to reconcile the enormous level of bad judgment and runaway greed that is behind this whole fiasco.
Now let’s not get too bearish here — we’re making progress. Personally, I can’t wait to take advantage of some of the great opportunities that lie ahead.
As a matter of fact, we’re already taking advantage of some opportunities that are just too good to pass up — particularly in the Freddie Mac and Fannie Mae guaranteed mortgage paper owned by mortgage real estate investment trusts (REITs). That paper is discounted 50% below its actual value.
Come Back to Reality
As with all problems in life, we have to leave the denial zone and enter reality.
Remember, in August, the turmoil in the financial markets was characterized as a “temporary liquidity problem.” The B&P Paribas and Bear Stearns hedge funds blowups were seen as isolated incidences.
Now, seven months after this “temporary” problem, and $200 billion (probably headed to $500 billion) in bad loans write-offs later, the politicians are still in denial.
We need to step back and recognize that the current situation is not a liquidity issue, and hasn’t been one for a long time.
The problem is the genuine uncertainty about the underlying value of the assets, and that’s a solvency problem, which is exacerbated by the fact that many of the entities that own these bad assets are financial companies with 20- to 30-to-1 leverage.
There are still dozens of these special purpose entities out there sitting on a pyramid of paper that’s supported by leverage — and no one has any idea what they’re actually worth.
If this were a simple liquidity problem, then the action that’s been taken by the Federal Reserve and other Central Banks ($1.5 trillion worth) would have solved things — but it hasn’t. Instead, the Fed’s actions have resulted in bear market rallies, followed by pullbacks.
If you still think we’re dealing with a liquidity problem, consider the following:
1) Credit spreads — the cost of buying credit is higher today than it was seven months ago.
2) Mortgage rates — these are also higher today than they were seven months ago, even with all of the liquidity that has been pumped in by the Fed.
3) Corporate debt spreads for banks — corporate bank debt is now paying a higher rate than what they can hope to get lending the money out, which is unheard of.
We are now experiencing the classic example of what George Akerlof described in “The Market for ‘Lemons.’”
He basically said that, absent better information, it is perfectly rational for the buyer of an asset to assume that the assets offered for sale are lemons, i.e., the bad stuff.
This is why we’re currently seeing the flight to quality in the way of Treasuries and other things that people can value, while the rest of the stuff is floating out in la-la land.
Well, we are turning lemons into lemonade, so to speak, by taking advantage of some of these situations.
But until the financial institutions and politicians come out of denial and we get to the hard business of triaging the dead loans from the live ones — and, unfortunately, moving about 1 million unqualified homeowners back into the apartments they can really afford — we have more pain to go.
However, we don’t need all of the pain out of the markets to get the “all clear” signal for stocks — we just need to get about halfway there.
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Limits on Prices
One more than crucial factor or set of factors that will determine the powers of and power of oligopolists , is the very degree of cooperation among the group and grouping , or to the very extent and extent of their ability and abilities to stick together regarding price increases. One only has to think of the power of the OPEC oil cartel an example , the gold producers to some degree, and especially to the diamond gem stone industry and related industries – with De Beers and the De Beers groups at the helm . As a model for the development of , and coordination of such groups one only has to look at the brief history of OPEC ( The Organization of Oil Exporting Companies). Again the history of , and the development of what used to called “cartels” and now marketing groups , or trade industry groups are of great help in understanding these concepts and their marketing forces involved. A link to the history of the De Beers diamond mining and vertical integration and marketing of diamonds as a most precious gemstone and gemstones.
Obama faces challenges at Europe summit – Jonathan Martin … – But Wall Street would be deeply uneasy with expansive international regulations. Obama says there’s room for both solutions — telling the Financial Times that “we need stimulus and we need regulation.” Kati Suominen, an economic expert …
Obama administration to tighten regulation on VCs? » VentureBeat – Venture capitalists may soon be facing more stringent reporting requirements, according to testimony from Treasury Secretary Timothy Geithner today about …
CompliancEX: Bank CEOs Tell Obama They Are Working Toward Recovery – Chief executive officers from some of the nation’s largest banks told President Barack Obama that they will work with him to revive the US economy and agreed that financial-market regulations need an overhaul.
Obama in the Driver’s Seat – The Plank – The high cost of labor and regulations in America. The Obama administration is playing with fire here. The latest comment from Fritz Henderson that Bankruptcy is more likely now requires everyone who does business with GM to request COD …
Inexpensive Budget Engagement Rings
Social Security Shortfall
The Bush Administration has published that Social Security is facing a 13.6 trillion dollar shortfall in the coming years. Delaying needed and necessary reforms is unfair to younger workers , in its estimation.
A special report issued by the American Treasury Department noted that some combination of benefit cuts and tax increases will need to be considered and implemented permanently to fix the funding shortfall. However white house officials have stressed that President George W. Bush remains opposed to raising taxes. Bush had hoped to make Social Security reform its top domestic priority of its second term. President Bush had put forward a Social Security reform plan in 2005 that focused on creation of private accounts for younger drivers but that proposal never came up for a vote in American Congress. with Democrats opposed and few Republicans embracing the idea. While Democrats have fought to protect current benefit levels , Republicans have been adamant that taxes should not be raised to cover the Social Security shortfall.
Barney Frank as Madame Defarge
“It is an easy and vulgar thing to please the mob ? but to improve them is a work fraught with difficulty, and teeming with danger.” — Charles Caleb Colton
“The mob is the mother of tyrants.” — Diogenes Shamelessness is the order of the day. If I were an AIG executive entitled by law to a large “retention” bonus negotiated before the taxpayers had bailed out my company, I hope I would have the decency to refuse it. Reward for a job well done in the private sector is one thing. Suckling from the government sow is another. And it is particularly galling to reward mismanagement!
Accepting all of the above as fact (and it is not entirely clear, as of this writing, whether the executives receiving bonuses are the same ones who got the company into trouble), it would be difficult for even the worst banking or insurance executive to outshine our elected officials when it comes to shamelessness. Our elected officials may have no idea how to extricate the economy from its economic decline, but they sure know how to stage a show trial.
It would be nice if just every once in a while, maybe just to keep us off-balance, the good members would make at least a pretense of caring about solving the nation’s problems. There is surely enough blame to go around in this financial mess: bankers who made bad judgments about loans, Wall Street firms who negligently packaged securities of unknown worth, and individuals who made unwise investments based on the foolish assumption that real estate prices could only continue to rise. But certainly the malfeasance of politicians is near the top of any list. Politicians a) encouraged (to the point of bullying) Fannie Mae and Freddie Mac to make dubious loans; b) resisted regulation of those same GSEs; and c) have spent taxpayers’ money wildly and irresponsibly, setting us up for even more frightening economic calamities down the road.
It starts at the top. President Obama played his sleight of hand game of seeming to do something while actually doing its opposite. On the campaign trail (er, sorry, on a presidential swing to California), Obama tried to distance himself from the blame game in Washington. “I know Washington’s all in a tizzy and everybody’s pointing fingers at each other saying it’s all their fault, the Democrats’ fault, the Republicans’ fault. Listen, I’ll take responsibility. I’m the president.” This was met by cheers. But then the president added, “We didn’t draft these contracts. We’ve got a lot on our plate?” So he isn’t really taking responsibility, he’s evading it.
Meanwhile, Rep. Barney Frank played Madame Defarge on Capitol Hill. AIG’s recently installed CEO, Edward Liddy, agreed to testify before a subcommittee of the House Financial Services Committee, which Frank chairs. Liddy was actually a poor choice for scapegoat as he has only been on the job since September. Additionally, he is serving as a dollar-a-year man hoping to rescue the company and our financial system from a downward spiral.
These facts slowed the momentum of some committee members. But most plowed ahead. Here’s Rep. Gary Ackerman of New York: “There’s a tidal wave of rage throughout America right now, and it’s building up and it’s expressing itself at this latest outrage, which is really just the tip of the iceberg. And that rage is because the taxpayer knows that they are the ultimate sucker on the list of who pays for all of the greed that has been going on in the marketplace for years and years.”
There was a lot more along those lines, but the most sinister move came from Frank. He demanded that Liddy reveal the names of the 73 executives who had received retention bonuses. Liddy said he would do so if he could receive a promise of confidentiality. Frank refused and threatened to subpoena the names. Liddy said if subpoenaed he would obey the law, but he then read to the committee some of the death threats his company had been getting over the past few days. Some threats spoke of hanging the executives with piano wire, others of finding where their kids went to school.
That is the sort of ugliness and criminality that Frank is willing tacitly to encourage by demanding the names. And for what? The bonuses amounted to just one tenth of 1 percent of the AIG bailout (to say nothing of the stimulus bill and the gargantuan budget bill Congress and the president are hanging around our necks). If politicians want to metaphorically flay away at evil businessmen, well, that’s regrettable. But when they cross the line into encouraging the targeting of actual individuals, they are no longer “honorable gentlemen,” but leaders of a mob.
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