Cablevision subscribers in the tri-state area woke up Jan 1st to find out that HGTV and Food Network had been dropped from the lineup. Scripps Networks, owners of the two networks, are feuding with Cablevision over fees for the channels. Cablevision has been launching attack ads against Scripps ever since urging subscribers to pressure Scripps into making a deal with Cablevision. Cablevision just raised my rates so I am a little annoyed that two of my five favorite stations are now gone. What the hey?
If you happen tune in to these now blank stations, you will be treated to Cablevision's apology/explanation claiming that Scripps is being unreasonable for requesting triple the fees that it once got from Cablevision to be a part of the lineup. Cable networks are biting back because they want a bigger piece of the action; they want some of the subscription fees that cable providers collect from all of us poor sods. I'm paying Cablevision $85 for television and double that when you add in internet access and voice lines; there is no competition, yet.
I don't know how much Scripps Networks should get so how do we know whose side to come down on in this feud. I know that Cablevision is making a mint and now that they also own Newsday, they have a virtual media monopoly on the Island. So, maybe they should give Scripps what they want. On the other hand, does Scripps deserve triple their fees. I don't know, I just want my HGTV.
Showing posts with label American Business. Show all posts
Showing posts with label American Business. Show all posts
Tuesday, January 5, 2010
Thursday, October 15, 2009
Cheering Up
I just don't seem to be having any fun lately and I'm entering winter which is my least favorite time of year. What can I do to get some pep back in my step? As this blog as devolved into a diary of sorts, it captures more of my mood which isn't too good lately. It seems I am spending more time in a negative spin zone and that can't be good for me. I do, at least, try to stop myself from time to time because I know that I should be of a greater mind and that my outlook should have some shimmer. I really need to cheer up.
Perhaps, I am just reflecting the general mood of the country which is moving beyond cynical, in my opinion. Unfortunately, there is very little to trust these days. Capitalism is front and center and it is showing its ugly side, it seems like greed, corruption and immorality are leading the charge and the acceptance of this as "business as usual" has set us on an even more destructive course of every person for him or herself. It seems that the common good has been left out of the equation lately. Hopefully, it will turn up soon.
Perhaps, I am just reflecting the general mood of the country which is moving beyond cynical, in my opinion. Unfortunately, there is very little to trust these days. Capitalism is front and center and it is showing its ugly side, it seems like greed, corruption and immorality are leading the charge and the acceptance of this as "business as usual" has set us on an even more destructive course of every person for him or herself. It seems that the common good has been left out of the equation lately. Hopefully, it will turn up soon.
Thursday, September 10, 2009
Online Subscribers Are We?
So the Long Island Business News (LIBN.com) has gone to an online subscriber model. Online subscription models are being tested on us, the public; we who are currently used to unlimited free information on the internet. Recently, Rupert Murdoch put forth that he was moving to a subscriber model for all of his online publications.
Many online publications are simply the digital version of a print publication so many of us have been able to enjoy many publications online without being subscribers. Most people believe that we will not be willing to agree to pay models for information on the net because it was founded on the notion of (free) access to information. However, there is the necessary revenue side of internet content vs. the status quo of free content especially as traditional ad revenue falls.
I'll be the first one to say that I don't like having to pay for anything and as long as I'm paying over $50 a month to access high-speed internet, through Cablevision I might add, I feel I am paying enough already though this doesn't help the content providers at all. But, TV used to be free, radio used to be free and so on. In reality, we are now paying for a lot of things that were free when I was growing up. So, subscriber models may actually work in some cases. I am watching. We'll see how LIBN fares in the paid content wars.
Many online publications are simply the digital version of a print publication so many of us have been able to enjoy many publications online without being subscribers. Most people believe that we will not be willing to agree to pay models for information on the net because it was founded on the notion of (free) access to information. However, there is the necessary revenue side of internet content vs. the status quo of free content especially as traditional ad revenue falls.
I'll be the first one to say that I don't like having to pay for anything and as long as I'm paying over $50 a month to access high-speed internet, through Cablevision I might add, I feel I am paying enough already though this doesn't help the content providers at all. But, TV used to be free, radio used to be free and so on. In reality, we are now paying for a lot of things that were free when I was growing up. So, subscriber models may actually work in some cases. I am watching. We'll see how LIBN fares in the paid content wars.
Thursday, August 13, 2009
Hello Retailers, Stop Rushing Us
Since many retailers moved up their back-to-school specials to July, I keep thinking the children are going back to school any day now. Yesterday, I finally stepped out to get going on the school shopping because I felt like I was running out of time. There have been flyers in the paper for weeks now advertising special discounts and so far I had failed to take advantage. Today, I checked the calendar and our school district does not open for another 4 weeks thanks to a late Labor Day holiday. So here I am thinking I have to rush for nothing.
These days, in an attempt to chase sales, retailers are pushing the calendar out of whack putting us all under pressure to shop months ahead of our usual timing. Many are experimenting with beginning Christmas sales in August. Halloween stuff is out in many stores already. Now we are supposed to shop for back-to-school, Halloween and Christmas at the same time. Hello retailers, we can only focus on one shopping season at a time. Throwing all the stuff out there months and months ahead of time believing that we will shop earlier for everything is just confusing all of us, well me. What was wrong with thinking about Christmas/holiday shopping after Halloween?
Well, as the dismal July retail sales reports are revealing, consumers are still in economic shock and they are not buying, no matter how many enticing discounts have been flung at them and I don't think that will change anytime soon. So, instead of rushing us in to buy everything that we would have bought through the end of the year by next week, retailers ought to adjust to the cold hard reality that the consumer is out of dough. Unfortunately, it is too late to change the fact that we are in for a very, very long Christmas/holiday shopping season this year. Egads!
These days, in an attempt to chase sales, retailers are pushing the calendar out of whack putting us all under pressure to shop months ahead of our usual timing. Many are experimenting with beginning Christmas sales in August. Halloween stuff is out in many stores already. Now we are supposed to shop for back-to-school, Halloween and Christmas at the same time. Hello retailers, we can only focus on one shopping season at a time. Throwing all the stuff out there months and months ahead of time believing that we will shop earlier for everything is just confusing all of us, well me. What was wrong with thinking about Christmas/holiday shopping after Halloween?
Well, as the dismal July retail sales reports are revealing, consumers are still in economic shock and they are not buying, no matter how many enticing discounts have been flung at them and I don't think that will change anytime soon. So, instead of rushing us in to buy everything that we would have bought through the end of the year by next week, retailers ought to adjust to the cold hard reality that the consumer is out of dough. Unfortunately, it is too late to change the fact that we are in for a very, very long Christmas/holiday shopping season this year. Egads!
Tuesday, June 9, 2009
Stranger than Fiction; America Must Continue its Debt-Fueled Ways to Survive
When I read all of the literature about how to solve the financial system, I realize that any rational solution cannot work. We have too many extenuating circumstances to return to a normalcy of spending because we have simply gone too far with our debt fueled existence to dial it back; without increased government spending, our economy as we know it will sink like a stone.
Right now we have a convergence of consequences from the various forks of the economic road requiring the largest outlay of deficit spending in the history of the country. We have corporate welfare with the bailout of the banks, insurance and auto companies. We have an escalating national debt, initially inflated by George Bush and his policies but now alarmingly exacerbated by President Obama's stimulus efforts. Finally, we have entitlement costs - social security and health care - and military spending that will bust the national budget in a few short years not to mention the interest payments on the national debt.
We are a nation depending on the kindness of China and Japan, the largest purchasers of our treasury bonds, to finance our debt. We are a nation completely unprepared to spend within our means. When times were good, our previous President, Mr. Bush, racked up annual deficits and doubled the national debt in his 8 year tenure. Now that times are bad and there is little real money flowing in our economy, our current President, Mr. Obama, needs to spend big and it is scaring the bejesus out of us because the debt that he inherited was already incomprehensible.
Unfortunately, we were all happily flush with cheap credit to worry about the debt when it mattered.
Now we have the Republicans, flagrantly disregarding the trillions Bush added while America's fortunes seemed rock solid and who lack a cohesive party agenda, blindly caught up in the throes of a full-fledged deflection of this stark reality and blaming President Obama for his profligate spending though it has apparently saved their bank accounts. Huh? I urge any Americans sucked into this rabid plot to reconsider and understand that the mechanisms for the problems we are facing were set in motion long before Obama.
Anyhow, efforts to balance the budget may well be the final nail in the coffin for the economy. This is an economy based on spending, 70% of it generated by consumer spending alone. The consumer is under siege due to the crash in the housing market, crash in their investment and retirement accounts, crash in credit financing and associated crash in employment. The government has to replace this spending in the interim to save the economy and it has to get us the credit we need so that we can start spending again.
As a result, the Federal Reserve and the Treasury are pumping all the money they possibly can into loosening those credit markets which, much to our distress, places the banks in the enviable position of ruling our economic roost. We cannot do anything about it because we all need the credit to move forward, including the government. It is counter-intuitive to think this way. After all, rational spending should be the basis of a sound economy and the solution of continuing our credit-fueled existence should sound stranger than fiction because it led us to this crash in the first place. But, it truly is our only hope at least until the economy can generate "real" money again. How, what and when will that be?
Sadly and ironically, the banks are cutting their consumer credit lines to shore up their balance sheets thus refusing to realize that by doing so will unleash a deadly negative impact to our consumer economy. They may be happy that they are racking up deposits because the consumer has learned the very hard lesson of not saving for a rainy day and are currently stashing cash but without credit cards and other consumer loans, we will buy nothing and that is much worse for America. So, we have to continue our debt-fueled ways because every other solution is an economic buzz kill. Yikes!
Right now we have a convergence of consequences from the various forks of the economic road requiring the largest outlay of deficit spending in the history of the country. We have corporate welfare with the bailout of the banks, insurance and auto companies. We have an escalating national debt, initially inflated by George Bush and his policies but now alarmingly exacerbated by President Obama's stimulus efforts. Finally, we have entitlement costs - social security and health care - and military spending that will bust the national budget in a few short years not to mention the interest payments on the national debt.
We are a nation depending on the kindness of China and Japan, the largest purchasers of our treasury bonds, to finance our debt. We are a nation completely unprepared to spend within our means. When times were good, our previous President, Mr. Bush, racked up annual deficits and doubled the national debt in his 8 year tenure. Now that times are bad and there is little real money flowing in our economy, our current President, Mr. Obama, needs to spend big and it is scaring the bejesus out of us because the debt that he inherited was already incomprehensible.
Unfortunately, we were all happily flush with cheap credit to worry about the debt when it mattered.
Now we have the Republicans, flagrantly disregarding the trillions Bush added while America's fortunes seemed rock solid and who lack a cohesive party agenda, blindly caught up in the throes of a full-fledged deflection of this stark reality and blaming President Obama for his profligate spending though it has apparently saved their bank accounts. Huh? I urge any Americans sucked into this rabid plot to reconsider and understand that the mechanisms for the problems we are facing were set in motion long before Obama.
Anyhow, efforts to balance the budget may well be the final nail in the coffin for the economy. This is an economy based on spending, 70% of it generated by consumer spending alone. The consumer is under siege due to the crash in the housing market, crash in their investment and retirement accounts, crash in credit financing and associated crash in employment. The government has to replace this spending in the interim to save the economy and it has to get us the credit we need so that we can start spending again.
As a result, the Federal Reserve and the Treasury are pumping all the money they possibly can into loosening those credit markets which, much to our distress, places the banks in the enviable position of ruling our economic roost. We cannot do anything about it because we all need the credit to move forward, including the government. It is counter-intuitive to think this way. After all, rational spending should be the basis of a sound economy and the solution of continuing our credit-fueled existence should sound stranger than fiction because it led us to this crash in the first place. But, it truly is our only hope at least until the economy can generate "real" money again. How, what and when will that be?
Sadly and ironically, the banks are cutting their consumer credit lines to shore up their balance sheets thus refusing to realize that by doing so will unleash a deadly negative impact to our consumer economy. They may be happy that they are racking up deposits because the consumer has learned the very hard lesson of not saving for a rainy day and are currently stashing cash but without credit cards and other consumer loans, we will buy nothing and that is much worse for America. So, we have to continue our debt-fueled ways because every other solution is an economic buzz kill. Yikes!
Monday, June 1, 2009
GM Bankruptcy: Par for the Course
So GM is dead-ish and the market did not raise an eyebrow. One of the largest manufacturing companies in the United States is being shepherded through a structured bankruptcy on the taxpayer's dime to the tune of $50,000,000,000, not including the $19,000,000,000 it has already received, and the market rallied several hundred points apparently overjoyed over other unrelated positive, though flimsy, economic data. Apparently investors felt that the GM thing was expected and already priced in so no big deal. Par for the course.
In the course of less than a year, another industry giant has been transferred to the taxpayer dole, let us not forget AIG, Fannie Mae, Freddie Mac and the dizzying array of financial firms that are now majority owned or significantly owned by the American Government. Smacks of that "S" word, doesn't it. Yech! Actually, I don't see any problem with socialism, we are trying to save America in this global economy, aren't we? Though it does look bad that the government of the country that is/was the economic powerhouse of the world is bailing out the firms that underwrote its superiority. Furthermore, this government is as bankrupt as they come. If the American government was a company, it would have sought chapter 11 a long time a go.
Why is the financial sanctity of this country so reputable when it has not been able to balance its books in nearly a decade? Now this government sits on the brink of skyrocketing legacy costs and it cannot negotiate any settlement. Sounds a lot like GM. The perceived strength of the US government lays upon its solid revenue source - the American taxpayer - but it cannot sell the prospect of higher taxes or reduction in services to the representative body of this bunch; it is considered political suicide. It has the largest military in the world and so cocoons its weakening financial condition with weapons. We are democratic, we are free, we are safe, we are broke.
But, we are saving GM and the rest of the funky bunch but the amount given to GM and Chrysler, which I still cannot understand why Chrysler is being sold to a foreign automaker but whatever, is still a drop in the bucket compared to what has been given to AIG and the financials. Now Wall Street is happy and the market is rallying while they criticize the President for spending too much money. How can anyone even mention free market in the same breath?
The government can save GM but at some point we will need to save the government. We will all have to pay a lot more taxes. Is there any other way?
In the course of less than a year, another industry giant has been transferred to the taxpayer dole, let us not forget AIG, Fannie Mae, Freddie Mac and the dizzying array of financial firms that are now majority owned or significantly owned by the American Government. Smacks of that "S" word, doesn't it. Yech! Actually, I don't see any problem with socialism, we are trying to save America in this global economy, aren't we? Though it does look bad that the government of the country that is/was the economic powerhouse of the world is bailing out the firms that underwrote its superiority. Furthermore, this government is as bankrupt as they come. If the American government was a company, it would have sought chapter 11 a long time a go.
Why is the financial sanctity of this country so reputable when it has not been able to balance its books in nearly a decade? Now this government sits on the brink of skyrocketing legacy costs and it cannot negotiate any settlement. Sounds a lot like GM. The perceived strength of the US government lays upon its solid revenue source - the American taxpayer - but it cannot sell the prospect of higher taxes or reduction in services to the representative body of this bunch; it is considered political suicide. It has the largest military in the world and so cocoons its weakening financial condition with weapons. We are democratic, we are free, we are safe, we are broke.
But, we are saving GM and the rest of the funky bunch but the amount given to GM and Chrysler, which I still cannot understand why Chrysler is being sold to a foreign automaker but whatever, is still a drop in the bucket compared to what has been given to AIG and the financials. Now Wall Street is happy and the market is rallying while they criticize the President for spending too much money. How can anyone even mention free market in the same breath?
The government can save GM but at some point we will need to save the government. We will all have to pay a lot more taxes. Is there any other way?
Monday, April 20, 2009
I thought accounting shenanigans were unsustainable
There is nothing like tax season to put things into perspective. I'm even madder than ever. So far, five financial institutions have shown 1st quarter 2009 profits due to hundreds of billions in bailout funds, government guaranteess for their bad assets, government guarantees for their bad loans, suspended mark to market rules allowing them to value the assets at a phantom price and a gullible electorate. I thought accounting shenanigans were unsustainable; I am very very wrong indeed.
The most egregious reporting came today when Bank of America claimed to have earned over $4,000,000,000 in 1st quarter profits, more profit than they made in the entire year of 2008, as if they did not recently receive over $25,000,000,000 in TARP funds and antoher $120,000,000,000 in loan guarantees. This is the biggest accounting b.s. heard around the world. How in the most bold face of lies can a bank show profits while being held afloat by the taxpayers. We are running with the mandate that some institutions are "too big to fail," and the bankers have moved beyond silently laughing at the gullible taxpayers to rubbing our faces in their government sanctioned ponzi-scheme-like balance sheets in broad daylight at our expense. What a life!
Thankfully, investors met Bank of America's outlandish claims with an even more resounding skepticism than I had anticipated so at least some people are paying attention. Instead we have fools throwing tea parties and protesting about taxation without representation as if George Bush didn't already spend their money while encouraging them to drink the fancy tea he made them believe they could afford. And now poor Obama in order to survive has surrended fully to the financial industry.
The general consensus that America's future depends on saving the financial sector was a battle cry of and by the entitled. Banks have an insatiable appetite for gains, ill-gotten or otherwise and they will take every penny the government has if it let's them.
The most egregious reporting came today when Bank of America claimed to have earned over $4,000,000,000 in 1st quarter profits, more profit than they made in the entire year of 2008, as if they did not recently receive over $25,000,000,000 in TARP funds and antoher $120,000,000,000 in loan guarantees. This is the biggest accounting b.s. heard around the world. How in the most bold face of lies can a bank show profits while being held afloat by the taxpayers. We are running with the mandate that some institutions are "too big to fail," and the bankers have moved beyond silently laughing at the gullible taxpayers to rubbing our faces in their government sanctioned ponzi-scheme-like balance sheets in broad daylight at our expense. What a life!
Thankfully, investors met Bank of America's outlandish claims with an even more resounding skepticism than I had anticipated so at least some people are paying attention. Instead we have fools throwing tea parties and protesting about taxation without representation as if George Bush didn't already spend their money while encouraging them to drink the fancy tea he made them believe they could afford. And now poor Obama in order to survive has surrended fully to the financial industry.
The general consensus that America's future depends on saving the financial sector was a battle cry of and by the entitled. Banks have an insatiable appetite for gains, ill-gotten or otherwise and they will take every penny the government has if it let's them.
Monday, March 30, 2009
Outrage
Last week I had a medical procedure done that required such detailed preparation and fasting that it drained the very life out of me and I couldn't write on Thursday. I came out of my stupor on Saturday, since I had to be sedated for the tests, to hear on Sunday that President Obama had finally done it; he was sticking it to the auto companies.
In finally taking bold action against the auto companies to come up with a sustainable plan for survival; the new administration has unleashed an avalanche of collateral criticism. This called for the ouster of Rick Wagoner at GM and a 60 day deadline for the company's major overhaul; it is rumored that President Obama prefers a structured bankruptcy for GM. Chrysler was given the directive to make a plan for a joint venture with Fiat in 30 days or else; the White House believes that Chrysler is essentially finished. I am not sure why Fiat is the chosen suitor. Even the market was spooked by this logic and fear in equities ensued again.
Nevertheless, it is finally nice to see the auto companies forced to face facts and deal with their fate. Business-as-Usual is truly over for them. They will not receive any more billions unless they comply. Unfortunately, the fallout from this decision-making process seems to underscore Obama's apparent elitism. Why force the auto companies to the comply with such draconian measures when the same was not required of the financial firms?
The auto companies received a mere fraction of what the financial firms have received to date. $30,000,000,000 for auto companies, nearly $1,000,000,000,000 for the financials. It doesn't even seem fair. It was likened to the President seemingly more "in bed" with "those who shower before they go to work," the white collar folk rather than "those who shower when they come home from work," the blue collar folk. Well, the whole stimulus situation is fraught with outrage. All the money and how it is delegated will continue to lead to outrage and I am sure there is more to come.
In finally taking bold action against the auto companies to come up with a sustainable plan for survival; the new administration has unleashed an avalanche of collateral criticism. This called for the ouster of Rick Wagoner at GM and a 60 day deadline for the company's major overhaul; it is rumored that President Obama prefers a structured bankruptcy for GM. Chrysler was given the directive to make a plan for a joint venture with Fiat in 30 days or else; the White House believes that Chrysler is essentially finished. I am not sure why Fiat is the chosen suitor. Even the market was spooked by this logic and fear in equities ensued again.
Nevertheless, it is finally nice to see the auto companies forced to face facts and deal with their fate. Business-as-Usual is truly over for them. They will not receive any more billions unless they comply. Unfortunately, the fallout from this decision-making process seems to underscore Obama's apparent elitism. Why force the auto companies to the comply with such draconian measures when the same was not required of the financial firms?
The auto companies received a mere fraction of what the financial firms have received to date. $30,000,000,000 for auto companies, nearly $1,000,000,000,000 for the financials. It doesn't even seem fair. It was likened to the President seemingly more "in bed" with "those who shower before they go to work," the white collar folk rather than "those who shower when they come home from work," the blue collar folk. Well, the whole stimulus situation is fraught with outrage. All the money and how it is delegated will continue to lead to outrage and I am sure there is more to come.
Tuesday, March 24, 2009
De-Pressed Conference
President Obama staged his second prime-time press conference this evening. The purpose of which was to provide insight into the new $3,600,000,000,000 budget and to assure the American people that while the price is high, the intentions are noble. The two-pronged approach is geared to stabilize the economy and plant the foundation for future growth, by investing in renewable energy, infrastructure and education.
With respect to education, the President referred to America's falling behind stating "countries like China and India will be running laps around our young people" which is true as far as my anecdotal evidence points. The fact that Americans do not realize that the playing field is globally level now and that our self-indulged young people will face serious competition in the future job market seems to be lost on them. Emphasis was also made that finding savings in the healthcare and defense sectors and repealing tax cuts back to Reagan-era levels for the top 1% of wage earners will help to offset new spending in other areas.
Most of this we have all heard in the last few weeks but it is always nice to see the President answer questions from the press; this is where his intelligence and thoughtfulness shine. He does know what he is talking about and perhaps this is the only consolation. What he proposes is costly and scary but as he points out and as I pointed out yesterday, there are lots of critics but no alternate solutions.
It was a sobering press conference as usual, times are tough, the solutions are difficult to comprehend and there is still a chance that it all might not work out the way we planned but something has to be done. Perhaps our expectations are too high? At the end of the day, Americans do need to believe that the fundamentals of the American economy are strong and that we will return to economic prominence and world dominance once we lick this crisis. I hope so but we have a long way to go, probably longer than we dare admit.
It is nice to see the President acknowledge that the gains of the last decade were artificially fueled so on the one hand he does get it but on the other hand his belief and optimism in America's future requires an audacity of hope that a culture mired in greed and deceit may not have the patience to muster.
With respect to education, the President referred to America's falling behind stating "countries like China and India will be running laps around our young people" which is true as far as my anecdotal evidence points. The fact that Americans do not realize that the playing field is globally level now and that our self-indulged young people will face serious competition in the future job market seems to be lost on them. Emphasis was also made that finding savings in the healthcare and defense sectors and repealing tax cuts back to Reagan-era levels for the top 1% of wage earners will help to offset new spending in other areas.
Most of this we have all heard in the last few weeks but it is always nice to see the President answer questions from the press; this is where his intelligence and thoughtfulness shine. He does know what he is talking about and perhaps this is the only consolation. What he proposes is costly and scary but as he points out and as I pointed out yesterday, there are lots of critics but no alternate solutions.
It was a sobering press conference as usual, times are tough, the solutions are difficult to comprehend and there is still a chance that it all might not work out the way we planned but something has to be done. Perhaps our expectations are too high? At the end of the day, Americans do need to believe that the fundamentals of the American economy are strong and that we will return to economic prominence and world dominance once we lick this crisis. I hope so but we have a long way to go, probably longer than we dare admit.
It is nice to see the President acknowledge that the gains of the last decade were artificially fueled so on the one hand he does get it but on the other hand his belief and optimism in America's future requires an audacity of hope that a culture mired in greed and deceit may not have the patience to muster.
Thursday, March 5, 2009
Lions and Tigers and Bears, Oh My
Can it be that Citigroup might follow the footsteps of Bear Stearns, Wachovia, Merrill Lynch & Lehman Brothers? Will it be swallowed whole by a rival, like JPMorgan Chase or will it go belly up and disappear. The mightly financials and the mighty companies are falling; GE is begging for mercy and GM finally admitted today that it is not a viable enterprise without bailout funds.
The very lives of these companies that have ruled the world for as long as I've known are collapsing. These mighty companies were the kings of the jungle, conjuring strength, agility and invincibility. Maybe if the Bellwethers like GE are cracking, this is a signal of the passing of an old era. Maybe these companies are not supposed to survive at all. Maybe these are all unsustainable business models.
The government is trying to address the financial meltdown by injecting all of those bailout funds into the system. But maybe the financial system as we know it is no longer viable, maybe we are trying to fix something that is already broken.
The very lives of these companies that have ruled the world for as long as I've known are collapsing. These mighty companies were the kings of the jungle, conjuring strength, agility and invincibility. Maybe if the Bellwethers like GE are cracking, this is a signal of the passing of an old era. Maybe these companies are not supposed to survive at all. Maybe these are all unsustainable business models.
The government is trying to address the financial meltdown by injecting all of those bailout funds into the system. But maybe the financial system as we know it is no longer viable, maybe we are trying to fix something that is already broken.
Wednesday, March 4, 2009
A Populace Needs to be Educated
If I had one wish, it would be to time the bottom of the market. I would find some money and put it in and ride the next wave to financial glory. Of course, it is a wish, for as we have been told through our formative years, there is no way to time the market. Nevertheless, we have pundits, daily, trying to call the bottom. It seems that we are already so sick of the financial pain that we need to wrap it up and get to the next level. Sorry lads and lasses, no generation gets away with everything.
We would not be well-rounded citizens if we did not feel the pain and make no mistake about it, there is plenty more pain to come. Me, I am just calling for a showing of the hands, someone, anyone, brave-up and tell the truth and let us know how much you really need AIG? GMAC? and the rest of you clowns hiding from a real valuation of those so-called toxic assets. AIG, what would it really cost to cover those bets? GE Money/GE Capital, Citigroup, Merrill Lynch/Bank of America, how much of those bets did you make? The best thing that the government can do now is to order all of these financials hiding behind their faux balance sheets to tell us the real deal.
If Obama is to be praised for a "true up" of the 2010 budget as he strives to incorporate all government expenses - all off-the-books expenditures like the costs for war and the deficiencies in the AMT and other budget machinations, i.e. no bid contracts and the like, why are we not demanding this from the companies who we are bailing out? Where are the forensic accountants when you need them? At this point in this dismal economic cycle, we need to know how much of these off-the-books assets are out there. Today, I am hearing that Bernanke wants to inject a trillion dollars into the shadow banking system, the system where all of these off-the-books assets reside like those credit swap derivatives.
We sit around and complain that there is no transparency in the system but we are not demanding answers. We need an independent citizens brigade to track all of these taxpayer dollars that are being injected into the financial system. At the very least, the taxpayer should know how much and to whom all of this money is being given. We should be protesting over this but our own financial woes are crippling us. Who has time to check out who the government is giving money to when our own personal financial lives are in shambles? I have been out of work 3 months; this milestone is now resonating on a daily basis. The reality has set in that the return on resume submission is dismal, there has been only one interview for nearly 50 submitted. These are not the type of odds that step up the employment quotient though I am hearing that I am lucky to have had one callback.
The bigger question is why I have not been able to get to the bottom of this financial crisis in all of its complexity. Previous recessions were explainable but this most recent debacle is rooted in financial instruments that we, the taxpayer, simply do not understand. There needs to be a whole-hearted effort on the part of the media and the government to explain the elements and educate a society on its new role as financial savior. Now we have people taking sides, even myself, trying to simplify the matter, saying bloviated statements like "let them fail," "no more bailouts," and "the democrats are mortgaging the future" and so on. What is the truth? I am being led to believe that while the government is supposedly bailing out AIG, GE, GM, and the rest of those fat-cats under some dubious rubric of "too big to fail," they are not explaining the real reason; the devasting financial shock to the worldwide banking/financial system of valuing all of those derivatives.
If this is true, then it needs to be explained to the American people. We have nothing to lose and everything to gain. We do not want the financial equivalent of the post 9-11 exhortation of "go out and shop, carry on as you normally do" response to crisis, we should be demanding a real appraisal of what we are getting into with these continued bailouts. If the situation is dire, tell us. Last fall, businesses were planning on a turnaround during the second half of this year. We have now reached the reality stage where it is clear that the turnaround may not happen until 2010 or beyond. I might have planned better last Fall if I had known that. Facts need to be faced. A populace needs to be educated.
We would not be well-rounded citizens if we did not feel the pain and make no mistake about it, there is plenty more pain to come. Me, I am just calling for a showing of the hands, someone, anyone, brave-up and tell the truth and let us know how much you really need AIG? GMAC? and the rest of you clowns hiding from a real valuation of those so-called toxic assets. AIG, what would it really cost to cover those bets? GE Money/GE Capital, Citigroup, Merrill Lynch/Bank of America, how much of those bets did you make? The best thing that the government can do now is to order all of these financials hiding behind their faux balance sheets to tell us the real deal.
If Obama is to be praised for a "true up" of the 2010 budget as he strives to incorporate all government expenses - all off-the-books expenditures like the costs for war and the deficiencies in the AMT and other budget machinations, i.e. no bid contracts and the like, why are we not demanding this from the companies who we are bailing out? Where are the forensic accountants when you need them? At this point in this dismal economic cycle, we need to know how much of these off-the-books assets are out there. Today, I am hearing that Bernanke wants to inject a trillion dollars into the shadow banking system, the system where all of these off-the-books assets reside like those credit swap derivatives.
We sit around and complain that there is no transparency in the system but we are not demanding answers. We need an independent citizens brigade to track all of these taxpayer dollars that are being injected into the financial system. At the very least, the taxpayer should know how much and to whom all of this money is being given. We should be protesting over this but our own financial woes are crippling us. Who has time to check out who the government is giving money to when our own personal financial lives are in shambles? I have been out of work 3 months; this milestone is now resonating on a daily basis. The reality has set in that the return on resume submission is dismal, there has been only one interview for nearly 50 submitted. These are not the type of odds that step up the employment quotient though I am hearing that I am lucky to have had one callback.
The bigger question is why I have not been able to get to the bottom of this financial crisis in all of its complexity. Previous recessions were explainable but this most recent debacle is rooted in financial instruments that we, the taxpayer, simply do not understand. There needs to be a whole-hearted effort on the part of the media and the government to explain the elements and educate a society on its new role as financial savior. Now we have people taking sides, even myself, trying to simplify the matter, saying bloviated statements like "let them fail," "no more bailouts," and "the democrats are mortgaging the future" and so on. What is the truth? I am being led to believe that while the government is supposedly bailing out AIG, GE, GM, and the rest of those fat-cats under some dubious rubric of "too big to fail," they are not explaining the real reason; the devasting financial shock to the worldwide banking/financial system of valuing all of those derivatives.
If this is true, then it needs to be explained to the American people. We have nothing to lose and everything to gain. We do not want the financial equivalent of the post 9-11 exhortation of "go out and shop, carry on as you normally do" response to crisis, we should be demanding a real appraisal of what we are getting into with these continued bailouts. If the situation is dire, tell us. Last fall, businesses were planning on a turnaround during the second half of this year. We have now reached the reality stage where it is clear that the turnaround may not happen until 2010 or beyond. I might have planned better last Fall if I had known that. Facts need to be faced. A populace needs to be educated.
Monday, March 2, 2009
Reflections on a Dow: Revisited
The Dow broke the sixes today, down 300 points to close at 6763 points. As I said last week, it was not impossible and here we are already. Now we are back to 1997 levels, we are now past Bush and back in Clinton! Reality Check. I thought I would look into the Dow a little further to try to understand some of the history. I have run some of these numbers in a previous post but I refer to them more in detail today as I again try to understand the specs and put the whole stock market thing into some historical context. What does all of this numbers posturing mean as I watch the Index begin to majorly tank again?
At the beginning of the last century, the Dow was around 50 points. From 1901-1990 it increased 2950 points winding up around 3000 at the beginning of the 1990s. It has spectacularly increased since 1990. From 1990-2007, the Dow increased over 10,000 points even after dropping down to 7600 points in the Fall of 2002 when the Tech Bubble finally burst for good. This is a significant statistic: 90 years to increase 2950 points, 17 years to increase 10,000 points. The last 17 years have been all the more artificial because of all the available cheap capital.
We racked up incredible wealth in a small number of years if we look back at stock market history. Even the WWII boom increased the market from around 140 points in 1944 to the 700s in the early 1960s. For all of the conversation about the Great Depression, the DJIA was at a high of 381 points when the market crashed in 1929 when it slid down to slightly less than 200 points. Despite numerous efforts to power a reversal, the index finally hit a low of 41 points in mid 1932. After that it had its moments regularly peaking and troughing between 1960 and 1980 reaching a low of 535 points and a high of 1051 points during that 20 year period.
The DJIA began in earnest to steadily ratchet up under Reagan and added approximately 2000 points between 1981 and 1991. The major dip during that period was black Mondayin October 1987 when the market plunged nearly 1000 points from a highpoint of 2722 points. It gained over 8000 points between 1991 and 2001 rising from 2500 in 1991 to the 6700s in 1997 - where we are now - and upward to just shy of 11,500 at the end of 1999 gaining 9000 points under Clinton and a pronounced gain between 1997 and 1999 thanks to the tech boom which corrected itself in 2002 landing the market at 7600 points. This was shortlived and the market nearly doubled adding another 6400 points in 5 years to a high of 13930 in Oct 2007.
It has fallen ever since and here we are now.
So the swings that we are becoming "used to" these days of several hundred points up or down and into almost 1000 point peak to trough swings in one day cannot possibly be true commerce and therefore is no longer any indicator of where the market should or should not be. Unless you are one of the lucky to have had enough money to weather the current downturn or you have a good union type job with a pension, all of the wealth created since the turn of this new century has been wiped out completely putting the Dow back to 1990s levels.
By that reckoning, we have much more to bleed to bring business and building back to those levels. The problem is that you cannot do it without leaving too many relics i.e. abandoned big box store shopping centers. Most of us in the middle class just woke to the fact that we never had any real money to spend; we simply did not realize how hard it would be to pay back all of that debt; rolling into the mortgage and feeling no pain was just the luck of the draw and you did it if you could. Besides, wasn't it good for America?
We really didn't earn anything. We simply spent money that we didn't really have - debt - and now we have to pay some of that down before we can go on. I am trying to remember the last time I was better off...ah yes, the 1990s was it for me.
At the beginning of the last century, the Dow was around 50 points. From 1901-1990 it increased 2950 points winding up around 3000 at the beginning of the 1990s. It has spectacularly increased since 1990. From 1990-2007, the Dow increased over 10,000 points even after dropping down to 7600 points in the Fall of 2002 when the Tech Bubble finally burst for good. This is a significant statistic: 90 years to increase 2950 points, 17 years to increase 10,000 points. The last 17 years have been all the more artificial because of all the available cheap capital.
We racked up incredible wealth in a small number of years if we look back at stock market history. Even the WWII boom increased the market from around 140 points in 1944 to the 700s in the early 1960s. For all of the conversation about the Great Depression, the DJIA was at a high of 381 points when the market crashed in 1929 when it slid down to slightly less than 200 points. Despite numerous efforts to power a reversal, the index finally hit a low of 41 points in mid 1932. After that it had its moments regularly peaking and troughing between 1960 and 1980 reaching a low of 535 points and a high of 1051 points during that 20 year period.
The DJIA began in earnest to steadily ratchet up under Reagan and added approximately 2000 points between 1981 and 1991. The major dip during that period was black Mondayin October 1987 when the market plunged nearly 1000 points from a highpoint of 2722 points. It gained over 8000 points between 1991 and 2001 rising from 2500 in 1991 to the 6700s in 1997 - where we are now - and upward to just shy of 11,500 at the end of 1999 gaining 9000 points under Clinton and a pronounced gain between 1997 and 1999 thanks to the tech boom which corrected itself in 2002 landing the market at 7600 points. This was shortlived and the market nearly doubled adding another 6400 points in 5 years to a high of 13930 in Oct 2007.
It has fallen ever since and here we are now.
So the swings that we are becoming "used to" these days of several hundred points up or down and into almost 1000 point peak to trough swings in one day cannot possibly be true commerce and therefore is no longer any indicator of where the market should or should not be. Unless you are one of the lucky to have had enough money to weather the current downturn or you have a good union type job with a pension, all of the wealth created since the turn of this new century has been wiped out completely putting the Dow back to 1990s levels.
By that reckoning, we have much more to bleed to bring business and building back to those levels. The problem is that you cannot do it without leaving too many relics i.e. abandoned big box store shopping centers. Most of us in the middle class just woke to the fact that we never had any real money to spend; we simply did not realize how hard it would be to pay back all of that debt; rolling into the mortgage and feeling no pain was just the luck of the draw and you did it if you could. Besides, wasn't it good for America?
We really didn't earn anything. We simply spent money that we didn't really have - debt - and now we have to pay some of that down before we can go on. I am trying to remember the last time I was better off...ah yes, the 1990s was it for me.
Monday, February 23, 2009
Reflections on a Dow
The Dow Jones Industrial Average (DJIA) went down 250 points today closing at 7115. By now the bets are out, will it dip below 7000, will it actually touch the sixes? It seems to be all a game now. My retirement savings are tied up in this one market where I am supposed to stake my future economic survival and Wall Street is marginalizing its components, its rationale and by extension, its very being. It is betting on losers to survive e.g. GM with a market cap of less than $1 billion now wants to borrow up to $30 billion, that is the same type of leverage that caused this whole card house to fall.
The DJIA used to be based on something - a small group of well-run firms that have a great product, steady earnings and reasonable growth; a metric by which we could gauge the performance of all companies trading on the stock market. But over the last decade, the more we hailed the quarterly earnings, the more we zoomed in on government reports on various sectors of the economy i.e. gdp, unemployment, and indices for consumer spending, housing and inflation was the more we staked on the Dow telling us on a daily basis where we were. If those numbers changed, the Dow had to change and those underlying companies on which the Index is based had better report good numbers or risk the worst kind of scrutiny and derision.
Others said the Dow wasn't enough to portend the market, the S&P 500 was a better guide. It doesn't really matter now, though. Somehow, the greedy ones raced over to a rainbow that disappeared; a pot of gold that really wasn't there so they faked the numbers and kept on going. Now we all have to give it all back in the numbers - our house values continue to fall, our stock portfolios are off 50% and we can't get any more credit to buy anything. Now the Dow is left to swing wildly 100s of points at a time back and forth between Investor Fear and Investor Confidence making it very difficult to have any faith in it for it truly looks to have separated completely from the fundamentals that made it a reliable bellwether.
P.S. The Dow will not break six tomorrow because the market won't allow it. They (investors) are not ready for that kind of shock though it is not impossible that the 6000 level cannot be reached on a later date.
The DJIA used to be based on something - a small group of well-run firms that have a great product, steady earnings and reasonable growth; a metric by which we could gauge the performance of all companies trading on the stock market. But over the last decade, the more we hailed the quarterly earnings, the more we zoomed in on government reports on various sectors of the economy i.e. gdp, unemployment, and indices for consumer spending, housing and inflation was the more we staked on the Dow telling us on a daily basis where we were. If those numbers changed, the Dow had to change and those underlying companies on which the Index is based had better report good numbers or risk the worst kind of scrutiny and derision.
Others said the Dow wasn't enough to portend the market, the S&P 500 was a better guide. It doesn't really matter now, though. Somehow, the greedy ones raced over to a rainbow that disappeared; a pot of gold that really wasn't there so they faked the numbers and kept on going. Now we all have to give it all back in the numbers - our house values continue to fall, our stock portfolios are off 50% and we can't get any more credit to buy anything. Now the Dow is left to swing wildly 100s of points at a time back and forth between Investor Fear and Investor Confidence making it very difficult to have any faith in it for it truly looks to have separated completely from the fundamentals that made it a reliable bellwether.
P.S. The Dow will not break six tomorrow because the market won't allow it. They (investors) are not ready for that kind of shock though it is not impossible that the 6000 level cannot be reached on a later date.
Wednesday, February 18, 2009
How Many More Times?
Trumping the news of President Obama's stimulus plans is GM and Chrysler's new request for $39,000,000,000 in aid to remain afloat. That figure is much larger than anticipated and rekindles the debate of the fate of these iconic companies and whether the taxpayers should honor the latest requests on top of the billions they have already received. As much as you want to say "enough is enough" to GM and Chrysler, within the larger context of the bailouts it is hard to shut them out. Wall Street has received trillions of dollars from the Treasury, the Federal Reserve and the Congress. How can we give Wall Street all of this money and then shut down America's last bastions of industry?
The stewards of finance made mince meat of the nation's financial backbone and we have injected trillions of dollars into the financial industry to keep it afloat. Yet, for all of this money, none of these banks and investment houses (well the remaining investment houses are all banks now anyway) created jobs - they laid off hundreds of thousands and they did not start lending again - there was no credit available to keep small businesses solvent to retain their workers and/or to make payroll or to provide consumer credit to purchase homes and vehicles. They didn't turn around and do what they should have done after all of that money was pumped in to minimize the liquidity crisis.
I suppose we cannot fathom the damage had the financial industry crumbled yet they have received an awful amount of money and failed to behave as expected. Who can forget the $18+ billion dollars in Wall Street bonuses handed out? The stimulus package is laced with verbiage referring to the creation of jobs and to the preservation of jobs. Jobs that are saved are just as valuable as jobs that are created. It is hard to accept the realization that all of those trillions injected into the financial system have not amounted to enough and the first half of the original $700,000,000,000 in TARP funds, Congress' first round of funding, seems to have been sucked in without remorse. Now Congress has passed another $787,000,000,000. How can it possibly be enough?
Whatever the case, we are now doomed to continue to dole out the funds to save whomever is on the "too big to fail" list including those auto companies. But wait, upon closer inspection, GM states that it will close plants, discontinue brands and reduce the workforce by 47,000. I suppose it is better to save the rest of the remaining company and jobs than let it go altogether. Maybe GM really cannot survive, maybe the situation is beyond itself, beyond us. Unfortunately, the bailout stage has been set, it means that any "also-ran" that may have died in the regular course of economic business is now treated as a viable entity regardless of whether or not it would ordinarily be sustainable; this has happened for the auto companies.
If we think back to the amount of industry that has been economically devastated through the years, we might think of how many we could have saved with taxpayer dollars or we might logically think about the fact that a company had a bad business model or failed to secure good management or failed to recognize the sign of the times and adjust their business accordingly. Polaroid died last week essentially acknowledging that their product was obsolete and that the company has to either reinvent itself or die. That is capitalism. Now that the government has broken all the rules with bailouts, how does this all shakeout? Ok, ok, ok. Will it be luck or connections that will keep your company and/or industry from failing?
When do we re-evaluate who wins or loses going forward? The government simply doesn't have enough money to bailout everyone unless the people who overspent over the last 8 years suddenly change their minds.
The stewards of finance made mince meat of the nation's financial backbone and we have injected trillions of dollars into the financial industry to keep it afloat. Yet, for all of this money, none of these banks and investment houses (well the remaining investment houses are all banks now anyway) created jobs - they laid off hundreds of thousands and they did not start lending again - there was no credit available to keep small businesses solvent to retain their workers and/or to make payroll or to provide consumer credit to purchase homes and vehicles. They didn't turn around and do what they should have done after all of that money was pumped in to minimize the liquidity crisis.
I suppose we cannot fathom the damage had the financial industry crumbled yet they have received an awful amount of money and failed to behave as expected. Who can forget the $18+ billion dollars in Wall Street bonuses handed out? The stimulus package is laced with verbiage referring to the creation of jobs and to the preservation of jobs. Jobs that are saved are just as valuable as jobs that are created. It is hard to accept the realization that all of those trillions injected into the financial system have not amounted to enough and the first half of the original $700,000,000,000 in TARP funds, Congress' first round of funding, seems to have been sucked in without remorse. Now Congress has passed another $787,000,000,000. How can it possibly be enough?
Whatever the case, we are now doomed to continue to dole out the funds to save whomever is on the "too big to fail" list including those auto companies. But wait, upon closer inspection, GM states that it will close plants, discontinue brands and reduce the workforce by 47,000. I suppose it is better to save the rest of the remaining company and jobs than let it go altogether. Maybe GM really cannot survive, maybe the situation is beyond itself, beyond us. Unfortunately, the bailout stage has been set, it means that any "also-ran" that may have died in the regular course of economic business is now treated as a viable entity regardless of whether or not it would ordinarily be sustainable; this has happened for the auto companies.
If we think back to the amount of industry that has been economically devastated through the years, we might think of how many we could have saved with taxpayer dollars or we might logically think about the fact that a company had a bad business model or failed to secure good management or failed to recognize the sign of the times and adjust their business accordingly. Polaroid died last week essentially acknowledging that their product was obsolete and that the company has to either reinvent itself or die. That is capitalism. Now that the government has broken all the rules with bailouts, how does this all shakeout? Ok, ok, ok. Will it be luck or connections that will keep your company and/or industry from failing?
When do we re-evaluate who wins or loses going forward? The government simply doesn't have enough money to bailout everyone unless the people who overspent over the last 8 years suddenly change their minds.
Tuesday, February 17, 2009
A Different Vision of Productivity
It is President's week vacation and while most of the world went back to work today, almost the entire school population is on vacation this week. My husband's company was not off on Monday as it is just as much a regular business day for many private companies though the stock market and the banks are closed.
Today, President Obama signed the $787 stimulus package so it is a go. The Dow went down nearly 300 points when just last week it kept jumping on even a whiff of a bailout package. Today, there is a signed, sealed and delivered package and it drops like a rock. Also, the auto companies are back, hat in hand as we knew they would be, begging for another $39 billion to remain afloat. In addition, the deadline is upon them to submit their corporate sustainability plans. The numbers so far have been dreadful so I don't think much will change for them in the short term though it seems that the UAW has consented to a few concessions which may help the bottom line. How long will it take the Unions to realize that no one is immune from this Recession? Teachers, Government Workers, Carpenters, Electricians, Plumbers and everyone else belonging to similar organizations, you all need to pitch in, to help yourselves and ourselves because there is no good timeline for getting out of this Recession.
As much as the President tries to emphasize that there is no easy fix and a turnaround will not be immediate, we want those 8 years of George Bush to turn around; we certainly do not want to suffer for our excesses too long, right about now or at least upcoming in the Spring there should be a tidy picture of turnarounds; feel good stories about how the stimulus package is helping many families keep their homes. How the money will be apportioned will be of grave importance. How do we structure ourselves for opportunity in the next few years?
What side of the fence will we all be on when we emerge from this Recession? It is hard to look it in the eye, recession. It is hard to accept that it does not seem to be slowing. Everyone is being advised to work as hard as they can and stand out in order to save their job or themselves from layoff. Everyone who has a job is working as hard as they can because they fear losing their job. Those of us who lost their jobs feel like they have to prove productivity while they are home daily clicking resumes into a blank world; an auto-reply notice thanking you for submitting your resume. One time I did hear back that I was not the type of candidate they were seeking - it was a job on Long Island so I was rooting for it a little bit. Now, I am sending resumes to NYC and NJ wryly wondering how in the heck I would swing it; it is hard for both parents to commute to NYC from Suffolk County.
President Obama's plan was supposed to save us and it landed as flatly when the TARP was signed back in the fall. How much more Government spending will be necessary? I think most poeple know that the well has run dry but we are all in denial about that part. 8 whole years of destruction can't be turned around in a month but we want Obama to have fixed it today and we want our lives to be freed from our own monetary sins.
Today, President Obama signed the $787 stimulus package so it is a go. The Dow went down nearly 300 points when just last week it kept jumping on even a whiff of a bailout package. Today, there is a signed, sealed and delivered package and it drops like a rock. Also, the auto companies are back, hat in hand as we knew they would be, begging for another $39 billion to remain afloat. In addition, the deadline is upon them to submit their corporate sustainability plans. The numbers so far have been dreadful so I don't think much will change for them in the short term though it seems that the UAW has consented to a few concessions which may help the bottom line. How long will it take the Unions to realize that no one is immune from this Recession? Teachers, Government Workers, Carpenters, Electricians, Plumbers and everyone else belonging to similar organizations, you all need to pitch in, to help yourselves and ourselves because there is no good timeline for getting out of this Recession.
As much as the President tries to emphasize that there is no easy fix and a turnaround will not be immediate, we want those 8 years of George Bush to turn around; we certainly do not want to suffer for our excesses too long, right about now or at least upcoming in the Spring there should be a tidy picture of turnarounds; feel good stories about how the stimulus package is helping many families keep their homes. How the money will be apportioned will be of grave importance. How do we structure ourselves for opportunity in the next few years?
What side of the fence will we all be on when we emerge from this Recession? It is hard to look it in the eye, recession. It is hard to accept that it does not seem to be slowing. Everyone is being advised to work as hard as they can and stand out in order to save their job or themselves from layoff. Everyone who has a job is working as hard as they can because they fear losing their job. Those of us who lost their jobs feel like they have to prove productivity while they are home daily clicking resumes into a blank world; an auto-reply notice thanking you for submitting your resume. One time I did hear back that I was not the type of candidate they were seeking - it was a job on Long Island so I was rooting for it a little bit. Now, I am sending resumes to NYC and NJ wryly wondering how in the heck I would swing it; it is hard for both parents to commute to NYC from Suffolk County.
President Obama's plan was supposed to save us and it landed as flatly when the TARP was signed back in the fall. How much more Government spending will be necessary? I think most poeple know that the well has run dry but we are all in denial about that part. 8 whole years of destruction can't be turned around in a month but we want Obama to have fixed it today and we want our lives to be freed from our own monetary sins.
Tuesday, February 10, 2009
The Dow Plunges Nearly 400 Points as Street Rejects Geithner's Plan
I am still trying to figure out why the market tanked so hard today. I thought Wall Street was waiting with baited breath for the stimulus package to be passed which it was. Last week the market rallied on its supposed passing but did not drastically tank when it did not, it was ultimately sent back for more tweaking. Granted the tweaking was ridiculous since the Senate and House Bills were only a few billion dollars off and in a bill worth over $800 billion, the supposed tweaks were muscle flexing without any true consequence.
Anyhow, Wall Street must have been disgruntled with the new Treasury Secretary's proposal for the remaining TARP funds. I am understanding that the market went down nearly 400 points because it is possible that Investors did not like the fact that additional funds would be needed - everyone knows that the proposals are not nearly what is required but we are too far in debt to provide the truly costly package that is needed, they did not like the public-private investment partnership that was proposed - well the financial institutions have soaked up the first round of TARP funds plus the trillions from the Treasury and the Federal Reserve and still have not freed up the credit markets opting to keep the money to shore up their balance sheets and underwrite their bonus packages, and lastly they did not like that there were not anymore specifics on the remainder of the TARP funds because he mentioned that banks would be held more accountable and their balance sheets would now be "stress-tested" for market viability before they received more funds.
Apparently there is confusion in the plan, it did not explain the whole "bad-bank" proposal that would now buy up bad assets, Paulson's original plan that was never implemented, and it seemed to indicate that banks receiving bailout funds must adhere to more stringent rules where they would be required to lend but mostly the Street is unhappy because Treasury Secretary Geithner did not provide enough specifics of the whole plan. Too Bad.
The market certainly went hopping and ga-ga over Paulson's original 3 page bailout proposal to Congress but now that the Treasury Secretary states that the financial crisis is still bad and there is still lots of risk, the Street is choking. It seems to me that Investors are plain old mad that the Government is not promising to do all the spending itself; it expects Investors to help out. All the Investors want is a full-fledged Government Guarantee of funds. They did not get it today. Good. Let's start playing by some rules. Wall Street can't continue to reap bonuses without some skin in the game.
Anyhow, Wall Street must have been disgruntled with the new Treasury Secretary's proposal for the remaining TARP funds. I am understanding that the market went down nearly 400 points because it is possible that Investors did not like the fact that additional funds would be needed - everyone knows that the proposals are not nearly what is required but we are too far in debt to provide the truly costly package that is needed, they did not like the public-private investment partnership that was proposed - well the financial institutions have soaked up the first round of TARP funds plus the trillions from the Treasury and the Federal Reserve and still have not freed up the credit markets opting to keep the money to shore up their balance sheets and underwrite their bonus packages, and lastly they did not like that there were not anymore specifics on the remainder of the TARP funds because he mentioned that banks would be held more accountable and their balance sheets would now be "stress-tested" for market viability before they received more funds.
Apparently there is confusion in the plan, it did not explain the whole "bad-bank" proposal that would now buy up bad assets, Paulson's original plan that was never implemented, and it seemed to indicate that banks receiving bailout funds must adhere to more stringent rules where they would be required to lend but mostly the Street is unhappy because Treasury Secretary Geithner did not provide enough specifics of the whole plan. Too Bad.
The market certainly went hopping and ga-ga over Paulson's original 3 page bailout proposal to Congress but now that the Treasury Secretary states that the financial crisis is still bad and there is still lots of risk, the Street is choking. It seems to me that Investors are plain old mad that the Government is not promising to do all the spending itself; it expects Investors to help out. All the Investors want is a full-fledged Government Guarantee of funds. They did not get it today. Good. Let's start playing by some rules. Wall Street can't continue to reap bonuses without some skin in the game.
Monday, January 26, 2009
Seventy Two Thousand at One Blow
Today the job losses were brutal; Caterpillar, Pfizer, Sprint Nextel, Home Depot, Texas Instruments, ING and others announced 72,000 job cuts today, 207,000 jobs so far this year in 27 days. True to form the market rose a little because job cuts are presumed to bolster a company's bottom line by cutting costs.
However, I beg to differ, one or two companies announcing job cuts may be a good economic play, many companies announcing terrific layoffs in one day does not point to a good economic boost in my mind. When consumer spending is 70% of GDP, this adds a large number of consumers to the list who will not be buying or utilizing services not to mention the ripple effect of all the domestic service providers and assistants who also experience a reduction in livelihood because their services are no longer needed and who, in turn, will stop buying as well.
Anytime a city or town suffers from tourism losses due to a natural disaster or similar detriment, the economic cost is always tallied but when job losses are announced, the market only looks at the individual company's bottom-line and not the economic cost of those layoffs. The companies announcing losses are not isolated to certain industries, they represent the corporate spectrum which is never a good sign.
The market also improved today because sales of existing homes went up some 6%; this is not good news when most of those homes that were sold were foreclosures snapped up at bottom feeder prices; is this really good for your neighborhood? What happened to all those people who lost those homes?
It is odd but I still don't feel like the gravity of our economic reality on Long Island. The news is coming from school via my children, about where everyone is going for February break. Even I, as I have previously stated, am going to go away for a few days at the end of next week. I pulled the trigger and booked the flights and reserved the car though I am still undecided on hotel.
I am still questioning my motivation because I don't want to view it as a foolish, last hurrah, or as a foolish expense. I must be able to come up with a good reason for why I choose to spend this money at this time. And, I need to stop wasting my days searching travel sites for good deals so I can get back to the number one task at hand - looking for a job!
However, I beg to differ, one or two companies announcing job cuts may be a good economic play, many companies announcing terrific layoffs in one day does not point to a good economic boost in my mind. When consumer spending is 70% of GDP, this adds a large number of consumers to the list who will not be buying or utilizing services not to mention the ripple effect of all the domestic service providers and assistants who also experience a reduction in livelihood because their services are no longer needed and who, in turn, will stop buying as well.
Anytime a city or town suffers from tourism losses due to a natural disaster or similar detriment, the economic cost is always tallied but when job losses are announced, the market only looks at the individual company's bottom-line and not the economic cost of those layoffs. The companies announcing losses are not isolated to certain industries, they represent the corporate spectrum which is never a good sign.
The market also improved today because sales of existing homes went up some 6%; this is not good news when most of those homes that were sold were foreclosures snapped up at bottom feeder prices; is this really good for your neighborhood? What happened to all those people who lost those homes?
It is odd but I still don't feel like the gravity of our economic reality on Long Island. The news is coming from school via my children, about where everyone is going for February break. Even I, as I have previously stated, am going to go away for a few days at the end of next week. I pulled the trigger and booked the flights and reserved the car though I am still undecided on hotel.
I am still questioning my motivation because I don't want to view it as a foolish, last hurrah, or as a foolish expense. I must be able to come up with a good reason for why I choose to spend this money at this time. And, I need to stop wasting my days searching travel sites for good deals so I can get back to the number one task at hand - looking for a job!
Wednesday, January 14, 2009
The Good, the Bad and the Ugly
Today, while the market was tanking and nothing but more bad news hit the airwaves, I searched travel sites online until my eyes rolled up into my head. Come hell or high water, we are going on vacation; modest, of course, but vacation nonetheless. It seems that my school district has a Thursday and Friday off during the first weeks of February before the February President's week vacation. Why do school districts still have this much vacation time off when most parents have to go to work? It seems it is a ploy just to drag out those 180 actual school days so it appears that the children are in school for more time than they really are.
After speaking to some other mothers, it turns out that I am not the only one eyeing those 2 days as a convenient 4 day 3 night time period to have a shorter and therefore much cheaper vacation and also avoid the crowds and hassle of going away during the over-hyped, over-inflated February break with the entire school-aged American population to boot. As usual, "just about everybody is going to Florida," this I hear from my children every year around this time, "why can't we go on vacation?" Poor children, they were not put here to understand the greater cause of sacrifice at such a young age.
We always had hope that we would go away some time but every time we found an airfare and multiplied it by 4, we changed our mind; saving for the greater good or paying down more on a debt was always a better use of those funds. However, despite the perilous financial condition of the country and ourselves, we are going to go, finally. We are simply fed up with our austerity budget and still stinging from the fact that while everyone was living large over the last few years, we never got to take that ride. And now, when we hoped to see an improvement in our particular condition, we are now seriously challenged by the financial viability of the corporations we work for.
We were so glad to return to the corporate world and get off the small business merry-go-round of long hard hours for little pay, if any, we swore we would never complain about our jobs again and we didn't. Now my job is gone and my husband's hangs on a thread; his company riddled by so much debt, large though they may be, that they still have not made a profit this entire decade. Ridiculous.
Of course, we emphasize deeply with our fellow small-business owners and we treat them with the utmost respect because we truly know how it is. You have to struggle for 2 years on your own before most lending institutions and creditors will even loan you any money and then they all, including the SBA, still tie all of that debt to your personal name when they do finally say yes. That was the surprising thing about the SBA, in particular, it is set up to loan money to small business, guaranteed by the government, but the loan is still tied to the individual borrower and not the business entity. There is no easy way of getting out of this debt, the government will repay the bank if you default but then the government will come after you to recover those funds by any means necessary - complete federal rights to garnish your paycheck, hijack your tax refund or simply sue you. So much for a government guarantee.
The media keeps reporting that small businesses are the engine of the economy but so far I haven't heard of any plans to help relieve small business owners, most of whom have extended themselves on home equity loans and credit cards to survive. We did it and it is not very pretty. Nevertheless, we acted responsibly, we were resolute and vowed not to let our new extreme debt condition bring us down; we acknowledged that it would take years to pay off the business debt and that would have a futher consequence of setting our financial lives back so far that we are still hesitant to sum up the damage.
However, witnessing all of this bailing out of the profligate - homeowners who had overextended themselves in dwellings that they couldn't afford and businesses who simply had no common sense to save for a rainy day - it is difficult for us to champion the bailouts when we strived so hard to be responsible and it seems our counterparts did not. And so we will go on vacation, short but sweet, somewhere close and not too expensive, before my severance runs out and before our patience runs out. People who work hard are supposed to take a break and yet so far we have not.
We realize it will never be a good time to go away but we should take the opportunity now while we are both still receiving a paycheck. Now if I can just get past the prices which are still, in my opinion, way too high...
After speaking to some other mothers, it turns out that I am not the only one eyeing those 2 days as a convenient 4 day 3 night time period to have a shorter and therefore much cheaper vacation and also avoid the crowds and hassle of going away during the over-hyped, over-inflated February break with the entire school-aged American population to boot. As usual, "just about everybody is going to Florida," this I hear from my children every year around this time, "why can't we go on vacation?" Poor children, they were not put here to understand the greater cause of sacrifice at such a young age.
We always had hope that we would go away some time but every time we found an airfare and multiplied it by 4, we changed our mind; saving for the greater good or paying down more on a debt was always a better use of those funds. However, despite the perilous financial condition of the country and ourselves, we are going to go, finally. We are simply fed up with our austerity budget and still stinging from the fact that while everyone was living large over the last few years, we never got to take that ride. And now, when we hoped to see an improvement in our particular condition, we are now seriously challenged by the financial viability of the corporations we work for.
We were so glad to return to the corporate world and get off the small business merry-go-round of long hard hours for little pay, if any, we swore we would never complain about our jobs again and we didn't. Now my job is gone and my husband's hangs on a thread; his company riddled by so much debt, large though they may be, that they still have not made a profit this entire decade. Ridiculous.
Of course, we emphasize deeply with our fellow small-business owners and we treat them with the utmost respect because we truly know how it is. You have to struggle for 2 years on your own before most lending institutions and creditors will even loan you any money and then they all, including the SBA, still tie all of that debt to your personal name when they do finally say yes. That was the surprising thing about the SBA, in particular, it is set up to loan money to small business, guaranteed by the government, but the loan is still tied to the individual borrower and not the business entity. There is no easy way of getting out of this debt, the government will repay the bank if you default but then the government will come after you to recover those funds by any means necessary - complete federal rights to garnish your paycheck, hijack your tax refund or simply sue you. So much for a government guarantee.
The media keeps reporting that small businesses are the engine of the economy but so far I haven't heard of any plans to help relieve small business owners, most of whom have extended themselves on home equity loans and credit cards to survive. We did it and it is not very pretty. Nevertheless, we acted responsibly, we were resolute and vowed not to let our new extreme debt condition bring us down; we acknowledged that it would take years to pay off the business debt and that would have a futher consequence of setting our financial lives back so far that we are still hesitant to sum up the damage.
However, witnessing all of this bailing out of the profligate - homeowners who had overextended themselves in dwellings that they couldn't afford and businesses who simply had no common sense to save for a rainy day - it is difficult for us to champion the bailouts when we strived so hard to be responsible and it seems our counterparts did not. And so we will go on vacation, short but sweet, somewhere close and not too expensive, before my severance runs out and before our patience runs out. People who work hard are supposed to take a break and yet so far we have not.
We realize it will never be a good time to go away but we should take the opportunity now while we are both still receiving a paycheck. Now if I can just get past the prices which are still, in my opinion, way too high...
Tuesday, December 23, 2008
Most Have Shopped but Many Have Not Dropped
I'm feeling much better now that we have plowed through most of the shopping today. Thankfully the shopping was mild and we happily found deep discounts as promised. Surprisingly there was no frenzy or rushing, not too many lines, no overwhelming bags of goods and breathing room; a boon to the shopper, a sad requiem for a retailer. As we looked beyond ourselves to observe the fellow shoppers and their purchases - there were many lookers but still no takers - juxtaposed with the retailers we think are on the "list" as it were; we tried to narrow down who will be the winners and losers in the postscript. More later.
In the meantime, my husband and I bought meager gifts for each other, hoping to capitalize on the upcoming bargains we know will be beckoning next week. We can wait because our joy will come from saving money in the post-holiday shopping phase, not what will be under the tree for us in 2 days. We both have nice non-extravagant lists that we hope to fulfill at just the right price.
All shopping aside though, we all should know by now that the holidays are primarily about reaching out to family, friends and neighbors and making a positive connection. These winter celebrations are truly about the humanity in all of us. Don't forget to find yours and do something with it.
In the meantime, my husband and I bought meager gifts for each other, hoping to capitalize on the upcoming bargains we know will be beckoning next week. We can wait because our joy will come from saving money in the post-holiday shopping phase, not what will be under the tree for us in 2 days. We both have nice non-extravagant lists that we hope to fulfill at just the right price.
All shopping aside though, we all should know by now that the holidays are primarily about reaching out to family, friends and neighbors and making a positive connection. These winter celebrations are truly about the humanity in all of us. Don't forget to find yours and do something with it.
Monday, December 22, 2008
False Positive: Trying to Evade Gloom and Doom
May I be so bold as to go down that road. The road that I am trying to steer away from, the road that has been trampled lately, the road of gloom and doom that appears to be enveloping me despite myself. Not that I have been seeming all that positive lately but in my mind I really was trying. After all, we have to elevate ourselves above the fray if we want to survive.
Today is Tuesday before Christmas and I still have no gifts; well I finally ran out tonight to get a few "school gifts" realizing that tomorrow was the last day of school for the year. I absolutely do not like waiting for the last minute to shop because I hate having to jockey for position and wait on endless lines during the holiday shopping season yet here I am. Now, I have no choice, I have to do it all tomorrow or else.
I wish I wasn't so plain-minded when it comes to shopping then I would have had it all done already. Unfortunately, if I don't have any money or I feel my cash stream is finite, like losing a job, I will not shop, I go into lock-down; I simply will not buy another thing - I am frozen. I haven't even been to the supermarket. I have tried to do the holiday shopping since I was laid off, I have gone to the mall and all the usual discount retailers and I haven't seen anything I want to buy; not one thing has moved me.
Now the financial news shows are raising the red flag, don't buy gift cards at retailers that may not make it past January 2009 for the disconcerting reality is that this is one of the most dismal shopping seasons in decades and many retailers simply will not make enough this holiday season to survive. How the heck is the average person supposed to know which retailers are not going to make it? I try to do a little internet research and I can find plenty of lists of those that have closed under-performing stores or have simply died in 2008. So far, I have not been the most successful finding a good clean list of those that are in jeopardy outside of my own observation...this seems like everyone. Consumer spending is nearly 70% of GDP so if we don't spend; it seems that the economy is doomed anyhow.
You turn on the news and it is nothing but gloom and doom; how many years has it been since we've seen this statistic, this performance, this cycle, and the finality that this downturn will last through next year for sure. Though every guru keeps repeating the mantra that people should prepare for the worst, the reality is that most people really do not have a rainy day fund - that was what credit cards and home equity lines of credit were for. Now that those sources are dried up, most of us do not have the funds we need to survive. Today, commercial builders are begging the government for help because their debt is coming due to the tune of $160,000,000,000.
The bailout road is now on black ice; just slipping and sliding with no clue; everyone is slipping and we have no clue where to turn. How do we know who will survive? Last night, my husband and I were discussing where to invest; now is the time to adjust our 401ks. They keep telling us bargains are to be had in this market and we should steer ourselves towards those. So, I was thinking about companies that may benefit from the proposed infrastructure investments; caterpillar came to mind, they will be providing equipment I said. This morning I woke up to find out I was wrong, wrong, wrong. Caterpillar announced today that it was cutting salaries of all senior management and preparing other cost cutting measures to aid in its survival through next year.
I don't have a crystal ball and neither does anyone else but things really, really, really do not look so good this time around. I am going to keep looking for that light at the end of the tunnel but this tunnel seems awfully long already.
Today is Tuesday before Christmas and I still have no gifts; well I finally ran out tonight to get a few "school gifts" realizing that tomorrow was the last day of school for the year. I absolutely do not like waiting for the last minute to shop because I hate having to jockey for position and wait on endless lines during the holiday shopping season yet here I am. Now, I have no choice, I have to do it all tomorrow or else.
I wish I wasn't so plain-minded when it comes to shopping then I would have had it all done already. Unfortunately, if I don't have any money or I feel my cash stream is finite, like losing a job, I will not shop, I go into lock-down; I simply will not buy another thing - I am frozen. I haven't even been to the supermarket. I have tried to do the holiday shopping since I was laid off, I have gone to the mall and all the usual discount retailers and I haven't seen anything I want to buy; not one thing has moved me.
Now the financial news shows are raising the red flag, don't buy gift cards at retailers that may not make it past January 2009 for the disconcerting reality is that this is one of the most dismal shopping seasons in decades and many retailers simply will not make enough this holiday season to survive. How the heck is the average person supposed to know which retailers are not going to make it? I try to do a little internet research and I can find plenty of lists of those that have closed under-performing stores or have simply died in 2008. So far, I have not been the most successful finding a good clean list of those that are in jeopardy outside of my own observation...this seems like everyone. Consumer spending is nearly 70% of GDP so if we don't spend; it seems that the economy is doomed anyhow.
You turn on the news and it is nothing but gloom and doom; how many years has it been since we've seen this statistic, this performance, this cycle, and the finality that this downturn will last through next year for sure. Though every guru keeps repeating the mantra that people should prepare for the worst, the reality is that most people really do not have a rainy day fund - that was what credit cards and home equity lines of credit were for. Now that those sources are dried up, most of us do not have the funds we need to survive. Today, commercial builders are begging the government for help because their debt is coming due to the tune of $160,000,000,000.
The bailout road is now on black ice; just slipping and sliding with no clue; everyone is slipping and we have no clue where to turn. How do we know who will survive? Last night, my husband and I were discussing where to invest; now is the time to adjust our 401ks. They keep telling us bargains are to be had in this market and we should steer ourselves towards those. So, I was thinking about companies that may benefit from the proposed infrastructure investments; caterpillar came to mind, they will be providing equipment I said. This morning I woke up to find out I was wrong, wrong, wrong. Caterpillar announced today that it was cutting salaries of all senior management and preparing other cost cutting measures to aid in its survival through next year.
I don't have a crystal ball and neither does anyone else but things really, really, really do not look so good this time around. I am going to keep looking for that light at the end of the tunnel but this tunnel seems awfully long already.
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