This page has been archived and commenting is disabled.
Daily Highlights: 7.7.09
- British manufacturing output dropped in May
- Home prices may fall in more than half of the largest U.S. cities through of 2011
- Justice Dept. to look at telecoms and abuse of their market power.
- Oil hovers above $64 after plunging over past week
- Plane insurers suffer worst month since 2001 on Air France and Yemeni crashes
- US Service economy contracts at slowest pace in nine months in ISM index.
- US should consider a second stimulus package, Obama adviser Tyson says.
- Adidas AG plans to raise 500M Euros in debut bond issue in currency.
- AT&T, Verizon under focus after Justice Dept initiates antitrust review.
- Bank of America and Harley-Davidson to lead $9.5B of TALF bond sales.
- BASF to cut 3700 jobs - part of the integration with Ciba; may sell or close 23 sites.
- Basic Energy to sell $225M in notes to repay credit line.
- Beijing Automotive (BAIC) faces long odds in its bid to buy Opel
- Covanta Hldg Corp to buy enrgy and waste assets from Veolia for $450M cash.
- CRH intensifies cost-cutting program after profits fall 83% on building slump
- CVS Caremark renews contract with Cardinal Health, McKesson; deal seen as less favourable economically to suppliers, but better than expected.
- Discover Fincl Srvcs to sell $500M of stock, may repay Treasury bailout funds.
- EMC raised its takeover bid for Data Domain to $2.2B.
- Fiat and China's GAG have agreed to form a 50-50 joint venture.
- Ford will face increased pressure from a lean GM.
- GM is close to exiting bankruptcy.
- Lear Corp. plans to restructure ~$2.3B debt, create a new 9-member board.
- Regis Corp. plans to offer 11.5M shares, $125M in 5-year convertible senior notes.
- Societe Generale: Likely post a small profit in Q2, despite reduced revenue.
- Toyota plans to spend $500M on US SUV plant revamp as sales drop.
Earnings Calendar: BMJ, GBX, ISCA, KED, RT, SHLM.
Companies to watch: A. Schulman, BASF, CVS Caremark, Discover Financial Srvcs, EMC, Ruby Tuesday, Toyota, The Greenbrier Cos.
Recent Egan-Jones Rating Actions:
EDISON INTERNATIONAL (EIX)
ALLIANT ENERGY CORP (LNT)
ALASKA AIR GROUP INC (ALK)
SPRINT NEXTEL CORP (S)
DENBURY RESOURCES INC (DNR)
SMITHFIELD FOODS INC (SFD)
BEMIS CO INC (BMS)
GENERAL MILLS INC (GIS)
CONSTELLATION BRANDS INC (STZ)
BEAZER HOMES USA INC (BZH)
LEAR CORP (LEA)
BALL CORP (BLL)
GANNETT CO INC (GCI)
Data provided by: Egan-Jones Ratings and Analytics
»
- 2164 reads
- Printer-friendly version
- Send to friend
- advertisements -
The simple fact is you can't support $52.9T of total credit market debt with $1.484T of which $1.85T is federal government credit debt.
http://www.federalreserve.gov/releases/z1/
(See Z1, Total Credit Market Debt)
Total credit market debt for:
2007: $4.59T peaked in Q3 ($1.3T) annualized to $5.2T
2008: $2.617T (barely enough to pay interest)
2009 Q1: $371B (annualized to $1.484T of which $1.85T was federally created)
Sorry but the credit system is FUBR, eventually the federal government will be flatten by the train they stepped out in front of. The credit system must continue to exponentially expand or it's game over. Well, the fat lady is warming up as I write this.
Maybe humans should have considered the flawed equation and the end result of using such of an equation. Oh, but the fraudsters love to pull out the power of compounding interest, sure until you can't supply the equation with what it needs to service itself.
http://2.bp.blogspot.com/_dtY0VOFMWMM/R-xPyhz9uXI/AAAAAAAAAvY/mppP65HLTq...
The credit market was up to creating $5T a year soon it will have to be $10T a year but look whats happening the system really can't even create $2T. Houston, we have a problem.
The chart above should look familar.
http://www.mathwarehouse.com/exponential-growth/images/formula_exponenti...
A chart of what you HAVE TO supply the system to rent it out to yourselves. However, there is no way that humans can give unlimited power that they do not possess.
Agreed...the 'miracle of compound interest' has brought down many an empire.
Mako I love your posts. I'd propose to you but I'm already married.
If we could educate our children (at home if necessary) on the pitfalls of compound interest, fiat currency, and fractional reserve lending - and who benefits therefrom - only then would we have a generation (or two) that would not be prey to this same wealth transfer from the many to the few. I expect we will have to go thru another Depression (this current one) before such education has a chance of being implemented. Experience being a dear school, in which today's fools hopefully will learn.
Anything less than such reform, to me is just decorating the windows.
I suppose your right overall. Perhaps if humans could control their population growth, chronic food supply inequities, and religious differences, a small thing like controlled economic growth (1% per year) would allow us to exist until entropy (Q) finishes us off.
When you attach a % to your transaction or your credit or your money, it's game over right then and there.
1% is not any more sustainable than 10%, eventually if your credit system must grow exponentially than you have just doomed either yourself or a future generation.
If you don't believe me, go graph 1%, the only thing that changes is the time, eventually it goes vertical or near vertical. The population did not peak in the 1930s but the amount put in the system could not be sustained even with population still rising.
The global system seems to be down to the 55-75 year peak than implode cycle.
Yes, you can have 1% growth but when you have a system that DEMANDS 1% or more or whatever it may be to exist than it's game over. 1% growth is different than required to have 1% growth or you perish.
The inability to expand exponential can be either supply or demand caused, there is no way for humans to exponential grow the system forever yet that is what has to happen. Either way you either grow exponential in the current system or the system implodes.
Agreed! I love when these keysensian experts come on cnbc saying that 2% inflation is an ideal number. I mean, even with a number that low after 30 or 40 years your money is wiped out! -VegasBD
Mako,
I am going to attempt to bring what you're saying down to a 'household economics' level, just to make sure i'm following you:
If i try to live on credit card(s) due to lack of income or low income, sooner or later the interest and the minimum monthly payment is going to equal or exceed my ability to 'service' it with the available income.
sound about right?
Lou Salerno
PS i would like to hear your best case / worst case ideas on what you think it would take to fix the current mess.
Sounds right to me too. Interest-on-interest is an ever-growing monster, even if it starts small, even if it starts slow. Given enough time interest-on-interest will eventually outgrow the size of your capital, unless you can discharge it fast. Most people can't, which is why credit cards (for example) are so profitable to their issuers, and why there are so many eager lenders out there these days.
Default is really the only way to reverse this; I think we need to stop seeing 'default' as 'unthinkable' or 'dishonourable' and instead see it as a reasonable business (or survival) option. This will put the risk burden back on the lender, where it belongs.
" Default is really the only way to reverse this; I think we need to stop seeing 'default' as 'unthinkable' or 'dishonourable' and instead see it as a reasonable business (or survival) option."
Banks and big business do it all the time, without giving even a thought for ethics or what is honorable, so i don't have a problem with that if it's necessary from a personal perspective, but if the U.S. were to do it, wouldn't that make any sort of 'soft' landing impossible and bring on a worldwide financial 'gotterdammerung'?
Yes.
There is no 'soft' landing possible, however; so reaching for one (or trying to avoid a 'hard landing') is wasting time and is in essence what most governments are doing right now. Which is why the problem's getting worse, not better. Gotterdammerung is here and is the natural global consequence of ever-expanding national debt. I think most governments/CBs are aware of that and are in the buying-time stage, hoping for a 'black swan' miracle.
There is no point in trying to save the world if you're a country, or the country if you're an individual...if Iceland were to default, and if the 'developing nations' that the IMF 'helped' in the 90s had defaulted, instead of trashing their domestic economies trying to repay impossible debts, then yes it would have been harder globally in some ways, but much easier for the nation itself to rebuild, to get a chance at an economy based on domestic wealth. PLUS, it would have (again) put the risk burden back on the lender where it belongs, for a truly *sustainable* global (or domestic, or individual) economy. The rules don't change just because it's the world or the country rather than the individual whose debt is too large.
Think of it as 'ripping-off-the-bandaid' form of aid. It hurts more, for a briefer time.
that seems right
sn't protest a marketing/management issue? I could go to a Tea Party. I suppose I could go to Lafayette Square and self-immolate, but that's pretty much a one-time thing.
At this point, protest needs to be organized. You take food from the mouths of folks or their kids and you'll get protest. It won't be organized, though.
good articles: http://tinyurl.com/phy7j7