One more reason I love the Wall Street Journal.
Category Archives: Recession? What recession?
The end of the end of the Great Recession
It is hard to believe that a man is telling the truth when you know that you would lie if you were in his place. – Mencken
Remember all that robust economic activity we heard so much about last month? The stuff about the economy expanding at 3.5% for the third quarter of this year and “officially” marking an end to the Great Recession? Ooops.
It was only 2.8% according to revised Commerce Department numbers. (And every reporter who is even semi-competent knew this reduction was coming. This number will be revised at least once more.)
That 0.7% difference is big. It means the basis of all this activity was mostly a result of the Federal gov’t running up its credit card and not by the creation of goods and services as a result of non-government created demand. Most of the spending was the result of government subsidies of the housing and auto industries via the Cash For Clunkers program and the $8,000 tax “credit” for 1st time homebuyers. It had been hoped that these would spur ancillary spending and thereby help the economy. This was not the case. People spent only on the things they could get a deal on.
And even that spending was problematic as the FHA seems intent on recreating the subprime insanity that got us into this mess.
It is worth pointing out that Mr. Toll’s money comes from the FHA so he has a vested interest in NOT saying this.
Nor were individuals the only ones to reign rein in their spending:. Via AP: “Companies cut back spending on commercial construction — a weak spot in the economy — at 15.1% annualized pace. That was deeper than the 9% annualized cut back first estimated.” On the plus side: Corporate profits climbed by the most in five years.
Oh, wait, you mean you aren’t a corporation?
OOOOOPS, again.
Maybe that’s not good news.
The AP story tries so hard to offer both sides of the story that it contradicts itself in places:
For the current quarter, some economists think economic growth will slow to around a 2.5 percent pace, though others say it could reach 3 percent if holiday sales turn out better than expected. [I would like some drug testing done on those “others”.]
Most say they think the economy will weaken again next year, with growth at a pace of around 1 percent as the impact of the $787 billion stimulus package fades and consumers keep tightening their belts under the strain of high unemployment and hard-to-get credit.*
So for some reason consumers are going to shell out in this quarter but then stop. I may have missed it but I don’t think there has been a subsidy for Christmas presents. Unlike some other economists, I think most people know January follows December and behavior that won’t make sense then doesn’t make sense now.
By the way, the professional wishful thinking classes will be out in force for Black Friday so make sure not to believe a single damn thing they say. Reporting false bright numbers about the coming weekend is an annual and longstanding tradition. See: Journalists still too lazy to report truth about Black Friday
Journalists deeply irritated at working over the long weekend writes stories that begin: “Great Black Friday sales numbers mean a big shopping season. Insert somebody’s numbers to support this and then a quote or two from an analyst.” Publish, forget, and hope no one notices that they are ALWAYS — even in good economic times — WRONG.
I don’t know which irritates me more, that we are being lied to so badly or that we are so eager to go along with it.
*The article has a great example of how journalists say what they believe to be true without getting caught at it: “What’s not clear is whether the recovery can continue after government supports are gone. If consumers clam up, the economy could tip back into recession.”
Pumpkin pies follow Eggos on to endangered foods list
It looks like a grim winter for Americans who will now have to get through the coldest months without two of their favorite food groups.
And it’s not just our poor underprivileged industrial food producers being hurt by this. In case anyone cares, there are reports that mere people are also being effected.
“Our calculations indicate that we may deplete our inventory of canned Libby’s pumpkin as we approach the Thanksgiving holiday,” said Paul Bakus, vice president and general manager of Nestle Baking.
Damn. Just as I was poised to get rich off my pumpkin pie with Eggo crust recipe. Maybe next year.
UPDATE
I agree with Mister Impatient’s comment (below) and sense an attempt to drive up the price in both the pumpkin and Eggo markets by creating a fictitious shortage. As evidence I offer this picture of shelves at my local supermarket overflowing with Eggos!
I CALL SHENANIGANS!!!
Why I don’t believe in this recovery
What’s the opposite of cherry picking? Prune picking? This may be an exercise in that but this “recovery” looks like smoke without mirrors. Here’s a reader of items that explain my thinking.
First, the decrease in the rate of unemployment as positive sign is pure spin and doesn’t reflect the actual situation at all.
Second, housing starts are at a nine month high! Great, just when a huge amount of housing stock is about to be dumped on the market, aka, more foreclosures.
And who is relying on all those mortgages to keep it out of bankruptcy? No, not the banks but the US government.
Take note of which parts of the government are being particularly hurt:
But the stock market broke 9800 yesterday, so happy days are here again.
Welcome to the boomtown
Pick a habit
We got plenty to go around
Welcome, welcome to the boomtown
All that money makes such a succulent sound
Welcome to the boomtown
Krispy Kreme finds “depression era” price for coffee doesn’t pay
Last fall Krispy Kreme tried to grab some market share in the Northwest by rolling back coffee prices to “Depression era” levels. The “New Deal” marketing effort cut prices from for a small from $1.45 to a nickel, mediums went from $1.65 to a dime and larges from $1.75 to 15 cents. It was A) a nice thing to do in this economy and B) KK figured that it made fiscal sense for them because they make most of their money from donuts not java.
At first things went well, very well. In March sales of Lutheran gasoline (mocha) were up 229 percent over pre-price cut. Melissa Allison, who covers coffee for the Seattle Times (that’s gotta be like having the philosophy beat in ancient Athens), says cheap joe may not be enough. Turns out people weren’t buying the baked goods needed.
Today Gerard Centioli, CEO of Icon LLC in Seattle, which co-owns (with Krispy Kreme) 12 stores in the Northwest and Hawaii, tells Allison (does she ever get confused about which of her names goes first?) that two of the stores now require you buy something baked in order to get the coffee deal.
Still a heck of a deal. Now all we need is a good five cent cigar to go with it.
If unemployment has you down, Viagra wants to help
This a total cheap shot headline but – of course – I had to go for it. The actual marketing effort from Pfizer is a remarkably cool thing for the company to do.
The drugs to be given away include covered include several diabetes medications and top money makers like Lipitor, Celebrex, Lyrica and Viagra. It also includes antibiotics, antidepressants, antifungal treatments, several heart drugs, contraceptives and smoking cessation products. The company says it doesn’t know how much the program will cost and hasn’t put a cap on spending for it. Last year the company made $8 billion profit on $48 billion in revenue.
Irate French workers kidnapping bosses
In the past month there have been four separate incidents of workers taking their bosses hostage for up to 24 hours. Also, a billionaire boss was blocked in his taxi by employees for an hour on March 31. It even has its own word: Bossnapping – which sounds a lot more like what workers always assume the boss is doing.
Public opinion is pretty much split on this one. A poll released Tuesday had 50 percent against & 45 percent in favor. The other 5 percent were probably out buying cheese. As a result the government is dithering. (Actually this is SOP for the French government.)
French President Nicholas Sarkozy is trying to figure out whether he should enforce the law on this one. (Why do I think only the French and maybe the Italians would have to debate this?) In addition to the fact that M. Sarkozy is already deeply unpopular among the workers
The risk of sending in the riot police when the next hostage-taking occurs is that, far from discouraging such acts, it could cause them to proliferate. Turning a blind eye carries risks as well. All four plants where bossnappings have occurred are foreign-owned, and the head of the CGPME employers’ group, which represents small and medium businesses, said foreign investors could be put off France.
Really I just think he’s in a bit of a tizzy because Michelle O. has totally eclipsed his pinup model wife for coolest first lady on the planet.
New game is a wonderfully bitter version of the economic mess
“Crunch, The Game For Utter Bankers” is a card game for anyone with a distinctly gallows sense of humor:
This is the latest product from the fine warped folks at TerrorBull Games and – judging by the website — it is as bitter and cynical as their last number: War On Terror: The Board Game. (Does anyone do bitter better than the Brits? They have a cultural gift for angry commentary that I have never seen equaled: Waugh, Ralph Steadman, Francis Bacon, Martin & Kingsley Amis, Thackeray, Joe Orton – the list just goes on and wonderfully on. While the US has some fine satirists only Mencken really ranks for among the great acidivists.)
An average game sees you bribing your way out of government investigations, fending off aggressive takeovers and forcing debt onto the unsuspecting public. Meanwhile, reward your hard work by taking inappropriate bonuses and – when no one’s looking – brazenly embezzling your bank’s own funds and hiding them about your person. Crunch is unique in that to win, players are coaxed into cheating.
Fittingly, the game will hit stores on April 1, but it is NOT a prank.
Full disclosure alert:
- I have not played the game yet.
- I am being given a free review copy.
- The company has wormed its way into my heart by sending a free copy of War On Terror to a friend who is currently deployed in Afghanistan.
That said, if the game is half as fun to play as the website is to read it will be great.
Although the problems inherent in, say, spending over a trillion dollars on a war, while your country’s exports diminish year-on-year, would be apparent to the average school child, somehow everyone seemed caught off guard by this. And, being simple people, we started looking around to find out who to blame. …
Unfortunately, you can’t bomb the economy into shape, so looking for culprits was largely a waste of time. Even when bank bosses finally came under fire, it all felt like a bit of a diversion. Like sitting in an upturned, burning car and taking that moment to try and work out where you went wrong, when the car itself has no breaks, no steering wheel, tyres made out of butter and wood instead of glass for windows. And it’s not even a car, it’s an angry lion on roller skates and you’ve been trying to drive it.
Not sure if this will be as much fun as some tar and feathers – but I have my hopes up.
AIG claims it is paying bonuses to retain “best and brightest talent”
Congrats to Mr. Liddy for calling the people in question “the best and the brightest” – a description famously applied to the folks who got us into Vietnam.
And what would these folks be talented at? While getting someone else to pay for bankrupting a company is quite a talent it’s not one to reward.
Which is worse – losing a lawsuit or needing around-the-clock security for all your senior executives? I’m pretty sure the phrase “hanging is too good for them” is echoing around a lot of people’s minds right now.
BTW, the $165M in bonuses is in addition to a previously scheduled $121M:
Yep, more than a quarter of a billion bucks being paid to the folks who put the I in incompetent.
To quote Mr. Mencken: “Every normal man must be tempted, at times, to spit on his hands, hoist the black flag, and begin slitting throats.”
UPDATE:
In New Terror Video, AIG Demands Huge Ransom from U.S.
Shadowy Group Seeks Bonuses, Golf Retreats
New Hyundai warranty covers job loss*
*Mostly.
In a mark of how bad things are “Hyundai is providing a complimentary vehicle return program for the first year on every new Hyundai that is financed or leased for owners who experience an involuntary loss of income within 12 months of the purchase date.“
What that actually means is Hyundai is offering to cover up to $7.5K of the debt on a new car in case of
- Involuntary unemployment
- Physical disability
- Loss of driver’s license due to medical impairment
- International employment transfer
- Self-employed personal bankruptcy
- Accidental death
Details: You have to have made at least two payments; you are still on the hook for everything over $7.5K and; they get the car back. Which means if you bought the bottom line Accent with nothing added to it (MSRP $9.9K) and make just the two payments you are only on the cuff for about two grand. Not great but so far it’s better than anything else out there. (What dumbass wrote that? Truth is below)
You are on the hook for only the depreciation OVER $7500. Example: if the car had an msrp of around 25 grand and you were on the peverbial hook for the whole magilla and the depreciation over the first 10 months was 30% ( 7.5 large ) you would owe nada.
The deal looks even better when you consider that none of your tax dollars have gone into propping the company up.
So the new motto is, “Hyundai — the car to buy if you think you’re going to get canned.”
Italy outclasses us by giving parmesan to the poor
Permetta loro di mangiare formaggio!
I am not in general a fan of any Italian government that holds power for more than a week and the current one is no exception. However my hat is off to them for this plan that will help both the poor and the cheese makers.
Sure as hell beats the “processed American cheese product”* that our government gives away. It’s a great idea Mr. President-elect. Don’t just give food to the hungry, give them good food. I say we help out the Italian cheese industry too!
*Which I eat, too.
Top 10 Marketing Blunders of 2008
Yeah, there’s a lot more than 10 here. What can I say? It was a very good year for very bad things.
(PS: If you liked this would you mind going here and voting for it on Digg?)
GRAND PRIZE FOR SUSTAINED ORGANIZATIONAL EFFORT
(tie)
The John McCain Presidential Campaign
- “Our economy, I think, is still — the fundamentals of our economy are strong.”
- Has no idea how many houses he (or his wife) owns.
- Picks Sara Palin, the Broad to Nowhere who couldn’t find Russia or Africa on a map.
- Campaign adviser and former HP CEO Carly Fiorina says Palin couldn’t run a major corporation.
- Campaign adviser and former senator Phil Gramm says Americans are whiners about economic problems.
- “Shutting down” his campaign to fix the bailout.
- “Lipstick on a pig”
- Egregious attack on Dungeons & Dragons that clearly cost him the election. (OK, maybe not so much the last one).
GM
- June: with gas heading to $4-a-gallon, company announces it is trying to sell the Hummer brand. As of today, sale is still pending.
- August: with gas at $4-a-gallon, company announces it will take the bold move of investing “$500 million to build a new fuel-efficient, small car the automaker says will show it can make money in head-to-head competition with its Japanese rivals as it fights to return to profitability.”
- October: Asks Treasury Dept. for $10 billion to pay for proposed merger with Chrysler
- Early November: car company that already isn’t selling cars argues it can’t file for bankruptcy because “people won’t buy cars from a bankrupt car company.”
- Late November: leads troika of Detroit CEOs to DC to ask for taxpayer money to balance the books. Each flies in on wings of attitude and three separate corporate jets.
- December: runs weasel-word mea culpa in Automotive News: “While we’re still the U.S. sales leader, we acknowledge we have disappointed you. At times we violated your trust by letting our quality fall below industry standards and our designs become lackluster. We have proliferated our brands and dealer network to the point where we lost adequate focus on our core U.S. market. We also biased our product mix toward pick-up trucks and SUVs. And, we made commitments to compensation plans that have proven to be unsustainable in today’s globally competitive industry.“
Runners Up
- Ford features “Space Oddity” — a song about astronaut suicide — in new car campaign.
- Framingham State College uses the word blah 137 times in a 312-word fundraising letter.
- Disney (multiple entries): Bans kids from DisneyWorld restaurant; Changes “It’s A Small World” to “A Salute to All Nations, But Mostly America”; and Sells “High School Musical” panties for tween girls with the phrase “Dive In” on them.
- Woolworths (UK) launches Lolita brand of beds for young girl
- JetBlue lives up to Southwest’s parody ad by charging for pillows.
- Russia uses smiling kids in tourism ad for war zone
- Residents of Lesbos sue those other lesbians over brand name
- Motrin gets headache from viral moms video
- Butcher’s ads feature “Meat Products, Fresh Service” on naked woman
- Hershey asks if you’ve found Mr. Goodbar
Special Jury Awards
Co-Branding That Shouldn’t Have Been
- Windows Vista toilet paper
- The Muppets appear on DVD for Law & Order: SVU
- Barbie® Rice Krispies® Treats
- P&G starts hip-hop record label (Bounce® and Beyonce? Jay Z and Oral B®? 50 Cent and Febreze®? Snoop Dogg and Eukanuba®? Ghostface Killah and Ghost®? Lil Wayne & Pampers®?)
The Alpha & Omega of Over-reaching
- God’s chosen racing team loses at the Indy 500
- “Pope’s Cologne Provides Solace to Grieving Widow”
- “Can Batman Teach Spiritual Truth?”
- Email service lets you taunt friends after The Rapture
- McDonalds compares Ray Kroc to Martin Luther King Jr.
Product Failure
- LifeLock ID protection service fails to protect CEO’s identity
- Anti-shark device found to attract sharks
The Penguins Of Irony “Oh NO You Din’t” Awards
- Publisher says bankruptcy puts magazine chain in “a position poised for wonderful growth
- WaMu continues to send credit card offers after going out of business
Previous years’ lists
HUZZAH!!! Recession declared! (and backdated!)
With the horses so long out of the barn that they are now baseballs and glue, officials have decided to nail the barn door shut and call it a recession. “The U.S. economy entered a recession in December 2007, a committee of economists at the private National Bureau of Economic Research said Monday.” The official declaration comes a mere EIGHT MONTHS after even most economists were saying this was the case. Of course it is also a mere EIGHT MONTHS after the Anderson Forecast from UCLA predicted we would avoid a recession.
Waiter, I’d like some of what he’s smoking…
What has me worried is all the official assurances that it will never turn into a depression.
Economy costs reporters free drinks
Things are so bad The New York Financial Writers’ Association had to charge for drinks at its annual black-tie gala. Previously The Financial Follies (Actual name. Formerly funny.) dinner featured a pre-meal open bar. This year the association could not get a corporate sponsor to pick up the $25,000 tab. (Guesstimate: $500 of alcohol per journalist. Guesstimate based on extensive knowledge of the drinking patterns of reporters.) The bright side of this is that the media is now taking the “economic slowdown” very, very seriously.
.
What is the definition of “depression”?
More from me at BlownMortgage:
Idiots and economists (like them!) don’t like this because it leaves out the unemployment rate and consumer confidence as indicators. “By using quarterly data this definition makes it difficult to pinpoint when a recession begins or ends. This means that a recession that lasts ten months or less may go undetected.” Sadly, that’s not going to be an issue this time around.
BTW, now that the extension of unemployment benefits has passed the Senate expect to see a sharp increase in the unemployment rate — which only counts people who are collecting unemployment insurance. You are no longer officially counted as unemployed if you are not collecting insurance. A lot of people who used up their benefits but aren’t employed will now re-appear magically on the roles. They will just as magically disappear in seven weeks when their benefits are used up and the rate will go down again. However, those people won’t be any more employed.
Collateral Damage 