The silver lining: “Amid Higher Unemployment, Fewer Workplace Injuries”

One more reason I love the Wall Street Journal.

The Labor Department’s report of occupational injuries and illnesses that required days away from work mimicked the shifts the recession caused in the labor market in 2008. Hard-hit sectors, such as construction and retail, reported fewer injury and illness cases. Older workers experienced more injuries as their labor force participation rose. And incidents among younger workers fell as fewer remained employed.

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.

Robert Toll, CEO of Toll Brothers, said today at a New York home builders conference that FHA lending could create another huge crisis in the mortgage industry, referring to it as “yesterday’s subprime.” He also went as far as calling it a “definite train wreck,” noting that a “flag will go up in the next couple of months” for bail out money.

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.

PS: The FDIC Deposit Insurance fund is now in “Negative Territory” (ie, broke) as the number of bank failures continues to increase.

*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.

Nestle, which owns the Libby’s brand of pumpkin pie and announced this week that heavy rain has hurt its pumpkin farms in Morton, Ill., to the point that it will not pack any more pumpkins this year.

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.

The Spin: Sept. 17 (Bloomberg) — The number of Americans filing first-time claims for jobless benefits fell unexpectedly last week, a sign the labor market is deteriorating at a slower pace as the economy pulls out of the recession.

A: NEW YORK (CNNMoney.com) — Five states posted jobless rates above 12% in August, according to federal data released Friday. California, Nevada and Rhode Island each hit record-high rates, the Labor Department said. Michigan led the nation in unemployment, with a rate of 15.2%, while Nevada was next at 13.2% and Rhode Island was third at 12.8%. California and Oregon were tied for the fourth spot, each with unemployment at 12.2%.

B: After reviewing the various unemployment calculations maintained by the Bureau of Labor Statistics, I have come to the conclusion that the U6 calculation (Unemployed, discouraged and underemployed workers) is the most relevant, which increased 0.5 percentage points in August to a whopping 16.8 percent, representing a total of roughly 20 million people in the U.S. And remember, this is “less bad”.  I like that the U6 number includes underemployed workers, because these are people that have jobs but aren’t making as much money as they are accustomed; they have been forced into part time work. This can impact payments to ARM companies.

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.

The Spin: Sept. 17 (Bloomberg) — Housing starts in the U.S. rose to the highest level in nine months … adding to evidence an economic recovery is taking hold.

A: WASHINGTON (Reuters) – The federal government and states are girding themselves for the next foreclosure crisis in the country’s housing downturn: payment option adjustable rate mortgages that are beginning to reset. "Payment option ARMs are about to explode," Iowa Attorney General Tom Miller said after a Thursday meeting with members of President Barack Obama’s administration to discuss ways to combat mortgage scams.

B: While this index (and single family starts) are well above the massively depressed levels recorded late last year and early this year, this has in all likelihood been a rebound from unsustainably weak results that was reinforced by a temporary boost to demand from the $8000 first time homebuyer tax incentive that applies to purchases that close before December 1. Gains from here on will probably be much more difficult to achieve, as poor labor market conditions, tight credit, overly leveraged household balance sheets, and still considerable inventory of new and existing homes all exert downside pressures. –Joshua Shapiro, MFR Inc.

And who is relying on all those mortgages to keep it out of bankruptcy? No, not the banks but the US government.

 The Fed’s balance sheet expanded again in the latest week, rising to $2.125 trillion from $2.072 trillion, but the increase came primarily from purchases of mortgage-backed securities, Treasurys and agency debt. Holdings of mortgage-backed securities alone jumped by nearly $60 billion, and now make up nearly a third of the overall balance sheet. The Fed started a program in March to ramp up such acquisitions in order to keep long-term interest rates low. Nearly all of the programs set up as emergency facilities to prop up the financial system posted declines. Direct-bank lending remains at its the lowest level since the collapse of Lehman Brothers, and central-bank liquidity fell again. The commercial paper and money market facilities also dropped and are at their lowest levels since inception. Companies lately have decided to take their funds out and tap investors directly as sentiment in the market improves. The only emergency facility posting gains was the TALF program aimed at spurring consumer lending.

Take note of which parts of the government are being particularly hurt:

WASHINGTON – The Federal Housing Administration said Friday its cash cushion will dip below mandated levels for the first time, but officials insist it won’t need a taxpayer rescue. The agency, a growing source of funds for first-time homebuyers, faces mounting concerns that it will soon need a taxpayer bailout. As of this summer, about 17 percent of FHA borrowers were at least one payment behind or in foreclosure, compared with 13 percent for all loans, according to the Mortgage Bankers Association.

WASHINGTON (Reuters) – U.S. bank regulators will meet at the end of the month to explore options, possibly including some that are not well-known, to replenish the dwindling fund that safeguards bank deposits, the chairman of the Federal Deposit Insurance Corp said on Friday.

By December 2010 the state expects its unemployment trust fund, which is being tapped $31.7 million per month, will run out. The fund, which contained $430 million at the end of 2008, could dip to $118.5 million by year’s end. … Hawaii is not alone; at least 14 other states are insolvent, and four more are on their way. (Emphasis added)

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

David & David, 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.

11515Drink-Coffee-Poster 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.

"They were experiencing a level of coffee-only purchases which will cause us to either require a purchase or discontinue the program. If the test becomes permanent, we will develop marketing materials to communicate the change to our guests.”

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 world’s biggest drugmaker will provide more than 70 of its prescription drugs at no cost to unemployed, uninsured Americans, regardless of their prior income, who lost jobs since Jan. 1 and have been on the Pfizer drug for three months or more.

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.

The whistling at the financial graveyard grows increasingly repetitive

This brilliant post is entirely from the great blog Financial Armageddon

These days, lots of people seem to be reading from the same script:

"CBI Says Worst of British Recession Over" (Reuters)
"China’s Premier Says Economy Better than Expected" (Associated Press)

"Dubai’s Ruler Says the Worst Is Over" (Financial Times)

"U.S. Officials Suggest Worst of Recession Is Over" (Reuters)

"Italy Employers See Signs Worst Over in Crisis" (Reuters)

"Worst Over? Just Maybe" (Associated Press)

"’Worst Is Over; India to Be on Recovery Path in 2-3 Quarters’" (Business Line)

"US Hopes the Worst Is Over" (The National)

Hmmm, those words sound awfully familiar…ah, yes, now I remember:

"Lehman CEO Says Worst Is Over, Yet Troubles Ahead" (Reuters)

"Bear Stearns Says Worst Is Over After Writedown" (CNBC)

"Citigroup Chief Says Worst of Crisis Is Over" (Evening Standard, May 7, 2008)

"Legg Mason’s Miller Sees Recovery for Stocks; ‘Worst Is Behind Us,’ Famed Fund Manager Tells Beleaguered Shareholders" (MarketWatch, April 23, 2008)

"Is the Worst Over for Detroit?" (SmartMoney, July 18, 2005)

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.

ransom notePublic 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-box-3D

“Crunch, The Game For Utter Bankers” is a card game for anyone with a distinctly gallows sense of humor:

[It] allows you to experience the upside of down. Placed in the role of a global banking CEO, you have to juggle the conflicting demands of your ailing bank and your flourishing bank account. … Each player starts the game with a number of Assets in their bank, a small workforce and a few Trust cards. Trust is essential to your bank’s survival. Not only will capitalism falter without it, but each Trust card hides on the reverse a potential Government Bailout.

card-rebrandThis  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.

card-toobigtofail 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”

“We cannot attract and retain the best and the brightest talent to lead and staff the A.I.G. businesses — which are now being operated principally on behalf of American taxpayers — if employees believe their compensation is subject to continued and arbitrary adjustment by the U.S. Treasury.” — Edward M. Liddy, government-appointed chairman of A.I.G.

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.

Lawyers at both the Treasury Department and AIG have concluded that the firm would risk a lawsuit if it scrapped the retention payments at the AIG Financial Products subsidiary, whose troublesome derivative trading nearly sank AIG. The company promised before the government started bailing out the firm in September that employees would be awarded more than $400 million in retention pay this year and next.

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:

The payments to A.I.G.’s financial products unit are in addition to $121 million in previously scheduled bonuses for the company’s senior executives and 6,400 employees across the sprawling corporation. Mr. Geithner last week pressured A.I.G. to cut the $9.6 million going to the top 50 executives in half and tie the rest to performance.

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.

hyundaiIn 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.

Agriculture Minister Luca Zaia has committed to buying 100,000 66-pound wheels each of Parmigiano Reggiano and the very similar Grana Padano cheese to donate to the needy. Producers sought government help in the face of prices that have fallen some 25 percent over the past five years.

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

Runners Up

  1. Ford features “Space Oddity” — a song about astronaut suicide — in new car campaign.
  2. Framingham State College  uses the word blah 137 times in a 312-word fundraising letter.
  3. 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.
  4. Woolworths (UK) launches Lolita brand of beds for young girl
  5. JetBlue lives up to Southwest’s parody ad by charging for pillows.
  6. Russia uses smiling kids in tourism ad for war zone
  7. Residents of Lesbos sue those other lesbians over brand name
  8. Motrin gets headache from viral moms video
  9. Butcher’s ads feature “Meat Products, Fresh Service” on naked woman
  10. Hershey asks if you’ve found Mr. Goodbar

Special Jury Awards

Co-Branding That Shouldn’t Have Been

The Alpha & Omega of Over-reaching

Product Failure

The Penguins Of Irony “Oh NO You Din’t” Awards

Previous years’ lists

Penguin seal

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.

“We don’t see that happening,” said Edward Leamer, director and co-author of the forecast released Tuesday [March 10]. “This is a tough call, but I will be very surprised if this thing actually precipitates into 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.

.