Tag: economics

No matter how you slice it, this just ain't good, at all.

This is bad, real bad.

Via the U.K’s Daily Mail:

You may wish to know this because, if ever you had an irrational desire to charter one, now would be the time. This time last year, an Aframax tanker capable of carrying 80,000 tons of cargo would cost £31,000 a day ($50,000). Now it is about £3,400 ($5,500)

This is why the chilliest financial winds anywhere in the City of London are to be found blowing through its 400-plus shipping brokers.

shipsatseaBetween them, they manage about half of the world’s chartering business. The bonuses are long gone. The last to feel the tail of the economic whiplash, they – and their insurers and lawyers – await a wave of redundancies and business failures in the next six months. Commerce is contracting, fleets rust away – yet new ship-builds ordered years ago are still coming on stream.

Just 12 months ago these financiers and brokers were enjoying fat bonuses as they traded cargo space. But nobody wants the space any more, and those that still need to ship goods across the world are demanding vast reductions in price.

Do not tell these men and women about green shoots of recovery. As Briton Tim Huxley, one of Asia’s leading ship brokers, says, if the world is really pulling itself out of recession, then all these idle ships should be back on the move.

‘This is the time of year when everyone is doing all the Christmas stuff,’ he points out.

‘A couple of years ago those ships would have been steaming back and forth, going at full speed. But now you’ve got something like 12 per cent of the world’s container ships doing nothing.’

Aframaxes are oil bearers. But the slump is industry-wide. The cost of sending a 40ft steel container of merchandise from China to the UK has fallen from £850 plus fuel charges last shipsatsea2year to £180 this year. The cost of chartering an entire bulk freighter suitable for carrying raw materials has plunged even further, from close to £185,000 ($300,000) last summer to an incredible £6,100 ($10,000) earlier this year.

Business for bulk carriers has picked up slightly in recent months, largely because of China’s rediscovered appetite for raw materials such as iron ore, says Huxley. But this is a small part of international trade, and the prospects for the container ships remain bleak.

Some experts believe the ratio of container ships sitting idle could rise to 25 per cent within two years in an extraordinary downturn that shipping giant Maersk has called a ‘crisis of historic dimensions’. Last month the company reported its first half-year loss in its 105-year history.

Martin Stopford, managing director of Clarksons, London’s biggest ship broker, says container shipping has been hit particularly hard: ‘In 2006 and 2007 trade was growing at 11 per cent. In 2008 it slowed down by 4.7 per cent. This year we think it might go down by as much as eight per cent. If it costs £7,000 a day to put the ship to sea and if you only get £6,000 a day, than you have got a decision to make.

No matter what your politics is; this is truly bad. Living proof that were are in a globalist economy, and when America hurts; the World hurts too. Of course, the American Presidential Administration that caused all this, is long gone. The Clinton Administration.  If the Clinton Administration had not used it’s housing commissioner to pressure Freddie Mac and Fannie Mae to produce those high risk, Adjustable rate Mortgages; which ended up being traded as credit swaps on the market; none of this would have ever happened. But it did, and the balloon economy was created, and the World went with it. When the Balloon popped; the rest of the world came down with it.

It is truly sad thing to behold. But there were warnings and they went unheeded. So, now we have this. There are no easy solutions. But it will rebound, it just takes time.

Predictably, Dan blames Obama. Sorry Dan, that is just plain dumb; Much of this was caused by Clinton and his stupid housing policy. It predates Bush and Obama. So, let’s get off the stupid? Okay? 🙄

Yikes! – About half of U.S. mortgages are seen to be underwater by 2011

Tim Geithner call your office!

The percentage of U.S. homeowners who owe more than their house is worth will nearly double to 48 percent in 2011 from 26 percent at the end of March, portending another blow to the housing market, Deutsche Bank said on Wednesday.

Home price declines will have their biggest impact on prime “conforming” loans that meet underwriting and size guidelines of Fannie Mae and Freddie Mac, the bank said in a report. Prime conforming loans make up two-thirds of mortgages, and are typically less risky because of stringent requirements.

“We project the next phase of the housing decline will have a far greater impact on prime borrowers,” Deutsche analysts Karen Weaver and Ying Shen said in the report.

Of prime conforming loans, 41 percent will be “underwater” by the first quarter of 2011, up from 16 percent at the end of the first quarter 2009, it said. Forty-six percent of prime jumbo loans will be larger than their properties’ value, up from 29 percent, it said.

“The impact of this is significant given that these markets have the largest share of the total mortgage market outstanding,” the analysts said. Prime jumbo loans make up 13 percent of the total market.

via About half of U.S. mortgages seen underwater by 2011 | Reuters.

I wonder what “The One” will do about this? Cash for Refinancing?

Here’s why:

The drop in home prices is fueling a vicious cycle of foreclosures as it eliminates homeowner equity and gives borrowers an incentive to walk away from their mortgages. The more severe the negative equity, the more likely are defaults, since many borrowers believe prices will not recover enough.

Homeowners with the riskiest mortgages taken out during the housing boom have seen the greatest erosion in equity, in part because they were “affordability products” originated at the housing peak, Deutsche said. They include subprime loans, of which 69 percent will be underwater in 2011, up from 50 percent in March, Deutsche said,

Of option adjustable-rate mortgages — which cut payments by allowing principal balances to rise — 89 percent will be underwater in 2011, up from 77 percent, the report said.

Regions suffering the worst negative equity are areas in California, Florida, Arizona, Nevada, Ohio, Michigan, Illinois, Wisconsin, Massachusetts and West Virginia. Las Vegas and parts of Florida and California will see 90 percent or more of their loans underwater by 2011, it added.

“For many, the home has morphed from piggy bank to albatross,” the analysts said.

It is classic; The textbook reason why you DO NOT give home loans to high risk persons. Because they are the first to lose their jobs when the economy takes a dump.  This is the invention of the Clinton Administration. But yet, no one on the left wants to blame slick willy. Call it the Clinton bubble, call it a huge screw up by the Democrats. I call it reality. Welcome to the Obama Economy and the Democratic Future, brought to you by Clinton stupidity.

Once again Andrew Sullivan shows that he is not a Conservative

Andrew Sullivan is Astroturfing (or is it asshole-turfing? Most likely BOTH in Sullivan’s case! DohHypnotized)   for his fellow Liberals.

Andrew Sullivan says:

welcome2insanity(2)Here’s another example. There’s a groundswell of grousing on the right about the cash-for-clunkers program, because the feds were caught off-guard by its popularity. The argument is that if the government can’t run cash-for-clunkers, how can it run healthcare?

To which one might respond: but cash-for-clunkers is one example of the government actually doing something right, helpful and popular. It’s the kind of pragmatic experimentation that FDR tried repeatedly. So you have a practical, targeted measure that seems to have helped abate a deeper recession in the auto industry, and the right is obsessed with the ideological abstraction of “government.”

What conservatives have to do, in my view, is not demonize government, but to champion limited government. If government can do tangible practical things that help everyone, while balancing its budget, it’s doing what conservatives think it should. Smart, practical initiatives that address problems that the private sector has failed at: what else is government for? The rest is ideology – and it seems to be all the Republicans have left.

Can someone tell how the Government affecting the Markets is doing something right? I mean, Ron Paul knocked out of the ballpark, when he said in his video that, while the “Cash for Clunkers” program might help those who are able to buy cars; but that it would damage the market for the poor people who buy those older so-called “Clunker” cars.

Reason Magazine’s Matt Welch weighs in:

I’m nobody’s conservative, but I’m pretty sure if I was telling conservatives how to think I wouldn’t admonish them for failing to champion limited government within two sentences of praising FDR’s pragmatism. It’s like, I dunno, lecturing the Labour Party about demonstrating their pro-union bonafides while praising Margaret Thatcher’s centrism. Sounds a bit off.

[….]

Sullivan is dead right about one thing: Cash-for-clunkers is indeed very “popular.” So is the home mortgage interest deduction, the prescription drug benefit, and any number of federal programs that siphon from the diffuse pool of tax revenue+debt and blast out concentrated benefits to the broad middle class. The standard for judging these things shouldn’t be popularity–Richard Nixon’s wage-and-price control spasm of 1971, to name one of many historical measures now widely and rightly considered asinine, was hugely popular at the time–but whether they make sense in both the short and long term.

Cash-for-clunkers amounts to a rounding error in Tim Geithner’s nose-hair at this point, which is probably why at least some liberals seem so genuinely baffled by the disproportionate criticism it has drawn. But for some of us it’s also a nearly perfect symbol of economic statism run amok. The federal government is taking from the many, giving it to the less-than-many, destroying functional cars, funneling money to an auto industry that it already largely owns (at a hefty taxpayer price tag), then taking multiple (and multiply premature) bows for rescuing the economy and the auto industry in the process.

I understand, and even appreciate, that not everyone interprets things this way. But what I don’t understand, and ultimately don’t respect, is the weird urge to react to yet another Obama administration brainfart by rounding up its opponents and putting them in a metaphorical holding pen marked “ideologically obsessed.” Particularly after eight years in which the only detectable ideology was taxcut-and-spend, and otherwise do what parties in power always do: look for creative new ways to bribe the middle class.

I happen to like that last part about bribing the middle class. Is not that the honest truth? I mean, the Republican Party does it, and so do the Democrats. Bribe the middle class for their vote. I tend to believe it happens on the left more; but honestly, both sides do it. This program is an example of that.

James Joyner weighs in as well:

Piggybacking on WSJ’s point, it strikes me that the “clunkers” aspect of this arrangement is morally dubious. Glenn Reynolds‘ 2004 Mazda RX-8 is a clunker that, were he so inclined, he would be eligible to trade to the government (indirectly) for $4500.  It would then be scrapped.  Doesn’t this remove a perfectly good used car from the market that some person of modest means could otherwise have purchased, either upgrading from an older, less reliable vehicle or none at all?  And doesn’t doing that mean the price of other used cars will increase accordingly?

Which is exactly what Ron Paul said in his video. Here is another area that this program will hurt. Auto Mechanics; these guys are the ones who keep those older cars going, thus creating a living for themselves. Which, in case the liberal socialist left have forgotten; does contribute to the economy. Which proves to the this writer, that the socialist far liberal left, in their quest to further their so-called Green agenda, which is basically a big scam, that is only going to benefit big business; they have left the most important people behind —- their constituents, that are the poor and lower middle class in this Country.

Graphic Credit: McGurk @ Ace of Spades

Ron Paul says that "Cash for Clunkers" hurts the poor

I do not always agree with the Ron Paul. But this time; he is dead on. His point is that the liberals in their quest to revive a market for new cars, is destroying a used market for older cars for the poor people to drive. Which is absolutely true. Hell, I drive a damned clunker car! Do you think that I can afford to go buy a new car? Well sure, if someone wants to give me the entire amount needed to buy a new one!  Contrary to what some might believe, some of us Conservatives are not independently wealthy. Some of us Conservatives are below the poverty line. Some of us Conservatives are poor!

However, just because I am not rolling in the dough, does not mean that I want a Government hand out! Just because I am poor, does not mean that I want the Government controlling every aspect of my life either!

You ask, “If your are so damned poor, than why the hell are you a Conservative?!?!” Because I know the truth about the Democratic Party; how they use poor people, black people, and other minorities, all for their votes and to achieve idiotic goals of a socialistic society.

So, again; I might not always agree with Ron Paul, but this time, he knocked it out of the ballpark.

Here’s the video: (Via The Daily Paul)

By the way,The Daily Paul is a decent website as well; even if the owner did refuse to buy advertising on my site. I guess I wasn’t worth the investment. 🙄 In case he’s forgotten, it was with his Gold business that he runs.

Quote of the Day

I have to admit I love to beat up on Goldman; I do it for The Daily Beast and on CNBC every chance I get. I also have to admit cheering Matt Taibbi on when I first read his Rolling Stone article.

But in the end it does no one any good to travel in conspiracy theories. Is Goldman too powerful? Maybe. Was it too big to fail back in September? Given the size of its balance sheet, Goldman’s demise would have made Lehman’s look insignificant. (And while we’re at it, conspiracy theorists, let’s put to rest once and for all that Lehman was allowed to die to remove one of Goldman’s main competitors. Yes, Lehman was competitive with Goldman in the bond market, but the only reason to bail it out was to keep the systematic risk from infecting Goldman. In letting Lehman go under, the government actually put Blankfein and company in greater peril.)

A bigger issue lost in all the back-and-forth about the firm’s connections, trading habits, and where Lloyd Blankfein was the night of September 15, 2008 when Lehman went bust, is that the American taxpayer is right this very moment subsidizing Goldman’s risk taking. That’s a scandal no one seems to want to talk about.

Cash for Clunkers; Clunks out — Update:Feds trying to salvage program — Update: House Passes 2 Billion "C for C" Bill

This is a bit a humorous story.

Via Wall Street Journal:

White House officials and lawmakers were studying late Thursday how to keep alive the government’s cash-for-clunkers incentive program because of concerns the program’s $1 billion budget may have been exhausted after just one week.

Obama administration officials warned congressional leaders Thursday it planned to suspend the program at midnight. But the White House released a statement late Thursday saying that completed deals would be honored and the program is still under review.

Cash for Clunkers Runs Out of Gas

A White House official said, “We are working tonight to assess the situation facing what is obviously an incredibly popular program. Auto dealers and consumers should have confidence that all valid [cash-for-clunker] transactions that have taken place to-date will be honored.”

Lawmakers are discussing with White House officials where to find funding — including possibly tapping the government’s Troubled Asset Relief Program, or TARP, a congressional aide said.

The clunkers program, which offers rebates of up to $4,500 to consumers who trade in old vehicles and buy new, more fuel-efficient models, began July 24 and sparked a surge in car sales.

“It was an absolute success,” said Michael J. Jackson, chief executive of AutoNation Inc., the U.S.’s largest chain of auto dealerships. “There’s a very compelling case the government should put more money into it. It’s a great stimulus to the economy.”

There much just be such a thing as a program working too well. Mike Hendrix points out that Cato is pointing out a way to use the money to buy a classic car.  One little problem with that whole idea; well, a few actually. For one, it is dishonest; and I always thought that Conservatives were the upstanding ones and the Democrats were the lying, cheating criminals and thieves. Just a thought guys. Second of all, I am sure the Government, somehow or another; is going to keep track of how long you own the car, possibly by keep track of how long you have the title in your possession. So, if you get a car and turn around and off it. I am sure the Government is going to want their money back.  Even if it is not spelled out anywhere; I would not want to take my chances. I figure, the less the Government knows about me and desires to speak with me; the better.

However, there is late breaking news that that people behind the scenes are trying desperately to keep the program running:

The Obama administration and Capitol Hill sources told NBC News that efforts are underway to protect the auto sales incentive program, also known as “Cash for Clunkers.”

Although key members of Congress were notified by the Secretary of Transportation Thursday that the program would run out of money at midnight, sources said “Administration and Congressional officials are working to keep it up and running.”

The program has exhausted its authorized funding of nearly $1 billion in less than a week but officials say “it is not suspended.”

The program, which had been expected to run through Sept. 30, was designed to spur U.S. auto sales through consumer incentives.

“Cash for clunkers” authorized up to $4,500 in rebates for car buyers who traded in their gas guzzlers for more fuel-efficient vehicles.

The government launched the program on July 24 and said late on Thursday that sales and pending sales had neared the limit of 250,000 vehicles.

Some of my fellow Conservatives are he-hawing about how funny that this is; and that it is a waste of money. Well, I guess I must be funny. Put me in the bracket of people that say, “Hey if it’s working, it’s working!”  I am not a fan prime of pumping of the economy. But if people start buying cars again and the economy comes back to life. I am all for it. Sorry guys, I just remind unconvinced that this is waste or that it is somehow hurting the economy.

Update: Via Politico:

Congress is moving quickly to save the depleted cash-for-clunkers program, as the House passed a $2 billion spending measure Friday afternoon that would keep alive a program that has encouraged American car owners to trade in their old gas guzzlers for more fuel efficient vehicles.

Despite some criticism from Republicans who called the legislation another bailout for another industry, the bill easily passed on a 316-109 bipartisan vote.

Under the fast-track bill, Democratic leaders will use funds from a renewable energy loan guarantee included in the stimulus. The bill would extend the program through Sept. 30, 2010. Democrats have portrayed the run on cash for clunkers cash as a great success for the $1 billion program, which allows car owners to turn in older, less fuel efficient cars for a $4,500 rebate to purchase higher gas mileage vehicles.

The Senate path will be more complicated, as the upper chamber will have to work through a dispute between Michigan lawmakers who want more generous terms on gas mileage than California senators seeking higher fuel efficiency rules. Sen. Claire McCaskill (D-Mo.), has already posted a message on her Twitter account saying she won’t support transferring stimulus money to cash for clunkers. The $2 billion is not new money since it is being transferred from an existing renewable energy program.

Both Republicans and Democrats talked about how local dealerships across the country have been flooded with interest from car owners who want to dump their older vehicles and use the free $4,500 rebate to help purchase new, fuel efficient cars. But the government re-imbursement of car dealers has been inefficient, and lawmakers have criticized the program’s slowness in sending those rebates to auto dealers who have fronted the rebate money for car buyers.

“Cash for Clunkers may have run out of cash, but America’s consumers haven’t run out of clunkers. We’re going to work with the Obama administration to keep this wildly successful program going until it reaches its goal of helping consumers take 1 million gas guzzlers off the road,” said Rep. Ed. Markey (D-Mass.), who co-authored the legislation.

Some Republicans have already started objecting to the bill, saying it’s yet another bailout for a specific industry. But Republicans like Pete Hoekstra of Michigan and John Campbell of California have already spoken in favor of the bill in Friday afternoon floor speeches.

You see this is why the Republican Party is being painted by the left as the “Party of No.” Because something that is actually working; the Republicans are against it. Because it is supposedly a “Bail Out” of the auto industry. Oh Please, it is enabling those, who would not otherwise be able to afford a newer car. I know feeling, working a job, but not making quite enough to afford a new car. This is helping people out. Now truthfully, this program would not help me out. As I am not working; and I could not afford the car payment. But if I was; I would jump on the chance to get one of these vouchers.

Sometimes I think that some Republicans need to step back away from their ideology for a second, and see something in it’s broader terms. This inability to do this, is why the Republican Party lost in 2008 and will possibly in 2012 as well.

Others: : USA Today, New York Times, Washington Post, CNBC.com, Wake up America, The Politico, Environmental Capital, The Confluence, Scared Monkeys, DailyFinance, Wizbang, Hot Air and The Jawa Report

Movie: Fiat Empire

Synopsis: Inspired on the book, THE CREATURE FROM JEKYLL ISLAND by G. Edward Griffin, FIAT EMPIRE discusses the effects of the Federal Reserve System on the U.S. economy and explains why the debt-backed "fiat" money it issues is no longer Constitutional. This 60-minute documentary is an excellent primer for the citizen or student who wants to get an understanding of how money is created and why the U.S. government has entered into a partnership with elite Wall Street banks. Featuring Ron Paul, Edwin Vieira, G. Edward Griffin and Ted Baehr

Get the DVD here

The White House is trying to avoid the ugly truth…

The Economy is in the crapper, the Nation is up to it’s eyeballs in debt, and the White House is scared:

WASHINGTON (AP) – The White House is being forced to acknowledge the wide gap between its once-upbeat predictions about the economy and today’s bleak landscape.

The administration’s annual midsummer budget update is sure to show higher deficits and unemployment and slower growth than projected in President Barack Obama’s budget in February and update in May, and that could complicate his efforts to get his signature health care and global-warming proposals through Congress.

The release of the update – usually scheduled for mid-July – has been put off until the middle of next month, giving rise to speculation the White House is delaying the bad news at least until Congress leaves town on its August 7 summer recess.

The administration is pressing for votes before then on its $1 trillion health care initiative, which lawmakers are arguing over how to finance.

The White House budget director, Peter Orszag, said on Sunday that the administration believes the “chances are high” of getting a health care bill by then. But new analyses showing runaway costs are jeopardizing Senate passage.

“Instead of a dream, this routine report could be a nightmare,” Tony Fratto, a former Treasury Department official and White House spokesman under President George W. Bush, said of the delayed budget update. “There are some things that can’t be escaped.”

The administration earlier this year predicted that unemployment would peak at about 9 percent without a big stimulus package and 8 percent with one. Congress did pass a $787 billion two-year stimulus measure, yet unemployment soared to 9.5 percent in June and appears headed for double digits.

Obama’s current forecast anticipates 3.2 percent growth next year, then 4 percent or higher growth from 2011 to 2013. Private forecasts are less optimistic, especially for next year.

via My Way News – White House putting off release of budget update.

Hope! Change! Obfuscation! Numbers Fixing! Just another day in Obama-land folks…..

2010 is looking mighty good for the Republican Party right now.

America cannot say that they were not warned; Fox News Channel, Every Conservative Blogger; including myself, warned the folks. If you elect this guy, he will ruin America and will worsen our Economy. But did America listen? Nope! They elected him anyhow. It is indeed the late 1970’s and early 1980’s all over again. Barack Obama’s Administration is Jimmy Carter 2.0. It will be interesting to watch and see, just how much this country will be “In the hole” and for how long.

Somewhere, John McCain is smiling. 🙂

Others: Political Punch, Hot Air, Right Pundits, Wizbang, The Foundry, On Deadline, Don Surber, QandO, YID With LID, NewsBusters.org, JammieWearingFool, Betsy’s Page, Pajamas Media, Say Anything, AmSpecBlog, Riehl World View and Gateway Pundit

Video: The Southern Avenger: Ron Paul and Jim DeMint Take on the Fed

Synopsis: Texas Congressman Ron Paul and Senator Jim DeMint of South Carolina are gaining bipartisan support by going the extra mile in their efforts to audit the Federal Reserve.