The Great Recession - post mortem

[SteveMax58]

Originally Posted by Grammaticus

If you live in the US and you are paying a bunch of banking fees, you are not looking very hard.

This is what I was thinking. I havent paid fees or charges since...well, I can't really recall exactly. Maybe 1997-ish?

I've been with Wachovia since they bought First Union, which I had accounts with. While I've heard negative things from others that I know, I have to say I've been more than happy with Wachovia's (lack of) fees, pleasant customer service, and uncommonly helpful representatives who always seem to point me towards some helpful direction which benefits me every time I call up with a need/request/etc.

[Flasch186]

Mortgage rates plummeted today which is a very very good thing. If this direction can hold this could help navigate through the spring selling season and help get the mud to begin to dry. We'll see as everything theyve done so far has lacked endurance.

[Mac Howard]

Originally Posted by Marc Vaughan

Its swings and roundabouts - they've also cut the level of VAT by 2.5% which effectively balances things for high earners and ensures that low wage earners end up better off (as they're the ones worst hit by the recession).

I was quite taken by that, Marc, when I saw it on the news.

I've often thought that reliance on interest rates alone to control the economy and inflation through the money supply (described by Ted Heath in the past as "like a one club golfer") as too simplistic and that control via a national sales tax would offer additional/alternative and more flexible control.

For example, if they wish to stimulate the economy then they will drop interest rates to increase the money supply. But that often triggers inflation. But if you reduce a national sales tax (VAT) then you not only stimulate through increasing the money supply but you reduce inflation at the same time (retail prices come down) - or at the very least compensate to some extent for the increase.

I've never seen that suggested so I guess there must be something wrong there but I can't see it.

Of course the government loses revenue but that is compensated by the increase in economic activity.

It all seems too good to be true some how or another

But I presume that's what Brown is doing.

I would also add that if the banks in the UK now behave as you say then they've improved a lot since I was there

[Marc Vaughan]

Originally Posted by Grammaticus

If you live in the US and you are paying a bunch of banking fees, you are not looking very hard.

All the accounts I have over here charge unless you have a certain amount in the account (and not just keeping it in credit, normally a reasonably substantial amount).

The best I have is a Wamu account where they charge and then refund it if I keep over a certain amount in the account - if you know a better bank then please let me know, but both Wachovia and Wamu (which are the closest banks to me geographically - I've heard bad things about Bank of America which is the other alternative near by so haven't checked them out yet).

[Marc Vaughan]

Originally Posted by Mac Howard

I would also add that if the banks in the UK now behave as you say then they've improved a lot since I was there

Heh - they've been pretty good all my adult life, however in recent years the 'charges' they made for overdrafts (which weren't as heavy as those made by the banks I've used in America) were made illegal (and indeed many people were able to reclaim those they'd paid from several years past).

[Marc Vaughan]

Originally Posted by Grammaticus;1893931I really don't think the UK has more banking options than the US.[url="http://en.wikipedia.org/wiki/Banks_of_the_United_Kingdom"

List of banks in the United Kingdom - Wikipedia, the free encyclopedia[/url]

I wasn't meaning that there were more bank corporations (although considering the size of England I think there is quite a decent choice, what I was trying to argue is that by allowing foreign banks in it would increase choice and thus improve competition and service to customers.

If you look at the banks in England several are not 'native' banks (HSBC was I believe a Hong Kong based bank originally for instance. These banks helped push improved services to customers in order to gain them from the more traditional English banks.

There is of course a potential negative aspect to this side of things which can be seen from the collapse of the banks from Greenland which established entities in England.

[Mac Howard]

Originally Posted by Marc Vaughan

Heh - they've been pretty good all my adult life, however in recent years the 'charges' they made for overdrafts (which weren't as heavy as those made by the banks I've used in America) were made illegal (and indeed many people were able to reclaim those they'd paid from several years past).

12 years since I last had an account in the UK, Marc. Hell, is it really that long

[Edward64]

Woo hoo, up 3%. I did my part today! Hopefully we can extend last week gains.

Retailers keep fingers crossed as holiday shopping continues - Nov. 29, 2008

Holiday shoppers are spending
Research firm says Black Friday sales up 3%, thanks to deep discounts, in cautious start to the season.

[cartman]

The official designation of the economy as being in a recession was made by the National Bureau of Economic Research. What is a bit surprising is that the start was pegged as Dec. 07, which means we've been in one for almost a full year.

[path12]

Originally Posted by Edward64

Woo hoo, up 3%. I did my part today! Hopefully we can extend last week gains.

Oops.

Strictly anecdotal -- one of the things I do is track retail sales for my vendors. While we have been beating their department averages (yay) those department averages are almost entirely 10-20% below last years same week, both in sell-through and average retail price.

Some unhappy/worried stores out there. And with a short retail season this year they've got reason to be.

[Grammaticus]

Same store sales for McDonalds are up 5.3% in the US and 8.2% worldwide.

Although it looks like October was not a good month overall. It looks like an estimated drop of 0.3% overall. This is based on a Reuters report that

"tracks monthly sales for 34 of the nation's largest retailers including Wal-Mart (WMT, Fortune 500), Gap (GPS, Fortune 500), Sears (SHLD, Fortune 500) and J.C. Penney - began tracking the results in 2000."

On the list Wal-Mart was actually up 2.4%.

http://money.cnn.com/2008/11/06/news...ion=2008110612

[Flasch186]

Q1 will see a shocking number of store closures and bankruptcy filings. Mom and pops are and should be very scared.

[sterlingice]

Originally Posted by Flasch186

Q1 will see a shocking number of store closures and bankruptcy filings. Mom and pops are and should be very scared.

Yeah, I'm really worried about how many stores won't survive with 90 days of this Christmas, big and small

SI

[Mizzou B-ball fan]

Hoo, baby. Going to be a really rough day on Wall Street. Job loss report was FAR worse than expected.

[JonInMiddleGA]

Originally Posted by Flasch186

Q1 will see a shocking number of store closures and bankruptcy filings.

Somewhat rhetorical question I guess but ... if we expect it, how shocking is it?

[Flasch186]

hmmm...

[Edward64]

Originally Posted by Mizzou B-ball fan

Hoo, baby. Going to be a really rough day on Wall Street. Job loss report was FAR worse than expected.

Nice rebound ... what a crazy second half of 2008.

[Shkspr]

Originally Posted by JonInMiddleGA

Somewhat rhetorical question I guess but ... if we expect it, how shocking is it?

I suspect the shocking part will not be the what, but rather the who.

[molson]

Originally Posted by Shkspr

I suspect the shocking part will not be the what, but rather the who.

Who would be shocking? We have the big 3 automakers begging Washington for survival. Lehman Brothers had been around for 150 years.

The only one that would really shock me is Walmart, since they're basically recession-proof.

[Mizzou B-ball fan]

This struck a nerve with me. I was listening to the ABC News radio report at the top of the hour. The reporter mentioned that Obama and many others have said that GM's CEO should resign due to his lousy leadership. They then played a clip from an interview of a GM female union auto worker. She was asked if she thought the GM CEO should be fired. Her response:

Well, I think he should take a pay cut..........maybe not take a bonus. I don't think he should be fired. I think that everybody should be able to keep their job.

Proof-positive as to why these companies have become such a disaster. I'm hopeful that the restrictions are so tough that all three companies just don't even bother to take the money. I'm really surprised that the Democrat-led Congress is seriously pushing forward with any kind of loan/bailout given that public support for it has fallen to 25% or less in some polls.

[cougarfreak]

I think a better idea would be to let the oil companies bail out the auto industry. They have had those record profits for the last year, made their money off of the auto industry, and should have plenty of available cash.

[Fidatelo]

Originally Posted by cougarfreak

I think a better idea would be to let the oil companies bail out the auto industry. They have had those record profits for the last year, made their money off of the auto industry, and should have plenty of available cash.

I think that might set back the green initiative just a wee bit

[sterlingice]

I love that we're all up in arms about a $15B bailout, even moreso than an even stupider $700B bailout

SI

[Mizzou B-ball fan]

Originally Posted by sterlingice

I love that we're all up in arms about a $15B bailout, even moreso than an even stupider $700B bailout

SI

Don't lump me into that crowd. I was a vocal critic of the original bailout as well in this very thread, though I was in the minority at the time.

[Logan]

Originally Posted by sterlingice

I love that we're all up in arms about a $15B bailout, even moreso than an even stupider $700B bailout

SI

I think the $700B bailout has a 10% chance of success, and my calculations put the potential success of the auto bailout at -17.9%.

[flere-imsaho]

Originally Posted by Logan

I think the $700B bailout has a 10% chance of success, and my calculations put the potential success of the auto bailout at -17.9%.

That sound you just heard was QuikSand strangling himself.

[SportsDino]

Here it comes, the lines of "well we gave out 700 billion, whats 15 more?" (or reapportioning the 700 billion already sent to random whims, which of course it was designed for i guess anyway).

I opposed all sorts of bailouts, and to be honest the snivelling beggars these millionaires are becoming to try and win a government handout is just ticking me off. Well, the fact the act might work is ticking me off.

If 3 million jobs really hang in the balance over 15 or 30 billion in short term cash, then the government should say "okay here is your bridge loan, 10% APR". The reason that none of these companies will accept such a thing is because the real truth is they want a handout. Securing massive government dollars at say 4% is almost free money considering large chunks of their private funding comes in over that rate. Heck, I had 15% credit cards too, if the U.S. would pay down my principle and give me a new rate of 4% on it, I'd be throwing salt in my eyes to drudge up enough tears for my sob story.

Sure, give em a loan, charge a real interest rate, and charge it during the grace period. Make some money off of them. The request will either disappear over night as the free handout feel goes away, or they'll bite the bullet and take it since private debt experts would charge them more.

[Mizzou B-ball fan]

Looks like common sense may prevail. Even the paired down $14B deal appears to be going down to defeat. Not only do the Republicans oppose it, but some Democrats are voicing concerns over judicial pay raises that Harry Reid stuffed into the bill at the last moment.

Alright GM and Chrysler, Congress and the American public have called your bluff. We expect those banruptcy notices and the inevitable doom soon to follow as you've predicted.

[flere-imsaho]

Originally Posted by Mizzou B-ball fan

but some Democrats are voicing concerns over judicial pay raises that Harry Reid stuffed into the bill at the last moment.

WTF?! Why can no legislation go through Congress without getting a lot of irrelevant BS attached to it?

That was a rhetorical question.

[CamEdwards]

Originally Posted by flere-imsaho

WTF?! Why can no legislation go through Congress without getting a lot of irrelevant BS attached to it?

That was a rhetorical question.

Absolutely (and let's all pause to note the day that Flere and I agreed on something). If this is a crisis, then treat it like one. If it's not a crisis, then don't act like it is.

[Marc Vaughan]

Originally Posted by CamEdwards

Absolutely (and let's all pause to note the day that Flere and I agreed on something). If this is a crisis, then treat it like one. If it's not a crisis, then don't act like it is.

The trouble with all such 'crisises' is that until they've happened its impossible to tell 100% accurately what the fallout would be.

This was the case with the financial bail out - the money hats blinked first and the financial institutions got the money they 'HAD' to have .... did it save the economy, no one really knows and I'm sure university dissertations will be written upon that subject for decades to come.

The problem for the auto industry is a 'once bitten, twice shy' approach things things imho - the financial industry got in first with doom and gloom stories then failed to do what it was meant to (ie. unfreeze the credit system) and indeed no one really seems to know what was done with a lot of the money or the strategy which was utilised to determine its distribution ...

This will all lend itself towards the auto-industry having a harder time getting its bail out ... regardless of whether its justified or not.

[Flasch186]

I stand by my statement that Paulson's statement about NOT buying up the bad assets which had been one of the main facets of the whole tarp plan completely undermined the intended effect of the entire plan. Paulson basically torpedoed it and like I stated before, things are looking really really bad for next year. Complete and utter bunk, what he did to the program and I believe that had he not done that it might've worked.

[Marc Vaughan]

Originally Posted by Flasch186

I stand by my statement that Paulson's statement about NOT buying up the bad assets which had been one of the main facets of the whole tarp plan completely undermined the intended effect of the entire plan. Paulson basically torpedoed it and like I stated before, things are looking really really bad for next year. Complete and utter bunk, what he did to the program and I believe that had he not done that it might've worked.

I don't know enough about the setup to indicate if the change was right or wrong from a pure economic stand point - BUT the change from a confidence perspective was hugely damaging ... it gave the indication that everything was being done on a wing and a prayer rather than having been planned out in advance.

[sabotai]

Originally Posted by flere-imsaho

WTF?! Why can no legislation go through Congress without getting a lot of irrelevant BS attached to it?

That was a rhetorical question.

Not surprising, it's not as simple as MBBF would have you believe. I mean, yeah, it's a good demonstration of how the political process is inefficient and a bit silly, but it's not like Reid was trying to sneak some kind of big pay raise in under the radar for his judicial buddies.

The Associated Press: Democrats to scuttle pay raise for judges

"Members of Congress, however, who presently make $169,300 a year, will automatically receive a raise of almost $5,000 on Jan. 1.

Members of Congress and district judges now make the same salaries, a long-standing practice. Under ethics legislation enacted almost two decades ago, members of Congress get a cost-of-living raise automatically, but they have to vote to give judges an identical raise.

The Senate passed the judicial pay measure as a separate bill in November, but the House never acted on that stand-alone bill. House Speaker Nancy Pelosi, D-Calif., supports the pay raise, but was wary of forcing rank-and-file House members to vote during a recession to increase the pay for people making far more than most workers.

Instead, she agreed to a request by Senate Majority Leader Harry Reid, D-Nev., to attach the pay raise for judges to the bailout bill, which the House passed Wednesday night."

EDIT: And the original pay increase bill was passed in the Senate by Unanimous Consent, so it's not like anyone voted against it or objected to it a month ago. Smells more like a PR stunt by those objecting to it than anything else.

[sterlingice]

Sounds a lot more like a procedural vote than anything. But let's make it partisan while we can!

SI

[Bigsmooth]

[Balldog]

Might as well kiss my job goodbye.

[Mizzou B-ball fan]

Originally Posted by sabotai

Not surprising, it's not as simple as MBBF would have you believe. I mean, yeah, it's a good demonstration of how the political process is inefficient and a bit silly, but it's not like Reid was trying to sneak some kind of big pay raise in under the radar for his judicial buddies.

It actually is that simple. A judicial raise has nothing to do with an auto industry bailout. If they wanted to do that, write up another bill to just do that. It's very simple.

[Marc Vaughan]

It actually is that simple. A judicial raise has nothing to do with an auto industry bailout. If they wanted to do that, write up another bill to just do that. It's very simple

is it only me who see's a sub-3% pay raise for a very skilled position not being something to get excited and up in arms about?

Being a judge is a job with a huge amount of responsibility and pressure, not to mention the challenge of staying on top of a constantly evolving legal system - I think they'd deserve every penny of that raise myself.

[Mizzou B-ball fan]

Originally Posted by Marc Vaughan

is it only me who see's a sub-3% pay raise for a very skilled position not being something to get excited and up in arms about?

Where have we heard this before?

"The last bailout was $700B. What's 15-25B more?"

It all adds up. 3% here, 2% there. Earmarks that have nothing to do with the bill don't belong in that bill.

I never said that a judge doesn't deserve a salary increase. I just object to it being passed in an auto bailout bill.

[JonInMiddleGA]

Random little aside from the car makers impact.

Estimates are that automotive advertising makes up 12-15% of all radio advertising and as much as 25% of all TV advertising.

First half of the year was down 10%, to just over $5 billion. About half of that comes from the Big Three, who were down anywhere from 6% (GM) to 22% (Ford & Chrysler). By the end of Q3, the Big Three were down nearly 19% between them, spending only $4.1 billion so far this year.

Even at those levels incidentally, automotive is still the largest advertising category in the country, roughly double the pharmaceutical industry. For those who are curious, here's a story on the top categories for advertising. It also includes a table on various media types & their up or down for the YTD.

Also, here's a short Q&A piece on auto advertising & the impact for anyone who finds this remotely interesting.

[JPhillips]

Originally Posted by Mizzou B-ball fan

It actually is that simple. A judicial raise has nothing to do with an auto industry bailout. If they wanted to do that, write up another bill to just do that. It's very simple.

It's actually much more efficient to attach something with huge bipartisan support to an existing bill. Starting a bill from scratch can be a long, tedious proposition. This isn't a case of trying to sneak an unpopular measure through in a very popular bill, so I really don't understand the fuss.

[sterlingice]

Originally Posted by JonInMiddleGA

Random little aside from the car makers impact.

Estimates are that automotive advertising makes up 12-15% of all radio advertising and as much as 25% of all TV advertising.

First half of the year was down 10%, to just over $5 billion. About half of that comes from the Big Three, who were down anywhere from 6% (GM) to 22% (Ford & Chrysler). By the end of Q3, the Big Three were down nearly 19% between them, spending only $4.1 billion so far this year.

Even at those levels incidentally, automotive is still the largest advertising category in the country, roughly double the pharmaceutical industry. For those who are curious, here's a story on the top categories for advertising. It also includes a table on various media types & their up or down for the YTD.

Also, here's a short Q&A piece on auto advertising & the impact for anyone who finds this remotely interesting.

I'm not sure whether this is good or bad. On the one hand, you could say that it's good these companies are cutting back. On the down side, tho, it takes advertising money to make money. Cutting back on advertising money is like cutting back on R&D money- you may not see it initially but it can hurt you significantly in the long run.

SI

[Mizzou B-ball fan]

Originally Posted by sterlingice

I'm not sure whether this is good or bad. On the one hand, you could say that it's good these companies are cutting back. On the down side, tho, it takes advertising money to make money. Cutting back on advertising money is like cutting back on R&D money- you may not see it initially but it can hurt you significantly in the long run.

SI

Increase car quality along with reduced labor contracts (and car prices) would have a much larger impact on the economy (in a positive way).

[Mizzou B-ball fan]

Originally Posted by JPhillips

It's actually much more efficient to attach something with huge bipartisan support to an existing bill. Starting a bill from scratch can be a long, tedious proposition. This isn't a case of trying to sneak an unpopular measure through in a very popular bill, so I really don't understand the fuss.

You'll have to ask the Democrats who made the fuss. Even if they weren't actually opposed to the pay raises, it probably provided a convinent reason for them to oppose the bill without directly pissing off the UAW. That would be just as good of an argument for leaving it out of a bill. There are PLENTY of bills that pay raise could be tacked onto. This is the absolute last one that they should have used for that purpose given the high level of scrutiny.

[Marc Vaughan]

Originally Posted by Mizzou B-ball fan

It all adds up. 3% here, 2% there. Earmarks that have nothing to do with the bill don't belong in that bill.
I never said that a judge doesn't deserve a salary increase. I just object to it being passed in an auto bailout bill.

Don't get me wrong - I think its bizarre it gets tagged onto the auto-bill, but I think a pay-rise each year if you perform well at your duties is something people should expect myself ... otherwise each year people become worse off, inflation being a constant in life pretty much.

[Honolulu_Blue]

Originally Posted by Mizzou B-ball fan

Looks like common sense may prevail. Even the paired down $14B deal appears to be going down to defeat....

Alright GM and Chrysler, Congress and the American public have called your bluff. We expect those banruptcy notices and the inevitable doom soon to follow as you've predicted.

If you think this vote had anything to do with anything other than pure politics, then I've got some awesome automotive stocks to sell you. This had nothing to do with "common sense" and everything to do with politics.

A very disappointing result. Hopefully, they will find the money somewhere. Bankruptcy for anyone of the Big Three would be devastating, especialy to this region that's already been reeling for many years. The negative implications of this will reach much further than Michigan or even the industrial Midwest.

Essentially abandoning your country's manufacturing foundation is not a wise move for any number of economic or political reasons.

[Marc Vaughan]

A very disappointing result. Hopefully, they will find the money somewhere. Bankruptcy for anyone of the Big Three would be devastating, especialy to this region that's already been reeling for many years. The negative implications of this will reach much further than Michigan or even the industrial Midwest.

From what I understand of American bankruptcy law though - isn't it vey possible to structure bankruptcy in such a way that it protects the company and allows them to continue to function and restructure (and eventually come out from that state).

I'm pretty sure I've heard of several companies which have been through this ..

Essentially abandoning your country's manufacturing foundation is not a wise move for any number of economic or political reasons.

I think if a company isn't economically viable for whatever reason then its impossible to practically 'prop it up' continually - it drains funds from the healthy part of the economy and gives the unhealthy aspects no incentive to improve.

A bailout makes no sense imho - either nationalise the industry (which is effectively like bankrupting them done right, ie. get it healthy and put it back into the private sector) or let them go through bankruptcy and recover or fail in due course.

I agree that them failing would be bad for the areas they're located within - BUT imho that means the goverment should anticipate the possibility and put economic incentives in place in those regions to encourage other industries to locate there not bail out companies which are already unhealthy.

[ISiddiqui]

I think if a company isn't economically viable for whatever reason then its impossible to practically 'prop it up' continually - it drains funds from the healthy part of the economy and gives the unhealthy aspects no incentive to improve.

Bingo. Rewarding inefficiency is worse for the economy.

[Honolulu_Blue]

Originally Posted by Marc Vaughan

From what I understand of American bankruptcy law though - isn't it vey possible to structure bankruptcy in such a way that it protects the company and allows them to continue to function and restructure (and eventually come out from that state).

I'm pretty sure I've heard of several companies which have been through this ..

Yes. Bankruptcy doesn't mean a company turns out the lights, locks the doors and stops doing business. Many companies have gone bankrupt, continued to survive, and ended up being profitable again.

I don't think this is the case for the automakers and the reason is simple: People will not buy a car for a bankrupt company. One of the biggst considerations in buying a car is the services and support during future years. How can you ask someone to spend $15,000 to $60,000 on a new car if there is great uncertainty about future service and support? Such a blow would drive even more people away from U.S. automakers and would, essentialy, mean the end for them.