Saturday, December 27, 2008

Saturday Morning Cartoons--Popeye in Let's Celebrake

The new year of 2009 is about to begin next week. For today's Saturday Morning Cartoons, I found a very interesting Popeye cartoon Let's Celebrake. This 1938 cartoon has Popeye and Bluto strolling over to Olive Oil's place to pick her up for a New Year's evening of dancing and celebration. They are met at the door by Olive Oil's grandmother, who is staying home New Year's Eve, knitting by the fireplace. Popeye feels a little sympathetic that Olive's grandmother will be home alone, so he brings her along to the party. At the party, Bluto asks to dance with Olive Oil, while Popeye ends up trying to dance with a shaky Grandma. Wimpy then announces a dance contest with the prize being a loving cup. Who will win the dance contest? Bluto and Olive Oil, or Popeye and Grandma? I will not divulge the outcome of this contest, however, Popeye's spinach is used, and this is one of the few Popeye cartoons where both Bluto and Popeye do not get into a fisticuffs fight--where Popeye usually wins the fight over Bluto because he "eats his spinach." With that, have a Happy New Year enjoying Popeye in Let's Celebrake! From YouTube:

Thursday, December 25, 2008

Hottest Christmas toy on the market? How about a doll that takes a crap!

I really do not know what to say about this Washington Post story:

So long, Betsy Wetsy. Baby dolls just got a whole lot more real.

Put her on her little pink plastic toilet. Press the purple bracelet on Baby Alive Learns to Potty. "Sniff sniff," she chirps in a singsong voice. "I made a stinky!"

This season's animatronic Baby Alive -- which retails for $59.99 -- comes with special "green beans" and "bananas" that, once fed to the doll, actually, well, come out the other end. "Be careful," reads the doll's promotional literature, "just like real life, sometimes she can hold it until she gets to the 'potty' and sometimes she can't!" (A warning on the back of the box reads: "May stain some surfaces.")

The mess made by the $39.95 Little Mommy Real Loving Baby Gotta Go Doll, ("Over 60 phrases and fun sounds!") is more hypothetical. Once she is placed on her little toilet, a magnet triggers a presto, change-o in the plastic bowl: "The 'water' in the toilet disappears, with the expected 'potty waste' appearing in its place," says manufacturer Mattel. "Your child can then flush the toilet. The 'water' will reappear, while the toilet makes a very realistic flushing sound!" And then comes the applause.

The dolls, which are being heavily advertised on television, are expected to be the season's big sellers. Since the dolls were introduced to stores this fall, managers at Wal-Mart, Target and Toys R Us have reported trouble keeping them in stock. And Baby Alive, listed as one of the Hot Toys of 2008 by, was sold out at Wal-Mart, and the AOL shopping site a week before Christmas.

But not everyone thinks dolls need to be this real. Some things, they argue, are better left to the imagination. This battle over whether pooping dolls are an appropriate toy is only the latest skirmish in a long war between child development experts and toymakers. Psychologists say the best toys encourage children to pretend and use make-believe (witness the fact that children often love the boxes their expensive toys come in more than the toy itself). But toymakers want to use the latest technology to make and sell ever-more realistic toys. (Baby Alive's movements are the result of sophisticated robotics controlled by the same kind of microprocessor that navigates satellites and runs nuclear power plants.)

"Retailers have bought heavily into these dolls," said Reyne Rice, trend specialist with the Toy Industry Association. "They feel that these are some of the more popular items for girls this year." Although most baby dolls are sold in the last six weeks of the year and firm sales figures won't be available until early next year, Rice said indicators look good for big Christmas sales.

A doll that takes a crap, and shows kids the wonders of potty training. Do children really want these type of dolls that show the wonders of human excrement? The WaPost story calls these dolls best-sellers, and I'm sure that the kids are anxious to have the latest toys that are heavily advertised on TV by the toy-makers as the hottest toys. My niece wanted the Hokey Pokey Elmo, for Christmas, two years ago. Santa gave her Hokey Pokey Elmo. She played with it Christmas morning, and maybe a couple of days after that, but then almost completely ignored the toy after that. She got into other toys, like My Little Pony, and Littlest Pet Shop. I think she still has the Elmo doll sitting in her closet. Looking at this Baby Alive doll, I believe it will end up in the back of the closet, along with the Hokey Pokey Elmo doll, as a $60 doll that will be played with once on Christmas morning, and then forever trashed. Then again, the marketers have found a way to cash in by hyping up this outrageous, pooping, toy, and heavily advertise it on the cartoon shows so that children could pester their parents on purchasing this "crappy" toy. It is just incredible.

Merry Christmas!

Time for some eggnog, Santa, and lots of presents! Here is a little holiday treat for Christmas, a 1940 Merrie Melodies cartoon Bedtime for Sniffles. Sniffles the Mouse attempts to stay awake the entire night, before Christmas, in an attempt to see Santa Clause. Needless to say, staying awake all night for Santa is not an easy task. Not even a good cup of hot coffee and the Good Mousekeeping magazine can help Sniffles stay awake. Will Sniffles stay awake long enough to see the Big Guy himself? Find out on YouTube:

Have a Happy Holidays!

Saturday, December 20, 2008

Saturday Morning Cartoons--Gift Unwrapped

It is the last Saturday before Christmas, and let us have some holiday joy with this Merrie Melody cartoon Gift Unwrapped. This 1952 cartoon has Sylvester chasing Tweety for a Christmas morning snack, while Hector the Bulldog chases Sylvester--all of this taking place in Granny's home. Granny finds a unique way of making a Christmas peace within the house. From YouTube:

Thursday, December 18, 2008

More indicators to show just how bad the U.S. economy is heading

Conference Board's leading economic indicators fell for the second consecutive month. From The New York Times.

I'm not sure what to say about this New York Times story:

A private research group’s measure of the economy’s health fell again in November and its six-month rate of decline hit the worst level since 1991.

The Conference Board, based in New York, said Thursday that its index of leading economic indicators fell for the second consecutive month, dropping 0.4 percent in November. That was slightly better than the 0.5 percent decline economists surveyed by Thomson Reuters had expected.

The index is intended to forecast economic activity in the next three to six months based on 10 economic components, including stock prices, building permits and initial claims for unemployment benefits.

Based on revised numbers, the index has decreased 2.8 percent in the six months through November, the worst drop since 1991, when the economy was in a recession.

Drops in building permits and share prices, and increases in unemployment claims, led the index lower.

The Labor Department reported on Thursday that new applications for jobless benefits fell to a seasonally adjusted 554,000 last week, from an upwardly revised figure of 575,000 the previous week. Still, the four-week moving average, which smoothes out fluctuations, increased slightly to 543,750 claims, the highest since December 1982. The labor force has grown by about half since then.

Without increases to the money supply from federal bailouts, the leading indicators’ reading would have been far worse. The recession that officially began in December 2007 continues to ravage businesses in almost every sector.

The indicators are showing just how deep this U.S. recession is heading, and it is going to take a lot of brainpower and unconventional thinking, from the Barack Obama administration, in order to get this economy back on some type of growth track.

Fake Christmas trees gaining popularity

Is it time now to purchase a fake tree?

This is a rather interesting Christmas story from MSNBC News, although I think the war between fake Christmas trees and real Christmas trees will never be resolved:

On Nov. 30, Jason Baer sent out a tweet, or message, on the social networking site Twitter announcing a milestone in his life:

"Broke down & bought a faux Xmas tree. It's nice, and I'm psyched for no needle clean-up, but still a bit apprehensive. Your experiences?"

After 18 years of buying only real trees, Baer, a 39-year old social media and e-mail consultant from Flagstaff, Ariz., decided to invest in an artificial tree for this year.

“I switched teams,” he says, still a tinge of discomfort in his voice. “This year I felt a real tree was a little too much of a hassle.”


So he went online and bought a $700 artificial tree with the lights already attached and now he’s in Christmas tree nirvana. “It took me 10 minutes to put up the tree,” he says. In the long run, he figures the decision will even save him money.

After he announced his decision Baer conducted a Twitter poll and found that the majority, 17 people, voted for a fake tree, while only eight votes came in for the real variety.

Baer’s informal survey reflects what’s been happening among Christmas tree buyers nationwide in recent years. While real trees are still the favored purchase among consumers, artificial trees are gaining ground.

In 2007, 17.4 million people bought artificial Christmas trees -- a whopping 87 percent jump from the previous year's total of 9.3 million, according to a survey conducted for the National Christmas Tree Association, whose members are farmers and retailers of real trees. Rick Dungey, a spokesman for the association, could not explain the huge jump and said it seemed to be a statistical anomaly, although the margin of error for the survey is only 3.1 percent.

While live trees are still outselling fake ones, with about 31.3 million bought last year, all signs indicate their artificial counterparts are becoming a bigger and bigger piece of the Christmas tree buying pie.

“I can tell you over the last few years we’ve seen a steady increase,” says Jean Niemi, a spokeswoman for Home Depot, referring to artificial tree sales.

So what is fueling this trend in artificial tree sales? Jeff Bischoff, creative director from the National Tree Co., an artificial tree wholesaler, believes that one of the big factors fueling the artificial tree sales is that fake trees look so much more realistic today, when compared to the real trees. “In the old days, you could tell right away they were fake, with branches that hooked on,” Bischoff said. “Today they look great.”

However Bischoff failed to take the slowing U.S. economy into account for this Christmas:

The price range for many of these trees has become more economical, under $100 in some cases. “The truth is that money is tight, and people realize Christmas trees are a luxury,” says Richard Laermer, author of “2011: Trendspotting.”

“If they can buy one this year and use it next year, why not?” he says.

Balsam Hill, one of the nation’s premiere fake-tree manufacturers, has one tree that sells for $89, but price points can go into the thousands as well.

In this economy, however, the lower-priced trees are selling better than in the past.

One Balsam Hill tree that’s selling well is a more moderately priced 6.5-foot "Blue Spruce" for $279. This year, it’s the second most popular tree sold by the company, says company spokeswoman Caroline Tuan. Last year, the Spruce didn’t even make the top five.

When you consider that it costs around $100 to purchase a live tree, then the $100 fake tree is a bargain, considering the year-after-year savings of not continuously purchasing a real Christmas tree for as long as you use the fake tree. And with this U.S. economy slowing, and people spending less on their Christmas shopping, it doesn't surprise me that more Americans are looking at the fake trees this year. But the time to purchase fake Christmas trees isn't before Christmas--it is after Christmas, when the retailers drop the prices to move their fake-tree inventory off their shelves.

Then again, the Christmas war between fake trees and real trees will continue on.

Chrysler shuts down manufacturing for a month

This is from MSNBC News:

DETROIT - Chrysler LLC said Wednesday that it is closing all 30 of its manufacturing plants for a month starting Friday as it seeks to counter the most severe downturn in U.S. auto sales in more than two decades.

By extending the traditional two-week holiday shutdown period, the struggling Auburn Hills, Mich.-based automaker can adjust production to slowing demand and conserve cash.

In a statement Wednesday, Chrysler said tighter credit markets are keeping would-be buyers away from its showrooms. The company said its dealers are unable to close sales for buyers due to a lack of financing, and estimate that 20 to 25 percent of their volume has been lost due to the credit situation. Sales in November slid 47.1 percent.

Chrysler and larger rival General Motors Corp. have warned they could run out of cash within weeks without financial aid from Washington. Chrysler has said its cash will drop to $2.5 billion by Dec. 31, the minimum needed to meet payroll, pay suppliers and run the company. It would have trouble paying bills after the first of the year.

Operations will be idled at the end of the shift on Friday, Dec. 19th shift. the earliest plants will reopen is Jan. 19, 2009. A few plants will reopen on Jan. 26.

Chrysler is seeking $7 billion in government loans as it tries to survive the recession and the worst U.S. auto sales slump in 26 years. For the first 11 months of this year, Chrysler sales are down 27.7 percent to 1.4 million vehicles from 1.9 million for the same period last year.

With the U.S. sales slump expected to continue into January, traditionally one of the slowest sales months of the year, the company has little revenue coming in and must pay suppliers $7 billion every 45 days.

Now I pretty much expected companies to reduce their operations to a skeleton crew for the Christmas holidays, however, even I'm surprised by Chrysler's move to completely shut down its operations for a month. It is actually cheaper for Chrysler to stop producing cars for a month, and not have to pay their suppliers $7 billion for that month, than to run any type of skeleton operations when they can't sell cars due to the souring economy and the frozen credit market. Chrysler can also stave off any bankruptcy decision until after Barack Obama is inaugurated into the White House, and a new Congress can take up an auto loan bailout bill.

Tuesday, December 16, 2008

Consumer prices fall in November

This is from The New York Times:

Consumer prices fell at the fastest rate on record in November while home construction plunged nearly 20 percent in a single month, skidding to its lowest levels in 50 years, according to new government data that shows further weakness in the ailing economy.

The Labor Department reported Tuesday morning that consumer prices fell for the second consecutive month, and at the fastest rate since the government began keeping track in 1947.

Prices at cash registers and gas pumps across the country were a seasonally adjusted 1.7 percent lower in November from the month before, led downward by tumbling energy prices, which fell 17 percent over one month as the demand for gasoline and oil eclipsed.

The core rate of inflation, excluding volatile food and energy prices, was flat for the month.

The price of gasoline plunged 29.5 percent while the cost of fuel oil fell 13.6 percent. Food and beverage prices crept up 0.2 percent in November, their slowest rate of growth all year, while clothing prices were up 0.3 percent.

The unadjusted year-over-year inflation rate was 1.1 percent, the government reported.

In just six months, economists who had fretted about out-of-control inflation as oil peaked near $150 a barrel are now warning of deflation, with prices dropping as the economy grinds into a lower gear.

“I’ve never seen the economy slam on the brakes as much as it has in the last three months,” said Bill Hampel, chief economist at the Credit Union National Association. “And as the tires are squeaking on the pavement, that’s pulling prices down too.” Meanwhile, new data showed the nation’s housing market continuing to lag. The Commerce Department reported that housing starts fell to a seasonally adjusted 625,000 in November, far below Wall Street’s expectations.

The housing starts in November represented a 18.9 percent drop from the previous month and were 47 percent lower than November 2007. New-home construction in October was revised downward to 771,000 units from an earlier estimate of 791,000.

“This is mind-bogglingly awful,” Ian Shepherdson, United States economist at High Frequency Economics, wrote in a note. “The only consolation here is that unless sales drop much further from their already fantastically depressed level, the pace of new construction is so low that inventory will fall quickly. Right now, though, housing is still a disaster area.”

Looking at this story, and looking my previous posting on the Fed's interest rate cut to zero, nobody has any money left to spend. Banks are not lending any money out to Americans for purchasing homes, or even businesses to expand. Businesses are not asking for loans to expand their production of goods, not if consumer prices for goods are falling. Retail sales have fallen for the fifth straight month, with the Commerce Department reporting retail sales have dropped 1.8 percent in November. Americans are not spending their money on Christmas shopping, while businesses are trying to push their merchandise off the shelves with deep price discounts. The construction industry is still a wasteland, considering all the foreclosed homes on the market that the banks can't sell to cover their own subprime mortgage losses. And finally, we have the U.S. Treasury giving out gobs of nearly worthless dollars to the banks, praying that the banks would lend the money out. However, the banks are hoarding this money to cover their own losses in gambling on risky investment schemes backed by over-valued subprime mortgage assets. It is like an entire house of cards crumbling into a stinking pile of crap.

Fed cuts benchmark interest rate to nearly zero

The Federal Reserve has cut the benchmark interest rate to nearly zero. From The New York Times.

This is a first for the Federal Reserve. From The New York Times:

WASHINGTON — The Federal Reserve entered a new era on Tuesday, setting its benchmark interest rate so low that it will have to reach for new and untested tools in fighting both the recession and downward pressure on consumer prices.

Going further than analysts anticipated, the central bank said it had cut its target for the overnight federal funds rate to a range of zero to 0.25 percent, a record low, bringing the United States to the zero-rate policies that Japan used for six years in its own fight against deflation.

The move to a zero rate, which affects how much banks charge when they lend their reserves to each other, is to some degree symbolic. Though the Fed’s target had had previously been 1 percent, demand for interbank lending has been so low that the actual Fed funds rate has hovering just above zero for the past month.

Far more important than the rate itself, the Fed bluntly declared that it was ready to move to a new phase of monetary policy in which it prints vast amounts of money for a wide array of lending programs aimed at financial institutions, businesses and consumers.

“The Federal Reserve will employ all available tools to promote the resumption of sustainable economic growth and to preserve price stability,” the central bank said in its statement. Those tools include buying of “large quantities” of debt and mortgage-backed securities and debt issued by government-sponsored companies like Fannie Mae; commercial debt for businesses and consumer lending, and longer-term Treasury securities.

The problem I see here is that even though the Feds have cut their lending rate, to the banks, to almost zero, the banks are still not giving out loans to consumers or businesses. The banks are still saddled with bad debt from the collapsed housing market, and the soured derivative schemes that were backed by the subprime mortgages. Furthermore, the banks are getting stuck with a lot of foreclosed homes that they can't sell to cover their losses. The U.S. Treasury has given over $700 billion to Wall Street in an effort to free up the frozen credit market, however the banks are using this money to cover their own balance sheet losses, or to purchase other banks, rather than lend this money out as the U.S. Treasury had originally planned. Now we have the Federal Reserve both lowering the interest rate to almost zero, but also planning to print even greater amounts of money to dump into the market in the purchase of mortgage-backed securities and even more debt. The bottleneck here is that the banks, and Wall Street, is really hoarding all this federal money:

Ben S. Bernanke, the chairman of the Federal Reserve, has already outlined a range of unorthodox new tools that the central bank can use to keep stimulating the economy once the federal funds rate effectively reaches zero.

Those techniques include buying vast amounts of longer-term Treasury bonds, mortgage-backed securities issued by government-sponsored companies like Fannie Mae and Freddie Mac and commercial debt issued by private companies and consumer lenders.

The Federal Reserve has already introduced a slew of lending programs in its effort to revive corporate and consumer lending. Later this month, the Fed will start purchasing $600 billion worth of securities that are backed by Fannie Mae, Freddie Mac and other government-sponsored entities. The Fed and the Treasury are also introducing a joint program to buy up securities backed by consumer debt like automobile loans.

All of the new tools amount to printing money in vast new quantities, and the Fed has already started the process. Since September, the Fed’s balance sheet has ballooned from about $900 billion to more than $2 trillion as the central bank has created new money and lent it out through all its new programs. As soon as the Fed completes its plans to buy up mortgage-backed debt and consumer debt, the balance sheet will be up to about $3 trillion.

“At some point, and without knowing the timing, the Fed is going to have to destroy all that money it is creating,” said Alan Blinder, a professor of economics at Princeton and a former vice chairman of the Federal Reserve, said the central bank. “Right now, the crisis is created by the huge demand by banks for hoarding cash. The Fed is providing cash, and the banks want to hoard it. When things start returning to normal, the banks will want to start lending it out. If that much money is left in the monetary base, it would be extremely inflationary.”

The U.S. economy is straddling a razor's edge between deflation and inflation. And it all depends on when the banks want to start lending money out in the credit markets. However, the banks are afraid of lending money out because of all the losses they still have on their balance sheets due to the subprime mortgage collapse. The banks would love to have the U.S. taxpayer bail them out without any strings attached. And the U.S. Treasury, and the Federal Reserve, are willing to oblige. The U.S. economy could quickly go from a period of possible deflation to an extreme inflationary period. It all depends on when the banks are willing to lend.

And the Federal Reserve has shot its final interest-rate bolt from its quiver.

President Bush, shoes, and his failed legacy

I know that everyone has seen this video, but I do have a few comments on it. First the story of President Bush, shoes, and his failed legacy that is the U.S. war in Iraq. From The New York Times:

BAGHDAD — President Bush made a valedictory visit on Sunday to Iraq, the country that will largely define his legacy, but the trip will more likely be remembered for the unscripted moment when an Iraqi journalist hurled his shoes at Mr. Bush’s head and denounced him on live television as a “dog” who had delivered death and sorrow here from nearly six years of war.

The drama unfolded shortly after Mr. Bush appeared at a news conference in Baghdad with Prime Minister Nuri Kamal al-Maliki to highlight the newly adopted security agreement between the United States and Iraq. The agreement includes a commitment to withdraw all American forces by the end of 2011.

The Iraqi journalist, Muntader al-Zaidi, 28, a correspondent for Al Baghdadia, an independent Iraqi television station, stood up about 12 feet from Mr. Bush and shouted in Arabic: “This is a gift from the Iraqis; this is the farewell kiss, you dog!” He then threw a shoe at Mr. Bush, who ducked and narrowly avoided it.

As stunned security agents and guards, officials and journalists watched, Mr. Zaidi then threw his other shoe, shouting in Arabic, “This is from the widows, the orphans and those who were killed in Iraq!” That shoe also narrowly missed Mr. Bush as Prime Minister Maliki stuck a hand in front of the president’s face to help shield him.

Mr. Maliki’s security agents jumped on the man, wrestled him to the floor and hustled him out of the room. They kicked him and beat him until “he was crying like a woman,” said Mohammed Taher, a reporter for Afaq, a television station owned by the Dawa Party, which is led by Mr. Maliki. Mr. Zaidi was then detained on unspecified charges.

Other Iraqi journalists in the front row apologized to Mr. Bush, who was uninjured and tried to brush off the incident by making a joke. “All I can report is it is a size 10,” he said, continuing to take questions and noting the apologies. He also called the incident a sign of democracy, saying, “That’s what people do in a free society, draw attention to themselves,” as the man’s screaming could be heard outside.


Hitting someone with a shoe is considered the supreme insult in Iraq. It means that the target is even lower than the shoe, which is always on the ground and dirty. Crowds hurled their shoes at the giant statue of Mr. Hussein that stood in Baghdad’s Firdos Square before helping American marines pull it down on April 9, 2003, the day the capital fell. More recently in the same square, a far bigger crowd composed of Iraqis who had opposed the security agreement flung their shoes at an effigy of Mr. Bush before burning it.

In one sense, I almost feel sorry for President Bush. Here is a man who doesn't fully understand the significance of the shoes being thrown at him, nor does he understand the enormous amount of death and destruction he has brought upon the Iraqi people. President Bush still believes he will be vindicated by history for his sending the U.S. into this war. And yet, this shoe-thrower, Muntader al-Zaidi, has become a hero in the Arab world for expressing the Iraqi peoples' anger against the U.S. occupation. The American people still oppose the U.S. war in Iraq by a clear majority of over 60 percent. President Bush's disapproval ratings are still hovering around 70 percent, while President-elect Barack Obama's approval ratings are hovering at around 68-to-75 percent. And let us not forget how the entire world celebrated Barack Obama's victory in the U.S. presidential race. President Bush disgraced himself when he gave the order to invade Iraq. He disgraced himself with the failed U.S. occupation of Iraq, the failed reconstruction of Iraq, and now this shoe-throwing incident which clearly shows how he cannot even travel anywhere in the world without being exposed to protestation and derision. I do not think he even understands the contempt that the world has for him, considering how he made such a terrible joke about the shoe size. In around 34 days, George W. Bush will leave the Oval Office, and Barack Obama will be sworn in to clean up the entire mess that Bush left us with his failed legacy. I almost feel sorry for President George W. Bush.

But then again, with the terrible crap that Bush has left this country in, I do not.

Tuesday, December 09, 2008

Tuesday Music Video--You Know My Name by Chris Cornell

It has been a while since I've posted a music video. And with the new James Bond movie Quantum of Solace coming out, perhaps it is time to go back to the days of Casino Royale and Chris Cornell's You Know My Name. From YouTube:

Interest rate reaches zero on 4-week Treasury bills

This is just another amazing MSNBC story:

WASHINGTON - Interest rates on four-week Treasury bills fell to zero in Tuesday's auction, as investors still sought the safety of government securities without any return on their investment.

The Treasury Department says it sold $32 billion in four-week bills at an interest rate of zero percent. That meant investors were willing to earn no return at all on their money as long as they cold park it in the safety of Treasury securities.

The rate was down from an interest rate of 0.04 percent at last week's government auction of four-week bills.

So investors are more than happy to put their money into T-bills that will offer no return for their investment, rather than risk the money into other types of stock and bond investments. This tells me that investors are scared of what is happening in the U.S. economy, and are not willing to take any sort of risk on anything. I wonder if this is a short-term holding pattern until January, 2009, when we leave the failed Bush administration for a new Barack Obama administration. Investors may just be parking their money for the holiday season, until they learn what President-elect Barack Obama's plans are for recovering the contracting U.S. economy. Still, this says something about just how bad this U.S. economy has gotten, and at how many people are simply waiting for the transition of power within the Oval Office.

Craig loses bid to withdrawal guilty plea

We've got even more fun with political scandals. It appears that Idaho Senator Larry Craig will not be able to withdrawal the guilty plea for soliciting gay sex in the Minneapolis airport men's room. From

MINNEAPOLIS - Idaho Sen. Larry Craig has lost his latest attempt to withdraw his guilty plea in the Minneapolis airport men's room sex sting that effectively ended his Senate career.

A three-judge panel of the Minnesota Court of Appeals on Tuesday rejected the Republican's bid to toss out his disorderly conduct conviction.

Craig still has the option of appealing to the Minnesota Supreme Court, and he said Tuesday he was considering future options.

Craig was arrested June 11, 2007, by an undercover police officer who was conducting a sting operation against men cruising for gay sex at the Minneapolis-St. Paul International Airport.

He quietly pleaded guilty to the misdemeanor and paid a fine, but changed his mind after word of his arrest became public that August. Craig insisted he was innocent and said he was not gay. His attorney argued that the police officer misconstrued Craig's foot-tapping, hand movements and other conduct.

But the case brought widespread ridicule and effectively ended his political career.

Craig lost several GOP leadership positions in the wake of the scandal, and the Senate Ethics Committee said in February that Craig had brought discredit on the Senate. The committee members said they believed he was guilty, and that his attempt to withdraw his plea was just an effort to evade the legal consequences of his own actions.

He did not seek a fourth term in last month's election. He will be replaced in January by Idaho Lt. Gov. Jim Risch, a Republican.

Craig's attorney, Billy Martin, argued before the appeals court in September that there was insufficient evidence for any judge to find him guilty.

In its 10-page opinion, the appeals panel said that Craig failed to show that Hennepin County District Judge Charles Porter abused his discretion by denying his petition to withdraw his plea. Porter had said the plea was "accurate, voluntary and intelligent, and ... supported by the evidence."

Tuesday's opinion also said Craig failed to show that the state's disorderly conduct law was unconstitutionally overbroad.

"I am extremely disappointed by the action of the Minnesota Court of Appeals," Craig said in a statement. "I disagree with their conclusion and remain steadfast in my belief that nothing criminal or improper occurred at the Minneapolis airport." He said he and his attorneys were reviewing into the possibility of further appeals.

So does this mean that Craig will appeal to the Minnesota State Supreme Court? I guess that Larry Craig is desperate for not having his reputation destroyed by having gay sex in the men's room. Guess what Larry, you wanted to have gay sex, so now you can pay the consequences for soliciting such gay sex in the airport bathroom.

Illinois governor arrested on corruption charges

This is the big political news story for today. Apparently Illinois Governor Rod R. Blagojevich was arrested on corruption charges for selling President-elect Barack Obama's U.S. Senate seat to the highest bidder. And there were even more corruption charges against Blagojevich. From The New York Times:

CHICAGO — Gov. Rod R. Blagojevich of Illinois was arrested by federal authorities on Tuesday morning on corruption charges, including an allegation that he conspired to effectively sell President-elect Barack Obama’s seat in the United States Senate to the highest bidder.

Mr. Blagojevich, a Democrat, called his sole authority to name Mr. Obama’s successor “golden,” and he sought to parlay it into a job as an ambassador or secretary of health and human services, or a high-paying position at a nonprofit or an organization connected to labor unions, prosecutors said in a 76-page affidavit by the United States Attorney’s office in the Northern District of Illinois.

He also suggested, the affidavit said, that in exchange for the Senate appointment, his wife could be placed on corporate boards where she might earn as much as $150,000 a year, and he tried to gain promises of money for his campaign fund.

If Mr. Blagojevich could not secure a deal to his liking, prosecutors said, he was willing to appoint himself.

“If I don’t get what I want and I’m not satisfied with it, then I’ll just take the Senate seat myself,” the governor said in recorded conversation, prosecutors said.

Federal authorities recorded Mr. Blagojevich speaking with advisers, fundraisers, a spokesman and a deputy governor, using listening devices placed in his office, home telephone, and a conference room at the offices of a friend, the affidavit said. In its detail, it paints a vivid picture of influence peddling and bare-knuckle politics inside the Blagojevich administration, evoking the heyday of Chicago’s political machine.

At an appearance to address climate change, Mr. Obama said he had not had any contact with Mr. Blagojevich (pronounced bluh-GOY-uh-vich) or his office, and did not know about any machinations involving the Senate seat. He said it was a “sad day” for Illinois, but declined to comment further.

The charges against Mr. Blagojevich are part of a five-year investigation into public corruption and allegations of “pay to play” deals in the clubby world of Illinois politics. In addition to the charges related to Mr. Obama’s Senate seat, they include accusations that the governor worked to gain benefits for himself, his family and his campaign fund in exchange for appointments to state boards and commissions.

For example, according to the affidavit, Mr. Blagojevich discussed whether he could strip a Chicago children’s hospital of $8 million in state money after a hospital executive declined to make a $50,000 contribution. He also discussed withholding state assistance from the financially struggling Tribune Company, which owns The Chicago Tribune, unless the newspaper dismissed unfriendly editorial writers.

Mr. Blagojevich’s chief of staff, John Harris, was also named in the complaint. After a brief appearance in federal court Tuesday afternoon, Mr. Blagojevich, dressed in sport clothes and tennis shoes, was released on a $4,500 cash bond. An official at the governor’s office had no immediate comment on Tuesday.

An artist's drawing shows Illinois Governor Rod Blagojevich he stands in front of U.S. Magistrate Nan Nolan (L) at the Dirksen Federal building in Chicago, Illinois December 9, 2008.
(Verna Sadock/Reuters)

At a news conference on Tuesday, Patrick J. Fitzgerald, the United States Attorney for the Northern District of Illinois, said that Mr. Blagojevich had gone on a “political corruption crime spree,” and that his actions had “taken us to a truly new low.”

“The conduct would make Lincoln roll over in his grave,” Mr. Fitzgerald said.

He added that the complaint “makes no allegations about the president-elect whatsoever.” In one passage of the complaint, Mr. Blagojevich is quoted cursing Mr. Obama in apparent frustration that “they’re not willing to give me anything except appreciation.”

I'll be honest, there is not much else to say here, except that Blagojevich got caught with his hand in the cookie jar. And he is going to pay for that cookie with federal corruption charges. Now the big question is who will appoint a replacement for Obama's U.S. Senate seat? Under Illinois law, Blagojevich has sole authority to select a replacement for Obama's U.S. Senate seat. It certainly cannot be Blagojevich, who was arrested on corruption charges stemming from selling Obama's Senate seat. The Illinois Republican Party has called for Blagojevich to resign from his governorship. The president of the Illinois State Senate, Emil Jones, is planning to call the state senate back into session to write a law in order to schedule a special election for Obama's U.S. Senate seat. This story will be staying in the news for the rest of the holiday season.

Saturday, December 06, 2008

More job losses expected

I don't know what else can be said on yesterday's 533,000 job loss in November. This MSNBC story provides a few more interesting statistics, and the economists' stunned reaction to the huge job loss:

Friday’s report showing the biggest monthly job loss in 34 years confirmed forecasters' worst fears that the decline in the U.S. economy accelerated in November, after the financial system seized up and consumers hunkered down. As the government scrambles to break the downward spiral, some economists are predicting the unemployment rate is headed substantially higher through next year.

Since the start of the recession in December 2007, the economy has lost 1.9 million jobs, lifting the number of Americans out of work to 2.7 million. At 6.7 percent, the jobless rate has now risen 2.3 percentage points since it bottomed in March 2007.

Graph showing monthly U.S. jobs lost for 2008. From MSNBC News.

Most sectors of the economy are now losing jobs, including manufacturing, construction, financial firms, retailers, and the leisure and hospitality industries. Only government, education and health services managed to post job gains.

Friday’s report also slashed another 200,000 jobs from the numbers already reported for September and October — a sign that the economy was hit harder than first reported when the credit crunch deepened.

Economists, who had been expecting a loss of some 350,000 jobs last month, were stunned by the news, describing the report as “horrendous,” "horrific" and “eye-poppingly bad.”

“We’re scrambling around here for historical parallels,” said Robert Barbera, chief economist at ITG, an investment advisory firm.

I do not think there is a historic parallel to what the U.S. economy is now experiencing, and that probably includes the Great Depression. There are huge, structural problems within the U.S. economy--the housing collapse and the subprime mortgage meltdown, the non-existent credit market, the huge amount of foreclosed homes that banks have on their books--with more on the way, the Wall Street meltdown in CDOs and other investment securities based on home mortgages, the huge amount of both government and personal debt that Americans have accumulated,the ongoing wars in Iraq and Afghanistan that are adding even more debt to the U.S. government. It is almost like the U.S. economy was a car that slammed into a brick wall at 75 miles an hour--there is not much left to see except wreaked steel, plastic, and the bodies of displaced American workers. Naroff Economic Advisors president Joel Naroff calls the latest job numbers, "shocking," saying that "Companies are sharply reacting to the economy's problems and slashing costs. They are not trying to ride it out."

And it is only going to get worst. Going back to the MSNBC story:

What makes the latest data so worrisome is that they point to an economic decline that is picking up speed.

“The economy is now locked in a vicious downward spiral in which employment, incomes and spending are collapsing together,” said Nigel Gault, chief U.S. economist at IHS Global insight.

Consumers also are taking a hit to their finances as the collapse in housing prices and the rise in foreclosures that tipped the economy into recession show no signs of abating.

American consumers are saddled with debt. First there is the subprime mortgage debt that Americans took on during the housing boom. With the housing crash, one in 10 Americans have a mortgage that is either in foreclosure, or at least a month behind on their payments at the end of September, resulting in a record 1.35 million homes in foreclosure for the third quarter. The percentage of auto loans that fell behind by 60 days or more rose to 15.9 percent in the third quarter, according to the credit reporting agency TransUnion. American families carry an average credit card debt of around $8,000. Americans are drowning in debt. And this has forced the lenders to tighten the credit market:

As consumers struggle to keep up with existing debts, lenders have cut credit card limits and tightened up on extending new loans, which has further crimped spending. The collapse of the stock market has wiped out trillions of dollars of personal wealth, forcing consumers to try to increase savings to make up for those losses.

All of which is accelerating the pullback in consumer spending – the main engine of the U.S. economy that accounts for roughly two-thirds of gross domestic product. Consumption dropped 3.7 percent in the third quarter; the spending pullback is expected to worsen during the holiday season that retailers rely on for the bulk of their profits. Gault expects consumer spending to shrink by 4.7 percent in the fourth quarter.

Economists already have begun comparing the current downturn to the back-to-back recessions of 1980-1982. The unemployment rate peaked at 10.8 percent then after the government pushed interest rates to high double-digits to try to break a decadelong inflationary spiral.

“You had interest rates that soared, the credit system shut down, and everything stopped,” said Barbera. “That's what this (jobs) number says, and that's what it suggests for the GDP numbers."

Before Friday’s jobs data, economists had expected GDP to contract at a sharp 4 to 5 percent rate in the current fourth quarter. Barbera said the latest data indicated the drop could be more like 8 percent.

As businesses pull back and lay off workers, Americans who have lost their jobs will be unable to pay off their credit cards, car payments, and home mortgages, resulting in a further tightening of the credit market, further reduction of consumer spending, and a further downward spiral of the U.S. economy. Could we really see a GDP contraction of 8 percent for the fourth quarter? Looking at what has been happening in the U.S. economy over the past month, I'm seriously wondering if that could be true.

We will have to see.

Saturday Morning Cartoons--Tom and Jerry in The Night Before Christmas

It is time to start the Christmas season with this classic Tom and Jerry cartoon, The Night Before Christmas. The two stars continue their cat-chases-mouse theme in the first part of the cartoon, but then both set aside their antagonisms for peace and goodwill on that Christmas night. This cartoon was released into theaters on December 6, 1941, the night before the Japanese attacked Pearl Harbor, sending the U.S. into the Second World War.

Here is Tom and Jerry in The Night Before Christmas. From YouTube:

Friday, December 05, 2008

Foreclosures soar to a record 1.35 million

There is not much more to say on this CNN.Com story:

NEW YORK ( -- A record 1.35 million homes were in foreclosure in the third quarter, driving the foreclosure rate up to 2.97%, the Mortgage Bankers Association said Friday.

That's a 76% increase from a year ago, according to the group's National Delinquency Survey.

At the same time, the number of homeowners falling behind on their mortgages rose to a record 6.99%, up from 5.59% a year ago, the association said.

This means that one in 10 borrowers in America are either delinquent or in foreclosure.

Many of those troubled borrowers are in California and Florida, which have among the highest delinquency rates in the nation.

The weakened economy and mounting job losses are expected to push these numbers even higher. And that will likely affect homeowners with prime, fixed-rate mortgages, which make up the vast majority of loans and have so far held up fairly well. Until now, much of the housing market's problems were concentrated in the subprime, adjustable-rate market, where homeowners with weak financial backgrounds got loans they ultimately couldn't afford.

"We have not gone into past recessions with the housing market as weak as it is now, so it is likely that a much higher percentage of delinquencies caused by job losses will go to foreclosure than we have seen in the past," said Jay Brinkmann, MBA's chief economist.


The number of homes going into foreclosure in 2008 is on track to hit 2.2 million, Brinkmann said.

All I can say is WOW! Just WOW! We are still not at the bottom of this bad housing market.

Factory orders drop 5.1 percent in October

Here is another statistic to show just how bad of a recession we are in. From MSNBC News:

WASHINGTON - Orders to U.S. factories plunged in October by the sharpest amount in over eight years as a deepening recession caused big cutbacks in demand for steel, autos, computers and heavy machinery. Analysts expect the weakness will continue for some time.

The Commerce Department reported Thursday that factory orders dropped 5.1 percent in October, the largest decrease since an 8.5 percent fall in July 2000.

It was larger than the 4 percent drop that economists had been expecting. They believe manufacturing will continue to be under pressure for many more months, reflecting a deepening recession that already is the longest slump in a quarter-century.

Graph showing factory orders dropping 5.1 percent in October. From MSNBC News.

This is a huge sign of just how bad the contraction may be on the U.S. economy. Factories produce goods for both businesses, to invest in modernizing and expanding their own capacity, and to retailers, who sell their goods directly to the American consumer. According to the MSNBC story, demand for non-defense capital goods fell by 5 percent in October. Capital goods are products that are not used for consumption, but rather are used to produce other goods and services. Machine parts for factories, or dump trucks for construction are considered capital goods. Capital goods are a good indicator on how the economy is growing, or contracting, because businesses order capital goods to expand their capacity. However, the demand by businesses ordering non-defense capital goods fell by 5 percent in October (These are goods that are not used in producing U.S. defense-related products and services). In other words, businesses are cutting back on their plans to modernize, or expand their capacity for production.

Orders for durable goods also fell by 6.9 percent, larger than economists' estimate of 6.2 percent. Durable goods are goods that are expected to last over time--at least three years. Examples of durable goods include cars, business equipment, home appliances, home furnishings, electronic equipment, housewares and such. Two examples of durable goods would be cars and home appliances. The MSNBC story reports that "U.S. auto sales plunged by 37 percent in November to their worst level in more than 26 years." With the credit crunch that has been taking place, Americans are not finding the credit they need to purchase new cars. And with the big plunge in U.S. auto sales, automakers are certainly cutting back in the manufacturing of cars. It is no wonder that the Detroit Big Three automakers are in Washington, asking Congress for a $30 billion bailout package. The transportation sector fell by a huge 11.2 percent, with demand for autos falling 2.8 percent, and commercial aircraft orders falling 4.8 percent.

The second interesting note on durable goods would be home appliances, furnishings, and housewares. These type of goods are purchased by American homeowners--dishwashers, stoves, and refrigerators, washers and dryers, furniture, televisions, and such. But with the subprime mortgage mess forcing more American homeowners underwater with increased mortgage payments, and banks getting stuck with even more foreclosed homes that they can't sell to cover their own losses, it doesn't surprise me that the demand for these goods have also fallen. According to the MSNBC story, furniture makers reported a 5 percent drop in demand, while computers and other electronic products fell 3.4 percent in October (Big screen TVs, for example, here). Americans purchase furniture to furnish their newly-purchased homes. But with the housing market in such a collapse, Americans are not buying homes, nor are they buying the furnishings needed for these homes. And this drop in durable goods is also reflected within the construction industry. Construction machinery dropped 25.6 percent, showing that the construction industry is still suffering from the housing disaster. And not only are the construction companies that build homes are not purchasing construction machinery, but they also not purchasing home appliances like stoves, ovens, dishwashers to install in their newly built homes. So we've got a ripple effect in the drop in home furnishing durable goods from both the American consumer and the construction industry.

The MSNBC story also reports that orders for nondurable goods, "such as food, clothing, paper goods and petroleum products, dropped by 3.4 percent, partially reflecting the big declines occurring in energy prices." Nondurable goods are goods that are used up only once, or last for less than three years. Gasoline is a non-durable good, and gas prices have dropped significantly, as the price of oil has fallen. On the non-durable goods, I'm wondering if we're seeing a combination of price deflation, caused by the drop in energy prices, on factories producing such nondurable goods, and a drop in the demand for such nondurable goods by American consumers. Retail sales figures are the weakest we've seen in 35 years. Americans are cutting back on shopping for goods--goods that I would say are nondurable goods. If retailers are having problems moving inventory off their shelves, then they are not going to be ordering more products from factories. And if factories are seeing their own profit margins being squeezed by a combination of falling energy prices, and falling demand for orders, then they are certainly cutting back on their production.

The conclusion here is that if factory orders have dropped significantly in October, then such factories are going to be cutting back on their production in November and December. And cutting back on production would also include laying off workers, which brings us into the 533,000 lost U.S. jobs in November. Demand has slowed for goods, resulting in the reduction of the supply of such goods. This is just another example of just how bad the U.S. economy is now contracting.

U.S. job losses at 533,000 in November

Graph showing the U.S. economy losing 533,000 jobs in November, with the unemployment rate rising to 6.7 percent. From The New York Times.

This is from The New York Times:

With the economy deteriorating rapidly, the nation’s employers shed 533,000 jobs in November, the 11th consecutive monthly decline, the government reported Friday morning, and the unemployment rate rose to 6.7 percent.

The decline, the largest one-month loss since December 1974, was fresh evidence that the economic contraction accelerated in November, promising to make the current recession, already 12 months old, the longest since the Great Depression. The previous record was 16 months, in the severe recessions of the mid-1970s and early 1980s.

The alarming job decline suggests that consumers and businesses have pulled back sharply on spending in response to the worsening credit crisis. That has put pressure on Congress and the White House to come up with a stimulus package that would substitute for the missing private sector outlays.

Over all, the losses since the recession began now total about 1.9 million, with most coming in the last three months.

“We have gone from recession into something that looks more like collapse,” said Ian Shepherdson, chief domestic economist at High Frequency Economics, referring to the accelerating job losses in recent months.

The losses in November far exceeded the 350,000 figure that was the consensus expectation of economists.

“Business shut down in November,” said Mark Zandi, chief economist at Moody’s “Businesses are in survival mode and are slashing jobs and investment to conserve cash. Unless credit starts flowing again soon, big job losses will continue well into next year.”

Economists were expecting 350,000 job losses for November--183,000 jobs less than the 533,000 that actually occurred. It is no wonder that economists are shocked by this huge job loss. We now have a total of 1.9 million jobs lost, with unemployment rising up to 6.7 percent. And the revised job loss figures for the past two months are even worst. For October, the revised job-loss figures went up to 320,000 from a previously reported 240,000 jobs lost, and September revisions were 403,000 from 284,000. Unemployment rose to 6.7 percent from October's 6.5 percent. The underemployment rate jumped to 12.5 percent, from 8 percent in October. This 12.5 percent underemployment is the highest level since the statistic was first compiled in 1994. The NY Times also reports that more than 420,000, who had been working or seeking work in October, left the job market in November. These people are not counted in the unemployment rolls. Had they continued seeking work in November, the unemployment rate would have risen to 7 percent. The numbers are just awful.

The Bureau of Labor Statistics report can be found here.

And there is even more bad news. According to the BLS report:

The number of persons who worked part time for economic reasons (sometimes referred to as involuntary part-time workers) continued to increase, reaching 7.3 million. The number of such workers rose by 2.8 million over the past 12 months. This category includes persons who would like to work full time but were working part time because their hours had been cut back or because they were unable to find full-time jobs.

So those people who have been able to find work are now working part-time, rather than full time. That number has increased by 2.8 million to a total 7.3 million part-time jobs. Those businesses that are hiring, are only hiring part-time. And these part-time jobs are more likely low-wage jobs with no benefits. You can bet that these part-time workers are not going to be spending much for the Christmas shopping season--especially if they are working for rent, mortgage, or grocery money.

The BLS report also provides this startling statistic:

About 1.9 million persons (not seasonally adjusted) were marginally attached to the labor force in November, 584,000 more than 12 months earlier. These individuals wanted and were available for work and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey. Among the marginally attached, there were 608,000 discouraged workers in November, up by 259,000 from a year earlier. Discouraged workers are persons not currently looking for work specifically because they believe no jobs are available for them. The other 1.3 million persons marginally attached to the labor force in November had not searched for work in the 4 weeks preceding the survey for reasons such as school attendance or family responsibilities.

What this means is that there are a lot of Americans jumping in and out of the labor force. Those Americans who are "marginally attached to the labor force" had more than tripled from 584,000 a year ago, to the current 1.9 million in November. And of that number, there were 608,000 discouraged workers in November, up from 259,000 a year earlier (also tripled in a year). These discouraged workers have stopped looking for a job, and, when they stop drawing unemployment benefits, they are dropped from the unemployment rolls.

I really do not know what else to say. The numbers are just god-awful. We're looking at a very weak Christmas shopping season, where retailers are cutting prices just to clear inventory off the shelves. Consumer confidence has fallen. We've been in a recession for the past year, and we'll probably see a major contraction in the U.S. economy for this fourth quarter. We've spent hundreds of billions of dollars bailing out the financial industry, and now the auto industry is asking for another $30-$40 billion--or General Motors goes bankrupt. And now the November jobs report was even worst than what economists were expecting. I'm starting to wonder if we're heading into an economic collapse, or even an economic depression here.

Thursday, December 04, 2008

Full Metal Christmas

Since we're coming into the Christmas season, it is the perfect time to enjoy some great Christmas specials. One of my favorites is the combining of Santa Claus is coming to Town video with R. Lee Ermey's drill sergeant intro in Full Metal Jacket. I just love this YouTube video:

AT&T, Dupont, and Credit Suisse slashing even more jobs

There is not much to say about this story, except that companies are continuing to slash even more thousands of jobs during this economic downturn. From the Washington Post:

Telecommunications giant AT&T said today it would lay off 12,000 employees in coming months, the latest shock to a labor market that has declined steadily for a year.

In a news release this morning the company said that "economic pressures, a changing business mix and a more streamlined organizational structure" would lead it to trim its workforce by about 4 percent, beginning this month.

The announcement from AT&T comes amid a steady wave of data showing a collapse in hiring. New claims for unemployment benefits remained above half a million last week, though at 509,000 represented a dip from the week before, while ongoing claims rose 89,000 to hit 4.09 million, the highest level since the recession of the early 1980s.

The government's latest monthly report on unemployment, due for release tomorrow, is expected to show November job losses in excess of 300,000.

Along with the AT&T layoffs announced this morning, Dupont said it would trim 2,500 workers involved in lines of business dependent on the slumping auto and housing industries.

In a sign of the slowdown's global reach, Credit Suisse, a major player in Switzerland's storied banking industry, said it would cut 5,300 jobs -- about 11 percent of its workforce -- after suffering losses of $2.5 billion over October and November.

The WaPost reports that according to ADP Employer Services monthly payroll survey, "payroll processors estimated that private businesses shed 250,000 jobs in November," the biggest drop in seven years. Based on the data from nearly 400,000 companies, the ADP report shows across-the-board declines in large, medium-sized, and small companies. The U.S. government's monthly jobs report is coming out tomorrow, and analysts are expecting another spike in unemployment, with job losses that could top 300,000.

The U.S. economy is contracting. Also from the Washington Post:

A separate study by the Institute for Supply Management showed that economic activity in the service sector fell to the lowest level since its index for the sector was first reported more than a decade ago. The ISM surveys businesses for information on hiring, new orders and other data that are formed into an overall index. A reading greater than 50 indicates a sector is expanding. The reading for November was 37.3, compared with 44.4 in October.

Even usually positive news -- a rise in worker productivity -- took on a dark hue. The value of hourly worker output increased by 1.3 percent from July through September, a larger increase than originally estimated, according to the Bureau of Labor Statistics. But that upward revision came only because employers cut back workers' hours, leaving fewer employees to produce goods and services.

The ISM reading of economic activity for businesses have sharply dropped to 37.3 in November, from 44.4 in October. This reading is an index survey of businesses on their hiring, production, new orders and other data used to generate this survey. A reading greater than 50 shows the U.S. economy is expanding. The reading in November is 37.3--a serious contraction. Businesses are cutting back on manufacturing and new orders. Retailers have been slashing prices just to move their inventory off the shelves. Employers are shedding jobs to cut labor costs. Even the rise in employee productivity is attributed not to more business hiring, but to fewer employees doing more work. And American consumers are holding back on spending, even as they are worried about the economic downturn, the job losses, and the crumbling housing market.

I don't know when we will reach the bottom of this bad economy.

Bush purchases home in Dallas neighborhood

Does that mean Bush will leave his ranch in Crawford? From MSNBC News:

From NBC's Abby Livingston and John Yang.

President George W. Bush and First Lady Laura Bush will be moving back to Texas after the president's term ends, and they have purchased a home in the upscale Dallas neighborhood of Preston Hollow, the first couple tells NBC News in an interview to air tonight.

The home is valued at just over $2 million, according to county property records and reporting by the Dallas Morning News. It is within Dallas city limits and is located in close proximity to Southern Methodist University, the future site of Bush 43's presidential library.

Preston Hollow is the same neighborhood where they lived prior to Bush's election as Texas governor in 1994.

Within blocks of the neighborhood live other notable Dallas-ites, including the Dallas Mavericks' legally embattled owner Mark Cuban, Senator Kay Bailey Hutchison, former presidential candidate Ross Perot, and Tom Hicks, a businessman who has Bush's old job-Texas Rangers' owner.

Elizabeth Taylor, a Dallas realtor, describes the neighborhood as, "a very upscale, older neighborhood. Many older homes are being torn down and big new ones, mega mansions, are being put up in their place."

Or maybe he just wants to be close to his presidential library, where he can check out "My Pet Goat."

Obama selecting his governing team

Meet President-elect Barack Obama's governing team. From the New York Times.

I've been watching the Obama team transitioning from an election team to a governing team, and even I will say that I am impressed with the efficiency of president-elect Barack Obama in appointing members to his government. From the New York Times:

CHICAGO — President-elect Barack Obama put the rancor and even some of the rhetoric of the presidential campaign behind him on Monday as he welcomed his chief Democratic adversary into his cabinet and signaled flexibility in his plans to withdraw troops from Iraq.

Introducing a national security team anchored by Hillary Rodham Clinton as secretary of state, Mr. Obama said a new strategic agreement with Baghdad put the United States “on a glide path to reduce our forces in Iraq.” But while he reaffirmed his desire to pull out combat brigades within 16 months, Mr. Obama emphasized his willingness to consider options put forth by the military.

“I believe that 16 months is the right timeframe,” Mr. Obama said at a news conference, with Mrs. Clinton and Robert M. Gates, whom he is keeping on as defense secretary, as well as other appointees. “But as I have said consistently, I will listen to the recommendations of my commanders. And my No. 1 priority is making sure that our troops remain safe in this transition phase and that the Iraqi people are well served by a government that is taking on increased responsibility for its own security.”

Mr. Obama has long qualified his withdrawal pledge, but in the campaign the emphasis was on his intent to end the war. Now that he is taking office in 50 days, he is calibrating his statements to leave room to maneuver, knowing that some senior military officers are wary of moving too quickly and that the defense secretary he just reappointed has cautioned about timetables.

Now I know that the NY Times is currently focusing on Obama's national security team here, but even looking at the selection of Hillary Clinton as his secretary of state, and keeping Robert M. Gates on as Secretary of Defense, shows just how far Barack Obama is going in selecting candidates for his government. Hillary Clinton was his chief political opponent in the Democratic presidential primary, and now Obama is tapping her for the top foreign policy position in his administration. Gates is President Bush's secretary of defense, and yet Obama is keeping him on, perhaps as a transitional figure who understands the problems in Iraq and can bring Obama quickly into the fold on how to resolve the U.S. war in Iraq. It is going to take a brilliant mind, and a strong character, to bring out the best from the president's men, and women, here. Continuing further into the NY Times story:

Besides formally announcing Mrs. Clinton’s nomination, Mr. Obama said he was keeping on Mr. Gates, and while some close to the transition had suggested it would be a short-term holdover, the president-elect put no time limit on the Pentagon chief’s tenure. Mr. Obama also introduced Gen. James L. Jones, a retired Marine commandant and North Atlantic Treaty Organization supreme commander, as his national security adviser and confirmed plans to nominate Eric H. Holder Jr., a former deputy attorney general, for attorney general; Gov. Janet Napolitano of Arizona for secretary of homeland security; and Susan E. Rice, a former assistant secretary of state, for ambassador to the United Nations.

The adults are coming back into the White House. It is about time.

Black Friday ends with a dour note

Here is the latest retail sales news on our holiday shopping. From MSNBC News:

NEW YORK - Retailers — with Wal-Mart the notable exception — limped through a miserable November that even a surge of shopping after Thanksgiving couldn’t save, marking the weakest month since at least 1969 and deepening fears that the critical holiday period could be the most dismal in decades.

As merchants announced their November sales figures Thursday, the deep malaise cut across all sectors as shoppers worried about layoffs and shrinking retirement funds focus on necessities. Wal-Mart Stores Inc., though, posted sales gains that surpassed Wall Street estimates and has seen more customers and higher average transactions as it benefits from what could be a deep and prolonged recession.

However, Costco Wholesale Corp., usually a strong performer, reported a bigger-than expected sales decline. And most mall-based chains and department stores such as teen stalwart Abercrombie & Fitch Co., Kohl’s Corp. and Macy’s Inc. fared much worse, reporting percentage declines of over 10 percent.

“It’s an awful beginning to the holiday season,” said Michael P. Niemira, chief economist at International Council of Shopping Centers. “This is going to be a difficult holiday season for most retailers. There are going to be more bankruptcies.” He predicted that the retrenchment in spending will linger for at least another six months.

According to the Goldman Sachs-International Council of Shopping Centers index of 37 stores, sales dropped 2.7 percent for November, making it the worst month since at least 1969 when the index began. November’s results were even more miserable than the 1 percent drop that Niemira anticipated. He noted that excluding Wal-Mart, the index declined a dramatic 7.7 percent, indicating a widening gap between the world’s largest retailer and the rest of the merchants.

The tally is based on same-store sales, or sales at stores opened at least a year, which are considered a key indicator of a retailer’s health.


Sales data from the Thanksgiving weekend showed a buying binge on Black Friday — so named because it historically was the day that a surge of shoppers pushed stores into profitability — but shoppers retreated the rest of the weekend.

And even at the stores on Friday, they focused on bargains and on small-ticket purchases as they slash their holiday budgets, meaning only modest sales gains for the weekend.

Now concerns are growing that shoppers won’t return to malls until the final days before Christmas, making the typical lull between Thanksgiving weekend and the final days before Dec. 25 even more pronounced as shoppers wait for the best deals.

So shoppers were out on Black Friday, but they were in a bargain buying mood. They focused on Black Friday to purchase their bargains, then stayed home for the rest of the weekend. Now the retailers are suddenly worried that shoppers will stay home until the final days before Christmas to finish their Christmas shopping--and the retailers are slashing their prices even further in order to move the inventory off the store shelves. The shoppers are going to wait until the final days before Christmas to get the best deals.

The big anomaly here is Wal-Mart. Wal-Mart reported a 3.4 percent gain in same-store sales, surpassing the 2.1 percent increase that analysts were expecting. Wal-Mart is expecting same-store sales to increase in December between 1 to 3 percent. Wal-Mart claims that its business is benefiting from falling gas prices, and that shopping trips increased because “customers had more discretionary income to spend.” I would say that is a bunch of crap. Gas prices have certainly dropped and customers are saving money. However shoppers are still worried about the declining U.S. economy, and are spending their shopping dollars more carefully, looking for the best deals they can find. And, like it or not, Wal-Mart does have some of the lowest retail prices on their merchandise. That is why shoppers have flocked to Wal-Mart. It is not that shoppers had more discretionary income, but that they were more careful at spending their discretionary income.

For the rest of the retailers, sales declines have been terrible. Target Corporation suffered a 10.4 percent decline, even as they have been focusing more on non essentials "like trendy clothes and housewares." Wall Street was expecting an 8.9 percent decline in Target sales. Costco reported a 5 percent decline in same-store sales, which is larger than the 2.4 percent drop that analysts were expecting. Macy's reported a 13.3 percent decline in same-store sales in November. Kohl's posted a 17.5 percent drop in same store sales. J.C. Penny's reported a same-store sales drop of 11.9 percent, while Nordstrom Inc. reported a 15.9 percent decline in same-store sales. Gap reported a 10 percent same-store sales decline, however the company claimed that "discounts were more aggressive than last year, a move that would affect merchandise margins." This strategy allowed Gap to clear out their inventory in November.

But the biggest sales drop came from teen retailer Abercrombie & Fitch, which had originally resisted deep discounting. Abercrombie & Fitch posted a 28 percent same-store sales drop. By refusing to discount their merchandise in this slowing economy, Abercrombie & Fitch saw their sales declines almost doubled to what the other retailers were reporting. Talk about a complete and utter screw-up by the Abercrombie & Fitch executives here.

Wednesday, December 03, 2008

Bank of America to cut 10,000 investment banking jobs

And have a Merry Christmas! From CNBC:

Bank of America can be expected to cut at least 10,000 investment banking jobs as it moves to absorb Merrill Lynch, sources have told CNBC.

The layoffs will start before the end of the year and possibly as soon as this week.

The move comes amid very tough times for the banking sector. With the declining market and tight credit picture, profits are under intense pressure. And traditional work in the initial public offerings and mergers and acquisitions business has dried up.

With the IPO and mergers business drying up, I guess BofA doesn't need all the investment bankers that it is getting from its merger with Merrill Lynch. The merger of Merrill into BofA will result in a combined 260,000 employees, with around 50,000 in the investment banking operations. The majority of the 10,000 investment banking layoffs will come from Merrill Lynch's side of the investment banking business. That should make the Merrill Lynch investment banking employees especially happy with their merger into BofA, knowing that they will be out of a job before Christmas.

Update: I guess BofA wants to cut up to 30,000 jobs, rather than the original 10,000 as reported. And, of course, the majority of the cuts will still come from Merrill Lynch's side of the investment banking operations.

Golf industry in trouble as U.S. economy declines

I wonder if the golf industry will also be asking for some government bailout money as well? From MSNBC News:

Behold the golf course. Graced with rolling fairways, pristine greens, ancient oaks and other natural fanfare, it presents a striking picture.

But as beautiful as a golf course may be, its looks belie the trouble besetting the industry that created it.

According to the National Golf Foundation, the number of new courses expected to open in the United States in 2008 is the smallest in 20 years. More courses are scheduled to close this year (nearly 100) than the 80 expected to open, though the closures have fallen since almost 150 were shut down two years ago. The golf construction boom of the 1990s – when about 2,500 new courses (mostly daily fee ones) were added to the 13,000 or so already extant in the U.S. – is not only over; it’s stuck in reverse.

The problems of the broad economy are bedeviling golf course construction. The housing market’s collapse has hampered development, since a number of golf projects these days are tied into on-site housing. Getting financing to build a new course is tougher than it has been in decades. Projects that were started this year have seen the bulldozers turned off until better times appear.

According to the MSNBC story, it takes around 200 acres of suitable land, near a reasonable population center, to start a golf course. And just to build a golf course could take years in attracting money and securing permits. So the construction of a golf course is a "time-consuming venture." I would also guess that it is fairly expensive for golf courses to maintain their greens--with watering and mowing--and manage their country club buildings for golfers to relax in. So the golf courses would have to charge a high rate for golfers to play. Here in the San Jose area, the Santa Teresa Golf Club charges a weekday rate of $40, a Friday rate of $46, and a weekend / holiday rate of $60 to play. The Los Lagos Golf Course charges around $37 to $46 per player, depending on time and availability. The Almaden Golf and Country Club charges a proprietary membership dues of $625 a month for full access of the facility. And finally, Pebble Beach, located down near Monterey California, charges around $495 to play. This is just a sampling of what golf courses are charging in the San Jose area. Tack on the expenses of purchasing the golf clubs, golf bag, golf shoes, balls, tees, and you are getting into a fairly expensive sport here.

Then there is the subject of the golf courses being tied with on-sight housing. The housing market has completely crashed, considering the fallout from the subprime mortgage collapse on the housing market and the financial industries woes. To build a house next to a golf course, the builder is going to charge a premium price on that house. But with housing prices falling, such a builder is going to have a problem charging higher prices for a house, located next to a golf course, in competition with an increasing number of foreclosed homes, or even short-sale homes. Of course, it could get worst if the builder was constructing both the homes and the golf course. It is no wonder that the builders are turning the bulldozers off on these housing / golf courses until the housing and U.S. economy improves.

And the current golf courses are struggling in this economic downturn.

GM needs $12 billion to stay afloat, Ford needs a $9 billion line of credit and Chrysler wants a $7 billion loan.

Detroit's Big Three automakers are going back to Congress with their hats in hand. First is General Motors request of $12 billion in bailout money to continue operations:

WASHINGTON - Humbled and fighting for survival, Detroit’s once-mighty automakers appealed to Congress with a retooled case for a huge bailout Tuesday, pledging to slash workers, car lines and executive pay in return for a federal lifeline. GM said it wouldn’t last till New Year’s without an immediate $4 billion and could drag the entire industry down if it fails.

General Motors Corp., asking for as much as $18 billion to keep afloat and survive even worse economic storms, painted the direst portrait to date of what could happen if Congress doesn’t quickly step in.

“There isn’t a Plan B,” said Chief Operating Officer Fritz Henderson. “Absent support, frankly, the company just can’t fund its operations.” Without help, he warned, “the company will default in the near term, very likely precipitating a total collapse of the domestic industry and its extensive supply chain, with a ripple effect that will have severe, long-term consequences to the U.S. economy.”

New sales figures underscored the seriousness of the situation. Ford said its November U.S. light vehicle sales tumbled 31 percent, while sales at Toyota, Japan’s No. 1 automaker, fell 34 percent despite its extension of zero-percent financing on many vehicles.

Democratic leaders have said they might call Congress back next week to pass an auto bailout — but only if the carmakers’ blueprints show the Big Three have reasonable plans to stay viable with the help.

Again, the problem for the Detroit Big Three automakers is that for twenty years, they have been building big, gas-guzzling SUVs for the American market, while refusing to invest in smaller, hybrid, fuel efficient cars, that the Japanese automakers have been working on. When gas prices skyrocketed up to almost $5 a gallon, American consumers dumped the gas-guzzling SUVs for the hybrid Toyota Prius. Now with the U.S. economy in a serious recession, American consumers have stopped buying cars altogether. That is why U.S. auto sales have plunged 37 percent in November, to its worst level since 1982. General Motors year-to-year U.S. auto sales plunged 41 percent, Chrysler's LLC's year-to-year U.S. auto sales dropped 47 percent and Ford's U.S. auto sales dropped 31 percent in November.

The Japanese auto market also did not fare too well. According to MSNBC, "Toyota’s sales tumbled 34 percent, while Nissan’s dropped 42 percent and Honda’s fell 32 percent." This is a broad-based decline in both domestic and import auto sales in the U.S. market. However, those American consumers who are buying cars, are probably looking for more fuel efficiency cars, considering the shock of the high energy and gas prices from a year ago. These consumers are buying up the hybrid Toyota, Nissan, and Honda cars.

Graph showing declining U.S. auto sales for the major auto makers. From the New York Times.

Going back to the Detroit Big Three auto woes, General Motors is asking for an $18 billion government bailout package. When the Detroit Big Three automakers first asked for the original $25 billion auto bailout package, they were rebuked by Congress, demanding that the automakers come back with a detailed package of how they would spend the government bailout money. General Motors has come back with a plan on how to spend the bailout money. According to the New York Times:

But G.M., the world’s largest automaker for decades, said Tuesday that it was in such dire straits that it would deeply cut jobs, factories, brands and executive pay as part of its plea to get $12 billion in federal loans and an additional $6 billion line of credit. G.M. also promised that it could be competitive on labor costs with Toyota by 2012.

G.M.’s president, Frederick A. Henderson, said the company would be insolvent if it did not receive federal assistance, including an infusion of $4 billion in cash before the end of the year.

Summary of Detroit automakers' proposals for retooling their business lines in return for the government bailout money. From the New York Times.

Of course, the situation isn't looking so good for both Ford or Chrysler. From the New York Times:

Chrysler, the smallest of the Detroit companies, is in similar difficulty, and asked Congress for a $7 billion loan before the end of December to ward off a potential bankruptcy.

Ford said in its plan that it could survive through 2009 with its current cash levels and by tapping its credit line with private banks, and that it could return to profitability by 2011. Even though it is better prepared for the downturn, Ford said it wanted $9 billion in loans to draw upon if necessary.

All totaled, the Detroit automakers are now asking for $34 billion in government bailout money for this month. Perhaps Congress should pull the $34 billion from the $700 billion Wall Street bailout fund--the Wall Street banks are simply using the taxpayer money to shore up their own balance sheets, purchase other banks, or are throwing the taxpayer money into the bad subprime derivative crap they have been gambling with over the past decade or so. None of that money is going in to renegotiate loan contracts for American homeowners, whose subprime mortgages are underwater, or are about to see their homes foreclosed. Then again, Wall Street would cry foul.

One more interesting auto story to talk about. It appears that the United Auto Workers Union is realizing just how dire shape the Detroit Big Three automakers are in, and the UAW is willing to renegotiate their contract terms with the Detroit Big Three:

WASHINGTON - United Auto Workers President Ron Gettelfinger said Wednesday that the union is willing to change its contract and will delay billions of dollars in payments to a union-run health care trust in an effort to help the struggling Detroit Three automakers.

Gettelfinger also said the union will modify the jobs bank, in which laid-off workers are paid up to 95 percent of their salaries while not working, but he did not give specifics.

“We’re going to sit down and work out the mechanics,” Gettelfinger said at a news conference after meeting with local union officials. “We’re a little unclear on some of the issues.”

One local union member who was in the meeting said the changes to the jobs bank would nearly eliminate it. The member asked not to be identified because the details had not been made public.

Gettelfinger stopped short of saying the union would reopen contract talks with General Motors Corp., Chrysler LLC and Ford Motor Co. but said it would be willing to return to the bargaining table to change some terms.

I guess the UAW has suddenly gotten scared of a potential GM bankruptcy, and how the job losses, and non-payment of pension and health care benefits to UAW workers and retirees would devastate the autoworkers union. So the UAW is willing to work with the Detroit Big Three automakers in order to keep their operations running through this recession. We'll have to see what new terms, or contracts, will come from the Detroit automakers and the UAW.