Yesterday I read about how the folks at AIG will be getting their bonuses. Like many of you, this infuriated me to no end. Once more, failed business people gaining reward for their bad decisions. The shareholder has lost most of the value in the equity in the company. The taxpayer (and also now a shareholder) has actually gotten two punches in the gut, including diminishing share value they've also had to put up billions of dollars. Frankly enough is enough.
The capacity utilization rate for total industry fell to 70.9 percent, a rate 10 percentage points below its average from 1972 to 2008. This rate matches the historical low for this series, which was recorded in December 1982; the data for total industrial utilization begin in 1967.
I have been saying for a long time now that housing was a leading component of the economy. Housing peaked in late 2005 - early 2006, long before the recession started in December 2007. Just as clearly, it is likely that housing will bottom first, and will be a primary component leading us out of this "Great Recession." By now housing is so far into the downturn that we ought to be able to make educated projections about housing prices and sales over the next several years.
Recently I noted that new home sales are falling so fast that they almost have to bottom this year - or come very close - unless you think that new homes sales will be 0 by early 2010!
But new home sales are a smaller part of the housing market. Existing home sales are much larger. In this post I will examine what I think are reasonable projections about the volume and prices of new home sales in 2009-2010 and beyond.
I find this entire G20 news almost a game of chicken. Now they are discussing tackling toxic assets:
Officials meeting near London this weekend outlined guidelines on how governments should rid banks of distressed securities that have devastated companies from Citigroup Inc. to Royal Bank of Scotland Group Plc. With the G-20 calling the fight its “key priority,” Treasury Secretary Timothy Geithner vowed in an interview to “move quickly.”
But haven't we heard this before?
It's almost like hot potato with no one wanting to admit to holding billions in worthless derivatives.
What is more interesting is how other countries want the United States to clean up these toxic assets while the U.S. seems to be pushing more spending.
American International Group is giving its executives tens of millions of dollars in new bonuses even though it received a taxpayer bailout of more than $170 billion dollars.
AIG is paying out the executive bonuses to meet a Sunday deadline, but the troubled insurance giant has agreed to administration requests to restrain future payments.
The Treasury Department determined that the government did not have the legal authority to block the current payments by the company. AIG declared earlier this month that it had suffered a loss of $61.7 billion for the fourth quarter of last year, the largest corporate loss in history.
I believe it is time to question the benefits of globalization. We were told that globalization would benefit all nations. Sure, maybe in the short term but in long term and sustainability globalization may not be the answer.
I am not advocating "protectionism". Frankly, I am not sure what am advocating right now. But I know this: globalization has not been the "win-win" that "free trade" proponents have argued.
Globalization is not sustainable because it supports a downward pressure on wages and encourages and requires insatiable consumption of resources and cheap consumer goods. But the financing of the consumption, particularly by consumers, is not by higher incomes but by higher amounts of debt. Globalization may only lead to more "boom/bust" cycles in the future.
It's Friday Night! Party Time! Time to relax, put your feet up on the couch, lay back, and watch some detailed videos on economic policy!
Unless you have been hiding in a black box, you could not have missed hearing about Jon Stewart's attack on CNBC. Jim Cramer went on the Daily Show and here is the resulting interview:
It's Friday Night! Party Time! Time to relax, put your feet up on the couch, lay back, and watch some detailed videos on economic policy!
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