Tag: Economy & Business

The US Started And Now Has to Fix The Economic Mess

Decisions taken in the next few months will shape the world for a generation. If we get through this crisis without collapse, we will have the time and the chance to construct a better and more stable global order. If we do not, that opportunity may not recur for decades.

We are living on the cusp of history. The priority is to reverse the downward spiral of despair through overwhelming and concerted action. That will only occur if the US now gives the leadership we need. Mr Obama may even find, as many presidents have found before him, that leading the world is easier and more rewarding than cajoling a recalcitrant Congress. This may not be the challenge he expected. But it is the challenge he confronts. History will judge his presidency on whether he dares to succeed

via FT.com / Columnists / Martin Wolf – Why Davos Man is waiting for Obama to save him.

Folding dealers shock car buyers with unpaid liens

The national wave of auto dealership closures has come crashing down on thousands of people who are on the hook for used-car loans that dealers were supposed to absolve.

When a car buyer still owes money on a vehicle he is trading in, the dealer promises to pay off the outstanding loan, then resells the vehicle. But as more dealers go out of business, some are sticking consumers with the bill. Lenders can then go after the previous owner who thought the debt was paid, or repossess the car from the new owner who assumed it came with clear title.

via Folding dealers shock car buyers with unpaid liens – Yahoo! News.

Blame HGTV for the Real Estate Crash

HGTV is an evil empire that never rests. You can loathe your current domicile 24/7 with programs such as “Stagers” (move a few things around and double the value of your home); “Designed to Sell” (you can sell your house, even if the house next to yours is in foreclosure); “Design on a Dime” (see, it’s cheap); and “Property Virgins” (losing your virginity was fun, wasn’t it?) Every show features highly attractive hosts who show you how to “unlock the hidden potential” in your home, how to turn a $10 thrift-store table into a “wow” media center, and how to make everything “pop.” Pop is the word of choice on HGTV.

Ironic, isn’t it, given the fact that pop is the sound we keep hearing from the McMansion-sized housing bubble HGTV created.

via Jim Sollisch: Blame Television for the Bubble – WSJ.com. Continue reading “Blame HGTV for the Real Estate Crash”

Why No UAW In The South

Thus, historians agree that unionizing southern plants would require a dramatic cultural shift.”In the North you work for the UAW first and the company second,” says Hoffer at Virginia Commonwealth University. “It’s just never been that way in the South. You work for the company first.”

That attitude certainly is reflected in previous failed attempts to organize the transplant factories. Two decades of work by the UAW to force a vote at a Toyota factory in Georgetown, Ky., have yielded no results; votes at a Nissan plant in Smyrna, Tenn., were rejected out of hand by workers in 1989 and 2001.

“There is considerable tension between the union and Southern autoworkers,” says John Heitmann, a history professor at the University of Dayton in Dayton, Ohio, who has studied the auto industry for a decade. “It’s in part due to the strong strain of individualism that’s a part of the South. There’s no real compassion for union brothers down there.”

via Auto Bailout: Southern Workers Watch and Worry – BusinessWeek.

The End of Wall Street’s Boom

Ji Lee
Photoillustration by: Ji Lee

The era that defined Wall Street is finally, officially over. Michael Lewis, who chronicled its excess in Liar’s Poker, returns to his old haunt to figure out what went wrong. And it is ugly.

via The End of Wall Street’s Boom – National Business News – Portfolio.com

Anatomy of a meltdown

Building a Bubble

How our Greed Turned To Fear, Again

Losing our shirt? The problem is that our banks are also losing theirs. Illustration by Barry Blitt.
Losing our shirt? The problem is that our banks are also losing theirs. Illustration by Barry Blitt.

Not so long ago, the dollar stood for a sum of gold, and bankers knew the people they lent to. The author charts the emergence of an abstract, even absurd world—call it Planet Finance—where mathematical models ignored both history and human nature, and value had no meaning. A lengthy but cogent explanation of how we got here.

via Wall Street Lays Another Egg: Politics & Power: vanityfair.com

China & US – Two two-trillionaires

China hold 2 trillion of our debt according to this analysis ( simply SAFE is the Bank of China and the RMB is their currency).
Because a lot of the vulnerabilities that built up in the US economy between 2003 and 2007 can be linked – in part – to large purchases of dollars by SAFE during that period. Holding the RMB down discouraged investment in tradables, and encouraged investment in non-tradeables (think homes). And the rise in China’s surplus even as the oil exporters surplus was growing implied large offsetting deficits in the US and Europe – deficits that were found in the US household sector. Brad Setser: Follow the Money » Blog Archive » Two two-trillionaires

How Merrill Lynch Failed

Hong Kong clothing retailer Giordano International
Hong Kong clothing retailer Giordano International

For years, the product that Ms. Masters and her colleagues invented remained just a mechanism for offloading risk in high-grade corporate lending. But as often occurs with Wall Street alchemy, a good idea started to be misused — and a product initially devised to insulate against risk soon morphed into a device that actually concentrated dangers.

This shift began in 2002, when low interest rates pushed investors to seek higher returns.

via The Reckoning – How Merrill Lynch Faltered and Fell – Series – NYTimes.com

Bubble Warnings From Davos

The five day Davos meetging, held annualy in Switzerland, is THe meeting for the Rich and Powerful.I was taken by this quote from Stephen Roach, then Morgan Stanley’s chief economist, who now is chairman of Morgan Stanley Asia Ltd. “A sharp decline in housing prices could have a tremendous impact on the global economy; in the U.S. alone, 40 percent of new jobs since 2001 have been related to the housing sector. With low interest rates and excess liquidity, other bubbles may follow,” If the corralary is true, then we could be looking at more job loss than currently predicted.Here is the vull article inThe Bloomberg.com: Exclusive