Political Economy category archive

Chrysler LLC says it will accelerate the closure of its sport utility vehicle factory in Newark because of the slowing global economy and a continuing shift toward smaller vehicles.

The Newark closure will be effective at the end of the year and affect about 1,000 jobs, the company said in a news release.

Of course, it doesn’t help that the American automobile industry is headed by idiots.

Robert Reich:

Pardon me for asking, but if a company is too big to fail, maybe – just maybe – it’s too big, period.

We used to have public policies to prevent companies from getting too big. Does anyone remember antitrust laws? Somewhere along the line policymakers decided that antitrust would only be used where there was evidence a company had so much market power it could keep prices higher than otherwise.

We seem to have forgotten that the original purpose of antitrust law was also to prevent companies from becoming too powerful.

(snip)

Maybe the biggest irony today is that Washington policymakers who are funneling taxpayer dollars to these too-big-to-fail companies are simultaneously pushing them to consolidate into even bigger companies.

And the rest of us are too small to be helped.

My project got cancelled.

My current customer’s client, which is not a member of the financial sector, is going into armadillo mode until the economy settles down.

My customer had to lay off two of his full-timers, in addition to me, a contractor, and reshuffle the remaining work to his most senior guys (I would have done the same thing, by the way).

$700,000,000,000 bailout divided by 9,387.61 increase in the DJI yesterday = $74,566,369.93 per point.

Don’t worry. Be happy.

Not that the DOW is the end all and be all–after all, it’s fewer than 50 stocks–but, well (emphasis added) . . .

The latest loss also means the Dow is down 40.3 percent since reaching a record high close of 14,164.53 a year ago, on Oct. 9, 2007. The S&P 500, which reached its high of 1,565.15 the same day, is down 42.5 percent.

Wanna buy a used car dealership?

In Pennsylvania, the number of dealerships expected to close or merge by year’s end will be three times the historic average. Hardest hit are those selling U.S. cars, whose gas-guzzling models have become auto-lot orphans.

The national outlook is likewise grim. Last week, Ford Motor Co. reported U.S. sales had dropped 34 percent in September. And yesterday, normally bulletproof Toyota Motor Corp. saw its shares experience their largest one-day drop in decades on fears of a global recession.

Penske Chevrolet is among a batch of dealerships in Southeastern Pennsylvania and South Jersey to close or merge during the last month. Dealerships in Hammonton and Elmer, N.J., also shut down in recent weeks or are on the chopping block, and others are rumored to be next.

Most affected are dealerships selling autos by the Detroit “Big Three” – Ford, General Motors Corp. and Chrysler L.L.C., said John Devlin, vice president of the Pennsylvania Automotive Association in Harrisburg.

Delaware chooses wind:

Gov. Ruth Ann Minner signed legislation today that will enable the completion of the Bluewater Wind/Delmarva Power agreement, announced earlier this week. The signing comes after both chambers of the state Legislature unanimously approved the legislation.

Tommywonk has more.

Bonddad looks at the long(er) term:

This (S&P/Case-Shiller home-price-ed.) index has been dropping for a year and a half. That’s called a trend. And it’s not a good trend.

In addition, this isn’t going to end anytime soon. Inventory is still sky high and consumer demand is still hampered by massive debt and low confidence.

(snip a discussion of consumer confidence)

Short version: this is bad news all the way around. Period.

Link to the S&P/Case-Shiller home-price index here.

Ray, who’s off working on his post on how hedge funds work, thinks the Republicans are trying to stave off the crash the fruits of their economic failures until January 21, 2009, so they can then pretend that their policies of the last umpty-ump years had nothing–nothing!–to do with the results thereof.

The Associated Press reports that persons who depend on tips for a substantial part of their income are hurting, because their customers are hurting.

Remember that the minimum wage for the folks in food service is, well, minimal.

Bushonomics: Making the rich richer and the poor poorer in myriad ways.

The Geek News Central podcast is relentlessly non-political. Nevertheless, in Friday’s show, Todd asked his listeners to let him know what they think about opening up ANWR and the continental shelf for oil exploration.

So I did:

You asked for comments about opening up ANWR and the continental shelf for oil exploration.

No.

According to the discussion on this episode of the Diane Rehm Show, opening these areas would have little or no effect on current or future oil prices or on U. S. oil reserves.

The discussion indicated that one of the reasons for pressure to open these areas from the oil companies, who already have oil leases for areas that they have not yet started to explore or use, is the oil companies’ stock prices. One of the factors that affects their stock prices is how many reserves they have. In short, their interest may not be primarily oil supplies, so much as Wall Street supplies.

Opening up these areas would do little or nothing to help the everyday person and lots to help the rich get richer with paper profits.

The policy that got us into this mess is ably dissected in this article from The Nation.

GNC Shownotes.

Follow the link to see the evidence. Bonddad:

The bottom line is we’re nowhere near the end of the problems in the financial sector. Anyone who tells you otherwise is lyning through their teeth.

I wonder how many MBA’s it took to figure this out. From Market Watch (I highly recommend reading the comments):

U.S. stocks on Monday will attempt to recover from some hefty losses, but any comeback will likely be contingent on three factors: the price of crude oil, any hints of inflation, and developments in the troubled financial sector.

“Obviously this market is in lockstep with three things, the most important of which is the price of a barrel of oil,” said Art Hogan, chief market strategist at Jefferies & Co.

On Friday, stocks sank as crude-oil futures gained, a trend that played throughout the week, as the weaker U.S. dollar added to the allure of oil and other commodities as a currency hedge. And, more trouble in the financial sector compounded market anxiety.

But now from Candidate McCain. Josh Marshall parses when social security privatization privatizes with without being privatization.

Fuel prices break down spam filters:

Even Spam has seen its price jump 7 percent from a year ago, to $2.62 for a 12-ounce can. But that isn’t slowing sales — Spam’s maker, Hormel Foods, said strong sales of its pork-in-a-can helped push up its second-quarter profits 14 percent. Spam sales were up 10.6 percent in the 12-week period ending May 3, compared with last year, according to sales information from the Nielsen Co.

It cost me $64+ to fill up the tank of my little yellow truck today.

That was 16 gallons at $4.03 9/10s.

A while ago, when I first started this blog, I tracked gas prices at local gas stations. Prices were going up and down and up and down (I lost the category when I imported my database to the new server and haven’t taken the time to restore the categories for posts that are over two years old–and I’m probably not going to).

I’m not going to start tracking gas prices again. What made it fun then was that they went up and down and up and down.

Now they are just going up.

Wonder who helped Vice President Cheney formulate this wonderful energy policy?

Average U.S. gasoline pump prices — already above $4 a gallon — could run up 20 cents or more by mid-summer, if crude oil prices don’t fall from record levels near $140 a barrel, analysts said.

Gasoline prices are up almost $1 from a year ago, heaping pressure on a U.S. economy beleaguered by falling home values, a sagging dollar and an anemic job market. Oil prices have risen six-fold in the past six years and are up 40 percent since January.

Upside down on the other side of the pond:

More than 23,200 people who took out 100% mortgages in the year to 31 March could face negative equity, according to figures obtained by the BBC.

Falling house prices mean the amount borrowed could be greater than the value of their properties.

The data from the Council of Mortgage Lenders comes as figures show the housing market is slowing down further.

Separate housing figures suggest the number of transactions per estate agent has hit a 30-year low.

And there is no doubt it is highly likely that they took out these 100% mortgages because their estate agent or lender or both told them it was a good move to make.

This credit crunch or whatever you want to call it is worldwide and long-term.

Certainly no solutions. More on the ethanol scam:

And as oil prices soared past $100 per barrel in recent months — and a new closing record of $138.54 on Friday — the region’s biodiesel industry should have been awash in cash.

But to the surprise of the industry and its supporters, the cost of making biodiesel has outpaced the rise in fossil-fuel prices.

Soybean oil, the main raw material for U.S. biodiesel, nearly doubled in price — partly because the consumption of soy has risen globally, and partly because U.S. farmers have been switching land to more profitable corn crops, from which ethanol is made. Demand from biodiesel producers has also lifted prices, and other biodiesel crops such as canola and palm oil have quickly caught up in cost.

It now costs about $4.66 to buy enough soybean oil to make a gallon of the renewable fuel. After adding manufacturing expenses and subtracting a $1-per-gallon tax credit, a gallon of nearly pure biodiesel retails at local stations for close to $6.

Conventional diesel, meanwhile, currently sells for about $4.80 per gallon.

H/T Bill for the link.

Failure to regulate, because the monied class is always right. Follow the link for the full release:

The seasonally adjusted delinquency rate for mortgage loans on one-to-four-unit residential properties stood at 6.35 percent of all loans outstanding at the end of the first quarter of 2008 on a seasonally adjusted (SA) basis, up 53 basis points from the fourth quarter of 2007, and up 151 basis points from one year ago, according to MBA’s National Delinquency Survey.

The delinquency rate includes loans that are at least one payment past due but does not include loans in the process of foreclosure. The percentage of loans in the foreclosure process was 2.47 percent at the end of the first quarter, an increase of 43 basis points from the fourth quarter of 2007 and 119 basis points from one year ago.

(snip)

The foreclosure start rate differed considerably by loan type. For example:

• • Prime fixed rate loan foreclosure starts increased 7 basis points to 0.29 percent over the previous quarter and prime ARM foreclosure starts increased 49 basis points to 1.55 percent.
• • Subprime fixed foreclosure starts increased 28 basis points to 1.80 percent and subprime ARM foreclosure starts increased 106 basis points to 6.35 percent.
• • FHA foreclosure starts decreased 4 basis points to 0.87 percent and VA foreclosure starts increased 11 basis points to 0.39 percent.

And Duncan expects that bank failures are next on the Bushonomics agenda.

Bushonomics is sound policy. You can bank on it.

Or not.

Federal regulators today (May 30-ed.) shut down a small Minnesota bank called First Integrity, saying unsafe practices had weakened its financial condition.

The Federal Deposit Insurance Corp. was appointed as receiver of First Integrity National Association of Staples, which had $54.7 million in assets and $50.3 million in deposits as of March 31.

The FDIC said all the bank’s deposits will be assumed by First International Bank and Trust of Watford City, N.D. Its two offices will reopen Saturday as branches of First International. Depositors of First Integrity will continue to have full access to their deposits, the agency said.

Via Profiles Blog.