steve graves

Ahead of Black Friday: Has Consumer Confidence Been Restored?

The only statistic required to answer this question is the rising unemployment rate. Year-over-year unemployment has increased approximately three-and-a-half percent, a surge not witnessed since the 1930s. Even if Black Friday is better than expected or the retail season is somehow not as dismal as many forecast, this epic rise in unemployment will inevitably undermine consumer spending and therefore any potential economic recovery (70% GDP = consumer spending). Even if consumers swept in the embrace of holiday cheer temporarily assume more debt, the reckoning will invariably come. Jobs; jobs, jobs, jobs. Forget about 'seasonably adjusted' unemployment claims - let's look at the real number!

The ONLY way to ultimately restore consumer confidence is to give the consumers jobs. Anything else is either placebo or patch, the effects of which will swiftly be forgotten.

Delinquencies in Prime Mortgages on the Rise

"Corporations should be taking advantage of the cheap credit situation and borrow against assets to raise operating cash and maintain payroll. This would maintain earnings since consumers don't buy without income. Public entities should reduce spending and cut tax rates to enable individuals to pay down debt and increase savings while maintaining their current spending levels. Individuals should continue buying the things that they want and need because they know that they will continue to remain employed."

And the dictatorship of the proletariat should simply wither away just as soon as it's no longer needed. No offense Russ, but your vision of government, corporations and consumers suddenly synchronizing towards some mega-goal that benefits everyone is beyond fantasy. Not to mention the fact that it does nothing to cleanse the massive amounts of debt from the system, which is the basic problem that has to be addressed. Bottom line is there's no painless way out of our predicament; a generation of rising debt, swelling trade deficits and declining savings rates must be atoned for. Reality bites.

Suburban Housing Markets Are Unsustainable (Part 2)

BRAVO! Easily the best piece I've ever read on Seeking Alpha, Jim; it's to Seeking Alpha what "Network" was to motion pictures! Being an avid reader of John Mauldin's weekly newsletter - it's free, everyone should read it - I'm always astounded that more of those self-proclaimed prognosticators out there (Jim Cramer, are you listening???) don't acknowledge the GDP/MEW charts (2000-2006) that he reprints occasionally. If you throw in the era of irrational equities exuberance of the 1990s, it becomes painfully evident that the U.S. hasn't had more than a blip of 2-3% GDP growth in well over a decade and a half. So where does that leave the Obama Administration's fantastical projections that we're going to enjoy 2-3% GDP growth by next year?! I don't know Jim, this country's so deep into denial that it's almost impossible to imagine our current trajectory not ending in disaster. And what really frightens me, as you point out, is that we're going to end up being a very angry nation with a very, very large army. What happens when a nation that spends more on its military than every other nation on Earth combined stubbornly denies reality for so freaking long that it's too late to salvage itself? Who's the evil empire going to be then, Mr. Bush? Spoken as Sarah Palin, who believes so fervently in the end times, anxiously awaits in the wings...

Mortgage Resets: One Shoe Dropping

That's an excellent point...


On May 08 10:56 AM mac123449 wrote:

> An interesting and a more realistic view
>
> Andy T at Bigpicture.com
>
> Not to get too weird with statistics and numbers…cause they can make
> up any story you want….
>
> But using round numbers:
>
> Let’s say a country has 100 million workers…..then the country goes
> into recession/depression and businesses start firing .5% of the
> workforce every week…the weekly firings would look like this:
>
> 1st week: ( 500, 000 )
> 2nd week: ( 497, 500 )
> 3rd week: ( 495, 500 )
> 4th week: (492, 537)
>
> etc….
>
> You see how the 2nd derivative is getting better? We’re losing less
> and less jobs each week. That’s great, right? But, there’s the effect
> of dwindling numbers….there are less and less people to fire each
> week. If the country is slashing a certain percentage of the workforce
> on a routine basis, then by definition, the second derivative MUST
> get better at some point.