Tag Archives: economy

Business/Economics, International

What Economic Recovery? Germany says no more bailout money for Italy

Der Spiegel is reporting that German government officials doubt any more bailout money can save Italy, even if the current European Financial Stability Fund was tripled in size.

German officials have consistently said government finance reforms must come through spending cuts, and tax reform, not taking on more loans.

Currently the European Financial Stability Fund has $627 billion (440 billion Euros), and Germany says even if that was somehow tripled it wouldn’t be enough to save Italy.

Earlier in the week the European Central Bank started buying more government bonds from smaller European countries, but refused to buy any bonds from Italy and Spain (an indication that the bank has little confidence in those countries paying them back).

 

 

Business/Economics, International, U.S.

What Economic Recovery? Emergency World meeting over U.S. credit downgrade, China says no more U.S. dollar, Germany says finally the U.S. gets what it deserves

“The U.S. government has to come to terms with the painful fact that the good old days when it could just borrow its way out of messes of its own making are finally gone.”-Chinese government/media commentary

The European Central Bank will hold an emergency meeting on Sunday, August 7.  The issue; the credit rating downgrade for the United States.

Finance ministers and central bankers from the Group of 7 major industrialized nations will meet by telephone on Sunday.  The broader Group of 20 were due to hold a conference call Saturday evening.

China and Japan are calling for coordinated action to avoid a new worldwide financial crisis.  One issue that’s being looked at is whether the world can continue to use the U.S. dollar as a reserve currency: “International supervision over the issue of U.S. dollars should be introduced and a new, stable and secured global reserve currency may also be an option to avert a catastrophe caused by any single country.”-Chinese government/media commentary

Another issue to be discussed is the amount of secure debt versus risky debt: “It will weigh on secure assets. The bigger reaction will be on risky assets, including equities and on agencies and states backed directly by the federal government. U.S. Treasuries will remain a benchmark. This is a ship which takes a long time to turn around.”-Ciaran  O’Hagan, Societe Generale in Paris.

Germany, the economic powerhouse of Europe, says it’s about time the U.S. got what it deserves: “I’m not surprised about the U.S. rating downgrade, rather I am astonished that, for weeks, international rating agencies have focused their attention on the European debt situation but not the American one. For a while, there have been clear worries about America’s economic woes but also the fact the U.S. is heavily indebted.”-Norbert Barthle, a budget expert for German Chancellor Angela Merkel’s conservative party

 

 

Business/Economics, International

What Economic Recovery? German drug giant Bayer may leave Germany, find new home in China

German drug and chemical giant, Bayer, says high utility cost in Germany could force it to move all its German operations to a new location outside of Europe.

The most likely new home for Bayer, China.

Bayer blames the German government, and in a round about way the German people, for their decision to end the use of nuclear power plants in Germany.

Bayer claims the electricity cost would skyrocket, making it almost impossible for them to do business in Germany : “It is important that we remain competitive in comparison with other countries. Otherwise, a global business such as Bayer would have to consider relocating its production to countries with lower energy costs.”-Marijn Dekkers, CEO

Dekkers hinted that China could be Bayer’s new home, because they’ve already invested big time into their China operations.  They’re also looking at Brazil and India.

It’s not like Bayer is losing money in this bad economy.  They reported a net profit of $1.1 billion for the second quarter of this year!

 

 

Business/Economics, U.S.

What Economic Recovery? Proof the housing market hasn’t fallen enough: Big Banks bulldozing smalltown America

“Things that were unthinkable are now becoming thinkable.”-James W. Hughes, School of Planning and Public Policy at Rutgers University

If you want proof that the housing market still hasn’t hit bottom, just look at what Bank of America is doing, they’re bulldozing all those homes they foreclosed on.  Why? “There is way too much supply, the best thing we can do to stabilize the market is to get the garbage off.”-Gus Frangos, Cuyahoga County Land Re-utilization Corp of Cleveland

It’s not just BoA, but the other big banks that foreclosed (sometimes unjustifiably) on hundreds of thousands of homes across the U.S. are doing the same thing.

Essentially the big mortgage lenders shot themselves in the foot.  Now there is way too many homes on the market, compared to the decreasing number of qualified home buyers.

BoA is planning on bulldozing 100 homes in Cleveland, Ohio.  BoA is even giving away homes to local authorities: “No one needs these homes, no one is going to buy them. Bank of America is not going to be able to cover its losses, so it might as well give them away and get a little write-off and some nice public relations.”-Christopher Thornberg, Los Angeles office of Beacon Economics LLC

So far they’ve off loaded around 100 homes in Detroit, Michigan and 150 in Chicago, Illinois.

Even big cities are bulldozing their own.  Detroit Mayor, Dave Bing, proposed bulldozing one quarter of the entire city’s houses, and empty buildings, over the next three years.

Fukushima

Government Incompetence: Rice becomes the new Gold in Japan, add another notch to the tightening famine belt

Now that it’s become clear that most of Japan’s upcoming rice harvests are most likely to be contaminated with cesium, Japanese are holding onto last years rice like it was gold.

Japanese retailers are reporting that bags of last year’s rice are flying off the shelves, because consumers don’t think there will be any rice available from this year’s harvests.

The Agriculture, Forestry and Fisheries Ministry says it’s working to ensure the safety of this year’s rice harvests.  But so far the government has a real bad track record of proving their incompetence regarding nuclear contamination.

Lack of rice in Japan, yet another notch in the tightening belt of the global food crisis.

Business/Economics, International

What Economic Recovery? Will Sony join Hitachi and stop making TVs in Japan?

Believe it or not the electronics giant Sony has been losing money big time on TV sales.  Prior to the March 11th disasters Sony lost about $95 million from TV sales.

Hitachi recently announced they would shut down their last Japanese TV factory by March 2012.  They claim they’re losing to competition from South Korea.

Sony says it wants to continue to make TVs in Japan, in fact they say making TVs is “the biggest and critical issue” for Sony.

Sony would not give any details of their plans to rebuild their TV business, but analysts think Sony is hoping to expand sales in emerging markets.

The concern over TV production is overshadowing Sony’s next generation video game system, the PlayStation Vita, which is due to be released at the end of the year, or beginning of next year.

Business/Economics, U.S.

What Economic Recovery? Fannie Mae wants another $5 Billion bailout from taxpayers

The mortgage lender Fannie Mae reported a huge 2nd quarter loss of $5.2 billion. Now they want another $5.1 billion from taxpayers.

Let me remind you that Fannie Mae asked for $8.5 billion back in May!  So far the mortgage lender has gotten about $99 billion in bailout money from the U.S. government (taxpayers).

Fannie Mae officials say the answer to the continued housing finance crisis is jobs: “We’ve got to clear the mortgage market of the excess inventory and employment needs to recover, I believe, before we’re going to see a stabilization of home prices.“-Susan McFarland, Fannie Mae Chief Financial Officer

Business/Economics, U.S.

What Economic Recovery? Ford, GM, Chrysler; can we trust their sales and profit reports? U.S. auto sales actually stagnating

Ford and GM reported profits in July.  They also reported increased U.S. sales.  Ford claims 9% increase, GM an 8% increase, while Chrysler claims an incredible 20% increase in U.S. sales.

This while Japanese car makers Toyota and Honda reported that their U.S. sales crashed by more than 20% each.

Despite Chrysler reporting a 20% increase in sales, they claimed a net loss in profits, from buying back stocks from the U.S. taxpayers (interestingly the U.S. taxpayer also lost money).

Ford reported a small 9% increase in sales, but a big increase in profits.  One reason is because they jacked up the prices of their cars.  According to one report, the price increases accounted for $900 million of Ford’s profit.  Profiting by inflation.  Ford’s Chief Financial Officer, Lewis Booth, said they expect a drop in U.S. sales in the second half of 2011.

GM reported a small 8% increase in July sales, with a profit of $2.5 billion.  Remember GM still owes U.S. taxpayers for the bailout.  However analysts say now would be a bad time for taxpayers if GM decided to buy back its taxpayer (U.S. Treasury Department) held stock.  Just like the Chrysler buy back taxpayers would lose big time.  Most of GM’s sales came from pickup trucks.  The problem is that GM still has a surplus of pickup trucks, equal to a 115 day supply.  In order to get the surplus inventories down GM will continue with planned factory shut downs, that means more people out of work.  GM officials also expect the second half of 2011 to be hard on sales.

Mitsubishi reported an amazing 41% increase in July sales, while sales for most other Japanese companies stalled or crashed.

German car makers did well: Volkswagen reported a respectable 21% increase (not counting their AUDI brand).  Mercedes had a 13% increase.  BMW increased by 11%.

British companies Jaguar and Land Rover went in opposite directions, with Jaguar down 0.3% and Land Rover up 22%.

The problem is that you can’t go by percentages.  Here’s an example: Even though Toyota’s U.S. sales for July were down 22.7%, they still sold 130,802 vehicles in one month.  Compare that to Chrysler’s huge gain of 20%.  In July they sold 112,026 vehicles, still less than Toyota.

For another example of how percentages can deceive, let’s look at Mitsubishi and GM.  Mitsubishi reported an amazing 41% increase in July, but the actual number of vehicles sold that month was only 7,972.  GM reported a 8% increase in U.S. sales.  Sounds small, but the actual number of vehicles they sold in July is 214,915.  That makes GM the sales leader, however GM officials pointed out  they’re still stuck with a surplus of vehicles to sell.

So, is the auto industry on the rebound, or not?  Overall light vehicle (cars & pickup trucks) sales indicate that the auto industry stagnated in the month of July.  Car sales down 3%, pickup truck sales up 4.8%, almost cancelling each other out.

Data from Autodata Corp

 

Fukushima

Government Corruption: Japanese officials “fixed” public hearings on nuclear energy with fake supporters from the utility companies

The recent announcement that three top government officials will lose their jobs, comes after weeks of blame games between the Japanese nuclear agencies and the nuclear power utility companies.  The issue is that many weeks ago it was revealed that public hearings to determine if the Japanese people wanted nuclear power, were fixed to make it look like there was strong support of nuclear power.

Initially the utility companies were blamed, because it was their employees, and subcontractors that flooded the public hearings with support for nuclear energy. Now it turns out that the utility companies were ordered to do so by the very government agencies that were supposed to be regulating them.

05 August 2011, the Minister of the Economy, Trade, and Industry Ministry, Banri Kaieda, announced an investigation into the actions of the three top officials who were effectively fired the day before.

Specifically, a third party will investigate the Nuclear and Industrial Safety Agency.  That agency was the one who set up the public hearings, and, according to several electric power companies, ordered the utilities to flood the hearings with supporters of nuclear power.  The Japanese media is calling this a case of “influence peddling” on the part of the government.

Fukushima

Corporate & Government Incompetence: Local governments demand TEPCo end the nuclear disaster now!

Not only is Tokyo Electric Popwer Company being targeted, but other nuclear plants in other parts of Japan are getting hit by demands to get outa town.

A meeting in Tokyo, of local community leaders from around Japan, demanded a quick end to the ongoing crisis at Fukushima Daiichi.  They also demanded a complete redo of Japan’s nuclear power policies.

Those local officials with nuclear power plants in their area are extremely worried, because it’s become obvious that no one can trust the plant operators, or national government agencies that are supposed to be regulating the plant operators.