30 Days Of Night

Chrysler is furloughing all US plants for 30 days as of the last shift on Friday. The interesting reason behind the shutdown? No credit for people to buy cars.

"Chrysler dealers confirmed to the company at a recent meeting at its headquarters, that they have many willing buyers for Chrysler, Jeep and Dodge vehicles but are unable to close the deals, due to lack of financing," the carmaker said in an announcement. "The dealers have stated that they have lost an estimated 20% to 25% of their volume because of this credit situation."

Auto sales have been hit hard by tight credit and the struggling economy. Overall auto sales in the United States were down 37% last month compared with November 2007. Chrysler's situation was especially bad. Its sales dropped 47%.

Chrysler's financing arm, Chrysler Financial, has tightened lending terms for buyers and earlier this year, it announced it would no longer offer leases.

Remember, just over two months ago, the President assured us that everything was fine, and the recession was just all in our heads. Chrysler's all but done, as is GM. An entire American industry is now on the brink and the government has pledged trillions and trillions of dollars to fix the problem over the last nine weeks or so. Trillions.

It will not be the last industry facing extinction. America a few years from now is going to be a very different place, like the difference between 1928 and 1932. We're going to have to reinvent our entire economy from scratch. Many of the old industries and jobs they represent will vanish for good over the next few years.

Our consumer consumption economy is dying before our eyes. What will replace it? That is Obama's true test...and Bush's true legacy of disaster.

You Think I'm Depressing?

I'm not depressing. Now, James Boyce is depressing.

It will start with the housing market which will, once again, be determined by issues like the number of people living in a market, incomes and rental prices.

How far will housing prices fall? To the historical mean, which is another 20-40% down, depending on where you live. This graph is shocking for two reasons. One, how it disproves the basic belief that a house is a good investment, it's not. And second, how we should have seen a correction in 2002, but post 9/11, all we saw was a bubble. Currently prices are down 20% from the top that was shown in this graph, but clearly, they still have a long way to go.

Will housing prices return to historical averages? Yes. But what's going to happen first? Here's the view of Whitney Tilson who was on 60 Minutes on Sunday and one of the few who predicted the mortgage disaster.

"We had the greatest asset bubble in history and now that bubble is bursting. The single biggest piece of the bubble is the U.S. mortgage market and we're probably about halfway through the unwinding and bursting of the bubble," Tilson explains. "It may seem like all the carnage out there, we must be almost finished. But there's still a lot of pain to come in terms of write-downs and losses that have yet to be recognized."

The housing bubble will deflate slowly, unfortunately for our recovery because now people are just pulling their houses instead of selling at a loss. "I'll wait till the market comes back" you here but it's not coming back, any more than lightbulbs.com stock is going to be worth $100 a share anytime again ever.

In real dollar terms, in our lifetime, housing prices will never be what they were in 2005 and 2006. They may never even get within 25% of that false peak. In the next 100 years.

Problem is, I don't see anything wrong with his logic.

Dear America:

"There's no such thing as a moderate Republican. A moderate Republican is a liberal."

--Rush Limbaugh

(And people wonder why the Dems are in charge now.)

Da Troof

Balloon Juice's John Cole on the GOP and Obama's patriotism:

In fact, an argument could be made that questioning the Obama’s patriotism was the only growth industry of the last twelve months.

Nuff respect due.

Zandar's Thought Of The Day

1000 posts. I think I shall call Dad.

Man Of The Year

Time Mag's Man of the Year of course is Barry. No brainer, even for these guys.

Score that as follows: one imploding economy, one deteriorating war in an impossible region and two versions of Armageddon — the bang of loose nukes and the whimper of environmental collapse. That's just for starters; we'll hear the unabridged version shortly.

But first, there is a bit of business to be dealt with, having to do with why you are reading this story in this magazine at this time of the year. It's unlikely that you were surprised to see Obama's face on the cover. He has come to dominate the public sphere so completely that it beggars belief to recall that half the people in America had never heard of him two years ago — that even his campaign manager, at the outset, wasn't sure Obama had what it would take to win the election. He hit the American scene like a thunderclap, upended our politics, shattered decades of conventional wisdom and overcame centuries of the social pecking order. Understandably, you may be thinking Obama is on the cover for these big and flashy reasons: for ushering the country across a momentous symbolic line, for infusing our democracy with a new intensity of participation, for showing the world and ourselves that our most cherished myth — the one about boundless opportunity — has plenty of juice left in it.

In the Lord Voldemort category of "great but terrible things" that qualify a person for runner-up, we have Sarah Palin (for destroying the GOP) Hammerin' Hank Paulson (for destroying the economy), Chinese film director Zhang Yimou (for the terribly great Beijing Olympics opening orgy) and French President Sarkozy (for being terribly, terribly great at being French.)

Go fig.

StupidiNews!

• NASA scientists warn that 2 trillion tons of polar ice is melting at a much faster rate.
• A federal appeals court in New York has struck down yet another part of the PATRIOT Act as unconstitutional.
• More than nine out of ten Illinois voters say embattled Governor Rod Blagojevich must go.
• OPEC ministers are meeting to consider a record supply cut to boost oil prices above $75.
• The Bush administration continues to try to block the release of the NSA's internal arguments over wiretapping.

Zero Hour

The Fed has cut the chief lending rate to zero.

The Federal Reserve cut the main U.S. interest rate to “a target range” of between zero and 0.25 percent and said it will do whatever is needed to end the longest recession in a quarter-century and revive credit.

The Fed “will employ all available tools to promote the resumption of sustainable economic growth and to preserve price stability,” the Federal Open Market Committee said today in a statement in Washington. “Weak economic conditions are likely to warrant exceptionally low levels of the federal funds rate for some time.”

Treasury notes rallied in anticipation the Fed will buy the securities to force borrowing costs for consumers and companies lower. Nine rate cuts in the prior 14 months and $1.4 trillion in emergency lending have failed to reverse the economic downturn.

“The focus of the committee’s policy going forward will be to support the functioning of financial markets and stimulate the economy through open market operations and other measures that sustain the size of the Federal Reserve’s balance sheet at a high level,” the FOMC said.

The statement noted that the Fed has already announced it will purchase agency debt and mortgage-backed securities, and said the Fed is ready to expand the program. The central bank said it continues to weigh the potential benefits of buying longer-term Treasury securities.

And the liquidity trap closes with a ghastly, echoing crunch, like something out of an Edgar Allen Poe story. We're in uncharted territory here. The other half of the Fed policy, just as expected, is to magically invent a crapload of money. Officially, the Fed has today signaled that the Japan Scenario is on.

The Bank of Japan has been the only major central bank in modern times to mix a policy of steep rate reductions with quantitative easing, or the strategy of injecting more reserves into the banking system than needed to keep the target interest rate at zero.

Japan’s central bank kept its main rate at zero from 2001 to 2006 while flooding the banking system with extra cash to encourage lending, spur growth and overcome deflation. The abundant funds failed to prompt lending by commercial banks, which expanded their reserves at the central bank almost nine times by early 2004.

So there we are. And much like Japan, the cure will be far worse than the disease. The Fed is turning on the faucet full blast in a desperate effort to stave off a deflationary depression spiral. But Japan's already high personal savings rate and low personal debt contributed mightily to their eventual freedom, it just took a decade to do it.

We have no such reserves to fall back on. Everything the Fed has tried so far has failed. We're down to the last card in the deck now, zero rate and unlimited fiat money. When this too fails to turn around the economy, what then?

We're now officially a third world economy.

Just Another Bit Of Good Housing News

...or not.

New U.S. housing starts and permits plunged to record lows in November, as long-standing problems in the housing market continued to weigh on the U.S. economy, a Commerce Department report showed on Tuesday.

Housing starts fell 18.9 percent to a seasonally adjusted annual rate of 625,000 units from 771,000 units in October.

That was much less than the 740,000 starts Wall Street analysts expected to see for November.

New building permits, which give a sense of future home construction, plummeted 15.6 percent to 616,000 units from 730,000 units in October.

That was also much below Wall Street analyst estimates of 700,000.

That's a massive drop in numbers even from just October. The bad part is if housing starts pick up faster than housing prices do...it will depress prices even further. I don't see how that could happen other than housing companies jumping the gun and building early 2009 in order to "get in on the ground floor of the new housing recovery".

It doesn't make any logical sense. Then again, the US economy has been operating on that whole "lack of logical sense" thing for the last several years, especially in housing. If people see these record low new housing starts and permits as the bottom of the market rather than a price-based bottom (which is still nowhere in sight), things could get even worse in the housing market.

American consumers aren't that dumb, are they?

Dear America:

"Obama is clearly Jimmy Carter, and four years from now another multi-decade run of Reaganism will bury liberals for another generation. Suckers!"

--Philip Jenkins, American Conservative

StupidiNews!

• VP Cheney admitted to authorizing the waterboarding of 9/11 planner Khalid Sheikh Mohammed.
• The Fed is expected to lower interest rates once again, this time to record lows.
• The Illinois legislature considers an impeachment panel for Blago.
• The US Secret Service is under fire for their slow reaction to a shoe-throwing journalist.
• President Bush could act as early as tomorrow on the auto bailout.

The Sun Is Hot Too

From today's Obama presser announcing Energy Secretary pick Dr. Steven Chu:

"My administration will value science," Obama said, in what sounded like a pointed reference to his predecessor. "We will make decisions based on facts."

Holy hell, Presidents can DO that kind of radical, facty thing with actual science and logic and crap?

Do the Republicans know this? Somebody ought to tell them.

Dear America:

"If the Right shows the same superhuman ability to ignore reality that they employed during the last eight years, we should have no problem impeaching Obama over this Blagojevich thing."

--Dick Polman, Philadelphia Inquirer

Zandar's Thought Of The Day

Why do I make fun of the wingnuts on the right who write things like this?

We all understand now the significance of this particular insult in the Arab world -- right? But do we really? Somehow I tend to doubt it. The true significance of this attack on President Bush and symbolically on the United States, and its enthusiastic reception in both the Arab world and in our own liberal media has not really been addressed. One part of this story is of course the breathless eagerness with which our own biased leftist MSM quickly grasps onto any story that will support their long-held conviction that the Iraq war was a foolish criminal endeavor, perpetrated on the American people by a clueless ignorant cowboy -- "the unpopular U.S. president".

But I contend that this incident provides us with an even more important lesson. One which we should have learned by now but have not. It is simply this: Why should this act of hatred and resentment come as a surprise to us? Haven't we accepted the fact yet that 'blood is thicker than water'; or in this case, that the Arab world's adherence to Islam and to Sharia law supersedes any temporary arrangements of convenience made with infidel governments. Treaties made with Arab (or any Muslim) states are in reality no more than cynical measures of expediency. Realpolitik.

Here is the cold hard truth: Islam is, was, and always will be the sworn enemy of Western civilization in general, and of the United States of America in particular. Any thoughts that we can peacefully coexist without risking subsequent betrayal are foolhardy and delusional. Every time we think we have made inroads into the Muslim world we should be automatically circumspect and on guard. For when push comes to shove, all of those minor political or regional differences between Arab/Muslim states will be quickly set aside when confronted with the common enemy of the infidel West. Until the very roots of Islam are torn out of this culture we will never succeed in establishing any meaningful and lasting peace in this region.

Because they pen breathless screeds declaring a entire religion to be the enemy of the United States of America and therefore demand the cultural annihilation of a billion Muslims or so over a pair of fucking shoes lobbed at a world leader with a 27% approval rating in his own country.

It is only through the thick clear plastic walls of sarcasm, parody and satire that these fools should be both viewed and contained in before being disposed of.

Douchebags.

A Simple Test

Which one of the three following financial news stories is the most outrageous?

1. The US auto industry is pleading for Bush to release $15 million from the TARP bailout, but odds are looking more and more like they will get nothing.
   
2. Investment guru Bernie Madoff may have defrauded investors out of as much as $50 billion.
3. Bloomberg News's lawsuit over which bank put up what as collateral for the over $2 trillion in loans and guarantees is denied on the basis of being "highly sensitive".

If you answered anything other than "three", you're frankly part of the problem.

Yes, they're all bad. But that last one should have Americans across the country out in the streets. We're not. And that's why number three there will almost certainly continue to happen even under Obama.