Pent up demand

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    • Thu Dec 4th 09:29 AM
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      Rating: +2 0
      Commented on:
      Citi: A Sell at $3.00?
      Research shows again and again that the analysts are a case of "even a stopped clock is right twice a day". They are a good telltale for where the herd is going if you are a contrarian. That's about it.

      I agree with roger maxims. People have this wild notion that
      1. stock is beat down
      2. no way gov't. will not let them go out of business
      3. profit

      As roger says, look at when earnings per share go positive. Maybe in 3 to 5 years. In between time, you will get diluted, and/or high-yielding preferred will be issued to make sure that the profits go anywhere but to the rubes in steerage (common stock). If you want to buy a lottery ticket, go pick up some long dated calls on C.
      View article »
    • Wed Dec 3rd 10:10 AM
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      Rating: 0 -1
      Commented on:
      First Take on GM: Packaged Bankruptcy Inevitable
      This is simply not an option. These are real companies with payrolls and interest payments to make out of cash, which is evaporating rapidly. You cannot expect the taxpayer to just take over the liabilities of an ostensibly private company for a while without some stake of ownership. Much has been said about the "unfairness" of the auto situation relative to banking. Those people should go look at the specific terms under which that assistance is being rendered to banks. The government basically owns those banks at a date in the not too distant future. If you are proposing that we nationalize the automakers and run them for a loss at over capacity, then we would be no better/different than the infamous Soviet tractor farms turning out product that nobody wanted to rust in a yard somewhere.

      This is a bit like the "third rail" issue of Social Security reform. Any politician who proposes a painful reform is taken out and shot because there are always stupid or unscrupulous opponents willing to say that maintaining the status quo benefitis is an option and ignorant voters willing to elect them on a promise they cannot keep.


      On Dec 03 09:17 AM aarc wrote:

      > Re-structure GM once the global economy becomes less fragile or at
      > least already on the way to recovery.
      View article »
    • Wed Dec 3rd 08:22 AM
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      Rating: +3 0
      Commented on:
      First Take on GM: Packaged Bankruptcy Inevitable
      I agree with this 100%. Some sort of government assistance is inevitable. The automakers can enter bankruptcy now, or later (after burning through a round or two of government cash).

      Take the tough medicine now. A healthy auto industry means shedding capacity in manufacturing and in dealerships. That will be painful, but that is the sad reality.
      View article »
    • Thu Nov 20th 09:38 AM
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      Rating: 0 0
      Commented on:
      D-Day: Does Deflation Draw Near?
      "Deflation is simply caused by a lack of demand for product and services. Get money into the hands of the public thru Fiscal Policy and Job Growth and the problem will correct."

      Lack of demand == overinvestment

      We have deflation in sectors where easy money created massive over investment. I realize it's fashionable right now to toss out empty phrases like "Job Growth" and "Invest in the Future", but that is meaningless. Government spending is not an investment when it allows someone to keep building houses no one wants to buy, or what have you. These sectors, housing, mortgage origination, car building, etc. have to be brought in line with what consumers are able to buy. Public money will only delay the inevitable for a while, not prevent it.

      I wish savers would create an association in their minds that when they hear the words "government stimulus" they visualize a big siphon hose draining money out of their savings.
      View article »
    • Wed Nov 19th 13:46 PM
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      Rating: 0 0
      Commented on:
      Deflation Watch, Day 2: Consumer Prices
      Completely expected. The Fed never had control of the pricing environment. Their tools are extremely crude.

      Expect to see continued deflation in financial assets with ever-increasing spillover effects in necessities.


      On Nov 19 12:31 PM cpi watcher wrote:

      > Almost the whole of the All Items monthly drop is accounted for by
      > motor fuel and household energy. Everything else continued to go
      > up, including food, housing ex-energy, medical costs, recreation
      > ...
      >
      > cpiwatch.com/component...
      >
      >
      > Transportation costs have dropped precipitously for the past three
      > months but food prices continue to climb:
      >
      > cpiwatch.com/trends?sa...
      View article »
    • Mon Nov 17th 17:20 PM
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      Rating: +2 -1
      Commented on:
      Let GM Fail
      "GM outsold Toyota by about 1.2 million vehicles in the United States last year and holds a U.S. lead over Toyota of about 560,000 so far this year. Globally, GM in 2007 remained the world's largest automaker, selling 9,369,524 vehicles worldwide -- about 3,000 more than Toyota."

      And how much profit was turned on those sales? Oops.
      View article »
    • Mon Nov 17th 13:19 PM
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      Rating: 0 0
      Commented on:
      The Autos and Mentality That Ruined Detroit



      On Nov 17 10:51 AM Chris B wrote:


      > ...yet we are investing in the crappy SUV and subprime mortgage businesses
      > of the past instead, so nobody has to be out of a job. This is exactly
      > why China will be the dominant superpower in 15-20 years. They are
      > investing in the future, not subsidizing failure.

      Where do you get your news? The financial industry is shedding jobs like crazy. The "investment" in mortgage backed paper will be a failure just as the "investment" in the auto industry will be. In both cases the same medicine is called for: liquidate, recognize the losses and create a blank slate for some new leaders to build businesses.

      The automakers cannot keep their promises on pensions. We can recognize that now or we can wait until the problem grows even worse.
      View article »
    • Thu Nov 13th 15:41 PM
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      Rating: 0 0
      Commented on:
      Could Capital Injections Save the Auto Industry?
      Don't use all caps. Just don't.


      On Nov 13 03:11 PM jimmy46 wrote:

      > A federal BAILOUT WOULD BE STUPID.
      >
      > The auto companies have so many problems that $50 Billion won't save
      > them.
      >
      > THEY NEED TO GET RID OF WASTEFUL WORK RULES THAT LOWER
      > PRODUCTIVITY.
      >
      > WORKERS &amp; RETIREE'S NEED TO PAY MORE OF THE HEALTH COSTS.<br/>
      >
      > THE UNION NEEDS TO HELP OUT.
      >
      > THE JAPANESE FACTORIES IN AMERICA DON'T HAVE GM'S PROBLEMS,
      > WHY???
      View article »
    • Thu Nov 13th 14:25 PM
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      Rating: 0 0
      Commented on:
      The Death of Buy and Hold?
      "For example, if you had taken some basic steps like under weighting large-cap tech stocks at the height of the bubble, you’d be in far better shape today."

      Yes, because it was obvious to everyone when the bubble reached its height. So you begin your defense of buy and hold by recommending a little fortuitous market timing?

      If you expand your time and geographical horizons, buy and hold doesn't look so good. How many countries fell to socialist revolutions in the first part of the century? How many were devastated by wars? Those investors are not factored into the buy and hold track record because they did not survive (literally in many cases).
      View article »
    • Thu Nov 13th 14:18 PM
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      Rating: 0 0
      Commented on:
      Could Capital Injections Save the Auto Industry?
      They should go through bankruptcy. That would force them to show a workable plan of how they intend to become a going concern again. Then if the government wants to bestow goodies they can guarantee loans for the restructured entities. It's time the face the fact that our auto giants are going the way of the British automakers. For too long they have essentially been jobs programs (auto production) subsidized by financing companies.

      We've heard a lot about Wall Street pay lately. Let's talk about the jobs bank and the rampant absenteeism and all the other excesses of the auto workforce before we sign over the tax dollars.
      View article »
    • Thu Nov 13th 09:54 AM
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      Rating: 0 0
      Commented on:
      Number of U.S. Homes With Negative Equity Is Stunning
      "The losses the banks will take holding the real estate will far outpace whatever diminished losses they take on a reworked mortgage."

      Says you. Banks need cashflow like any other business. I find it doubtful that they can hope to restructure so many loans without starving for cash. As Jolly_Rancher said, anyway you want to slice it, a lot of the banks are dead men walking. Restructuring only changes rate at which they bleed out.

      I agree that many defaulters are going to stay in "their" homes if only because there will be nobody from the bank/sheriff etc. to kick them out. But they will be reduced to being de facto squatters with no ability to show clear title or borrow against the property. Just like a lot of third world countries. Good job America!
      View article »
    • Thu Nov 6th 10:30 AM
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      Rating: +1 -1
      Commented on:
      10 Points About the Markets
      You believe the 250k lie, and have the temerity to call others delusional?

      Haven't you noticed yet that on the campaign trail "rich" equals 200k+ incomes, but when the tax laws are written "rich" means "does not receive public assistance (yet)"?

      I agree that there has been zero fiscal discipline for the last 8 years, but I don't hear the Dems calling for cuts to anything but defense spending. Hardly models of restraint. We are all going to pay until they figure out that they cannot fix the budget on the revenue side of the ledger.
      View article »
    • Wed Nov 5th 12:12 PM
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      Rating: +1 -1
      Commented on:
      10 Points About the Markets
      Agree with Mac77. Everyone thinks "So what. Obama can do nothing with the current set of possibilities." Wrong. That is when idealist demagogues change the rules of the game to suit them.

      Already the trial balloon has been floated to do a "one time" tax on 401k balances. That is the first of many ways they will be looking to further loot the country so that they have something to spend.
      View article »
    • Mon Nov 3rd 15:59 PM
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      Rating: 0 -1
      Commented on:
      The Next Crisis Is on the Horizon
      Exactly right. The "leaders" of the banking industry have completely lost touch with the notion that wealth must be backed by actual economic activity. They have been shoveling abstractions for so long that they think they can stop this freight train with a pile of freshly printed money.

      The USA will declare bankruptcy (default on sovereign debt) before this is finished. This little panic has been the last nail in the coffin for the dollar. And those who have prepared correctly will be punished the same way as "hoarders" in all hyper-inflationary collapses. We will be forced by law to trade hard goods for the worthless scrip.


      On Nov 03 01:33 PM bbzz24 wrote:

      > to whom should banks lend to? the deadbeats on the line after the
      > ones that comprise the sub-prime sector? should we all them sub-sub-prime?
      > or maybe soon-to-be-sub-prime?
      >
      View article »
    • Tue Oct 21st 09:30 AM
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      Rating: 0 0
      Commented on:
      Bubble Logic
      Chris B, many (most?) small-time flippers were not paying a cent in capital gains on their investment properties. They lived in them just long enough to meet the second home requirements.

      Most middle class peoples' productive work is hardly touched by income tax after the various exemptions and deductions are applied. Those people pay mostly payroll taxes. And those payroll taxes are necessary to preserve the fig leaf that social security and medicare are "retirement" systems rather than welfare programs.
      View article »