Fin/Inv

On one hand you have management disclosures like this:

"In the second half of 2009, there are signs that key markets the Company operates in are stabilizing. Due to low inventories at distributors and rising shipments, regional premiums are improving and global aluminum consumption is expected to increase 11% in the second half of 2009."                        

On the other hand, you have absolute, unprecednted record amounts of aluminum just sitting idle, doing nothing, waiting for the day they get converted into that Boeing 787 fuselage (some time in 2094) and in the meantime just checking their email to see when those 10 new Amazon Kindles they ordered will finally arive, courtesy of a newly invigorated FedEx (we jest, aluminum does not read... and until a year ago, neither did the average American...some things sure change).

Jim Capretta looks at the Baucus healthcare bill and concludes that, because the subsidies phase out as income rises, it imposes an effective marginal tax rate on income of about 30 percent for many families. Add that figure to the income tax, the payroll tax, and the phase-out of the EITC and "the effective, implicit tax rate for workers between 100 and 200 percent of the federal poverty line would quickly approach 70 percent — not even counting food stamps and housing vouchers."

Indeed, Jim seems to understate matters, as he includes only the employee half of the payroll tax. Including both the employee and employer halves, as economic theory says is appropriate, appears to give a marginal tax rate closer to 80 percent. And, of course, many states impose income and sales taxes as well, and these would further raise the overall marginal tax rate.

Jim was doing a rough back-of-the-envelope calculation. I hope some Congressman asks CBO to do a more thorough analysis of the issue. Given all the income-linked programs already in existence and now being contemplated, what would effective marginal tax rates be for typical families? This is surely a question that needs answering before Congress can cast an intelligent vote on the healthcare bill.

Update: Reader Josh Barro emails me an astute observation:

To calculate the effect of employer-paid FICA on marginal income tax rates, shouldn't the employer FICA tax be added to both the numerator and the denominator of the rate calculation? That is, if the marginal rate before accounting for employer FICA is .7, the rate after adjustment would be .7765/1.0765 = .721, not close to .8.

Yes, indeed. I stand corrected. Add a bit for state and local taxes and 75 percent looks like a good guess for the effective marginal tax rate. But what we really need is some expert staff to get the numbers right. Are you listening, CBO?

Jim says the "market is hot, real hot." This is worth watching to get a feel for what is happening at the lower end of the housing market (in San Diego at least).

Even as Grayson fights for transparency (see full letter below) which would only be beneficial to U.S. taxpayers, of whom Maria Bartiromo is a member of, the latter asks Grayson the following highly logical question:

You think you and your colleagues in the Democratic party are going to slow down the spending? Perhaps that could help the deficit?

Probing questions from the world's foremost business news leader.

 

So anyway, sticking to the subject, here is the warranted list of information that Grayson and Paul have demanded to be produced by the Fed in order to evaluate whether or not the Chairman with a dollar deathwish deserves a second term:

• Information that Bloomberg reporter Mark Pittman has requested via a Freedom of Information Act Request on the Bear Stearns rescue and that the Federal Reserve is contesting in the courts,[i] and which Manhattan Chief U.S. District Judge Loretta Preska has ordered by turned over by the Federal Resrve.
• Information that Rep. Grayson requested in February at a hearing and by follow-up letter on which institutions received the $1.2 trillion added to the Federal Reserve’s balance sheet, how much reach institution received, and what was promised in return.
• All Federal Reserve documents that went to Attorney General Andrew Cuomo’s office relating to the Bank of America/Merrill Lynch merger in which potentially illegal and coercive activity might have occurred, as well all Federal Reserve documents relating to the lawsuit pursued by Merrill Lynch shareholders in the US District court for the Southern District of New York.
• Transcripts of all Open Market Meeting Minutes up to and including that of June, 2009, transcripts which are normally withheld from the public for five years.
• Full disclosure of all terms and conditions of all off-balance sheet Fed transactions in the past three years.

We would have also added the phone number for the undertaker that Bernanke has picked to provide (at the taxpayers' expense) the coffin for the U.S. Dollar.

We are confident that Bernanke, who has nothing to hide, will promptly comply with this disclosure request, which, considering the vast support for HR 1207, is in effect voiced by the entire American nation.

Full Grayson and Paul letter below.

 

Attachment	Size
Senate Letter on Bernanke Nomination.pdf	147.05 KB

In a leaked document of Goldman's internal defense of various trading practices including HFT and dark pools, before the SEC, the dominant force out of 85 Broad provides a very good if biased overview of virtually all issues that the SEC is currently evaluating and looking to address per the proddings from senator Kaufman.

The full document is presented below. What is interesting is that while Goldman makes token concessions about certain aspects of market topology, it is virtually adamant in its "do not touch" stance on precisely those components in which it is becoming a practical monopoly power.

 

One thing to note, which refutes much of the claims that HFT dominance has lowered trading costs, the argument at the core of Goldman's position, is that if one were to superimpose the VIX with the latest Implementation Shortfall data out of ITG, what is obvious is that even as market volatility has declined, the rise of the machines (best seen here) has not reduceed IS, and in fact trading costs have continued to creep higher over the past 3 years. We would be curious to hear Goldman's explanation of this particular phenomenon.

by Bruce Webb

CBO letter to Baucus

Estimated Budgetary Impact of the Amended Chairman’s Mark According to CBO and JCT’s assessment, enacting the Chairman’s mark, as amended, would result in a net reduction in federal budget deficits of $81 billion over the 2010–2019 period (see Table 1). The estimate includes a projected net cost of $518 billion over 10 years for the proposed expansions in insurance coverage. That net cost itself reflects a gross total of $829 billion in credits and subsidies provided through the exchanges, increased net outlays for Medicaid and the Children’s Health Insurance Program (CHIP), and tax credits for small employers; those costs are partly offset by $201 billion in revenues from the excise tax on high-premium insurance plans and $110 billion in net savings from other sources. The net cost of the coverage expansions would be more than offset by the combination of other spending changes that CBO estimates would save $404 billion over the 10 years and other provisions that JCT and CBO estimate would increase federal revenues by $196 billion over the same period.1 In subsequent years, the collective effect of those provisions would probably be continued reductions in federal budget deficits. Those estimates are all subject to substantial uncertainty.

For some reason the Table came out smaller than usual, in any event click to enlarge.

I haven't read through this and will make only two preliminary notes. One the bill leaves $81 billion in wiggle room to allow changes and still not break Obama's (rather foolish in my mind) demand that it be deficit neutral. Two is that on the cost side it is way under Obama's $900 billion leaving plenty of room for additions as long as corresponding funding is found for any thing proposed in excess of the $81 billion. Now if the Senate Finance Committee can just get this thing voted on and approved we could get this show on the road.

Im August 2009 sinkt die Verschuldung der US-Konsumenten den siebten Monat in Folge, mit einer auf das Jahr hochgerechneten Rate von -5,8% (-9,1% im Juli) auf ein ausstehendes Volumen von 2,4627 Billionen Dollar (2,4747 Bio. Dollar im Juli) wie die US-Notenbank FED in ihrem heutigen monatlichen Consumer Credit Release mitteilt. Im Vergleich zum Vormonat sanken die Verbraucherkredite um -12 Mrd. Dollar und zum Vorjahresmonat um -113,4 Mrd. Dollar!

> Im Vergleich zum Vorjahresmonat sank das ausstehende Konsumentenkreditvolumen um -4,4%, nach -4,1% im Juli! Die letzte signifikante Schrumpfung der ausstehenden Konsumentenkredite wurde im November 1991 markiert mit -1,9%! Die Schrumpfung von -4,4% zum Vorjahresmonat im August 2009 ist die höchste seit Juni 1944 (-5,2%)! <

Das Volumen der ausstehenden Konsumentenschulden zeigt die Kreditkartenkredite, die privaten Konsumkredite, die privaten Autokredite und die Studentenkredite an. Die revolvierenden Kreditkartenschulden sanken auf das Jahr hochgerechnet um -13,1% und damit bereits den 12. Monat in Folge auf 899,4 Mrd. Dollar! Die nonrevolving privaten Konsumkredite, Autokredite und Studentenkredite sanken nur noch um -1,6% auf 1,5633 Billionen Dollar.

> Eine kleine Korrektur nach Jahren des exzessiven Kredites. <

Zusammen mit den Hypothekenschulden betrug die Verschuldung der privaten Haushalte nach den letzten Daten der FED aus Q2 2009 immer noch fulminante 13,6976 Billionen Dollar bzw. 96,85% des nominalen BIPs der USA!

> Der Zusammenhang von Kreditwachstum und Wirtschaftswachstum wird im Chart klar deutlich. Mit der Kontraktion der Neuverschuldung der privaten Haushalte (Hypotheken- und Konsumentenkredite) bricht auch das nominale BIP ein, jeweils in % zum Vorjahresquartal. <

Trotz Geldflutung des Bankensystems durch die FED, bleibt die Kreditvergabe der Geschäftsbanken an die privaten Haushalte tendenziell restriktiv, allerdings haben auch die privaten Haushalte ein wenig ihr Konsumverhalten geändert, so stieg die Sparrate in den ersten 8 Monaten des Jahres 2009 auf durschnittliche 4,1%, im Jahr 2007 lag sie bei 1,7% der Einkommen.

Quelle Daten: Federalreserve.gov

Querschuesse-Forum

Kontakt: info.querschuss@yahoo.de

Securities Industries News discloses that the SEC has requested it be granted authority to have "direct access to real-time data" on CDS and other derivatives. One wonders how the SEC was operating up until this point without this information. Yet of course, this is merely just another pretext for the SEC to deflect allegations about its utter uselessness, with claims that "lack of such information hampered its efforts to investigate potential fraud and market manipulation in the over-the-counter (OTC) derivatives markets during last fall’s financial crisis." Well, duh. The SEC is finally realizing that the credit market is, oh, about 10 times bigger than equities, and that virtually everyone trades CDS now over cash products. CDS is, incidentally, also where all the insider trading occurs these days, a fact abused all too well by CDS traders, who have known about the SEC's inability to closely track the action in the credit market.  This is also why if the SEC were to look at CDS buying action of LBOs names in 2006/2007 it may actually find some amusing results. In the meantime, the SEC should spend $10,000 a year and get a MarkIt subscription.

From Securities Industry

The SEC’s enforcement actions in investigating market manipulation in OTC derivatives “were seriously complicated by the lack of a mechanism for promptly obtaining critical information – who traded, how much, and when – that is complete and accurate,” said Henry Hu, the director of the SEC’s new division of risk, strategy and financial innovation, in written testimony to the House Financial Services Committee.

 
The SEC’s enforcement actions in investigating market manipulation in OTC derivatives “were seriously complicated by the lack of a mechanism for promptly obtaining critical information – who traded, how much, and when – that is complete and accurate,” said Henry Hu, the director of the SEC’s new division of risk, strategy and financial innovation, in written testimony to the House Financial Services Committee.

Hu testified that “data on securities-related OTC derivative transactions were not readily available, and needed to be reconstructed manually.” He asked Congress to expand the SEC’s inspection authority over trade data repositories and clearinghouses for derivatives.

The comments represented a rebuke to industry efforts aimed thus far at making more information on CDS and other OTC derivatives data more readily available.

Yet it is a little odd that the SEC and the DTCC, which is the core CDS trade repository, are so unable to exchange phone numbers. After all, the DTCC is an organization for the benefit of everyone, or so the tag line goes.

The main collector of information on CDS contracts has been the Depository Trust and Clearing Corporation (DTCC), which could be required to supply it in real-time to the SEC.

The DTCC collects data on swaps contracts and places in its Trade Information Warehouse (TIW). Last Nov. 4, DTCC began publishing weekly aggregate data for some of the contracts placed by dealers in the database.

The TIW is a service offering of DerivServ, DTCC’s confirmation and affirmation subsidiary, which is not regulated.

DTCC says its CDS data proved critical in calming the markets last year when Lehman Brothers declared bankruptcy. While market analysts estimated potential net liabilities on CDS on outstanding Lehman obligations could top $400 billion, DTCC released data from the warehouse showing the amount would be less than $6 billion. Ultimately, $5.2 billion was transferred among affected Lehman counterparties, DTCC said.

The good thing to come out of all this will be a public means to price CDS intraday, which, ironically, may have a rather adverse impact on firms like the above mentioned MarkIt, whose primary business is providing just that.

Hey Gang Anna here

Another boring Wacky day today.  It just never seems to end! I posted this morning, but Mole posted over me that I believed we were either close to or at the end of Wave 5 in the old greenback.  Well I have a couple of great charts from Berk, since I am juggling 15 different things and am so glad to have his helping hand

He and I are on the same page, so that confirms my charts as well.

So far Bidu has been an awesome trade and I may just ride this one up till earning and then hit reverse.  Up over 12 points I put on the spread when it was up about 7 points.

Zero again told us that there was NO VOLUME and Mole warned all subs not to get too short or long either way. So a great day for Zero.

Also here is the Put Call ratio which all you guys always enjoy…again thanks to Berk for his helping hand!

Ok now for the stats on Evil Rat ES +1.5 and Geronimo +2.5

We all know AA beat earnings so should be an interesting day tomorrow, as I mentioned earlier, I fear that we may retest recent highs  Have a very great evening all!

Below we highlight a price chart of gold since the start of 2008 along with the median price estimates of gold analysts across Wall Street going out to 2013. The price estimates shown are quarterly through the first quarter of 2011, and then yearly from the end of 2011 through the end of 2013. Based on these estimates, gold analysts...

* Trading reversals from a gap fill and other excellent posts from Kirk; see also the links from The Kirk Report's twitter page;

* Diagnosing why your trading isn't working out;

* A bullish ETF look at Brazil;

* Using longer-term price levels to guide intraday trading;

* There's more to the market than the economy;

* Thanks to a perceptive reader for this link re: making change efforts simple;

* Market wisdom delivered via the ABCs;

* More on transcending the need to be right;

* Consumer confidence on the decline;
.

From the NAHB:

Extending the credit through Nov. 30, 2010 and making it available to all purchasers of a principal residence would result in an additional 383,000 home sales ...

The NAHB has also been arguing to expand the tax credit from $8,000 to $15,000. But using $8,000 per home buyer - and estimating 5 million home sales over the next year - the total cost of the tax credit would be $40 billion.

According to the NAHB this would result in 383,000 additional home sales. Dividing $40 billion by 383 thousand gives $104,400 per additional home sold!

That is higher than my original estimate that an extension of the tax credit would cost about $100 thousand per additional home sold.

Note: If the NAHB meant $15,000 per home buyer, the cost would be $75 billion - or $157 thousand per additional home sold.

And this doesn't included the costs of the unintended consequences.

The tax credit is simply motivating some renters to become homeowners (not reducing the overall number of excess housing units). This is pushing up the vacancy rent, pushing down rents and leading to more commercial real estate (CRE) defaults and foreclosures - and will lead to more losses for lenders. The additional defaults associated with lower rents will probably be higher than the cost of the tax credit. From the WSJ: Fed Frets About Commercial Real Estate

[Fed economist] Mr. Conway's presentation painted a bleak picture of the sliding real-estate values and enormous debt that will need to be refinanced in the next few years. Vacancy rates in the apartment, retail and warehouse sectors already have exceeded those seen during the real-estate collapse of the early 1990s, Mr. Conway noted. His report also predicted that commercial real-estate losses would reach roughly 45% next year. Valuing real estate has always been tricky for banks, and the problem is particularly acute now because sales activity is practically nonexistent.
...
More than half of the $3.4 trillion in outstanding commercial real-estate debt is held by banks.

Motivating some renters to become homeowners has increased demand at the low end and pushed up house prices (more demand). However when the tax credit eventually ends (it will someday), the price-to-rent ratio will equalize, applying downward pressure on home prices.

Many of the additional sales in 2009 were to buyers who used the tax credit as their downpayment. These were marginal buyers who haven't proven the ability to manage their finances and save for a down payment. The default rates will probably be higher for these buyers than for other buyers.

The housing tax credit raises the risk of deflation. Falling rents will probably already push core CPI close to zero in 2010. An extension of the housing tax credit will probably push rents down further (as those 383,000 additional home buyers move from renting to owning), and that will probably mean core CPI will be negative in 2010. Not only will this impact any program adjusted by CPI (like Social Security), but this could lead to a deflationary mentality for consumers - with consumers holding off purchases waiting for lower prices.

Anyone analyzing the tax credit should call the economists at the BLS and ask about how falling rents will impact owners' equivalent rent and CPI. Then call the economists at the Federal Reserve and ask how CPI deflation will impact consumer behavior and monetary policy. Welcome to the Fed's nightmare.

Some of what I am reading today:

• Financial Reform: Lessons from 1929 (BusinessWeek)

• Will California become America’s first failed state? (Guardian)

• Fed Frets About Commercial Real Estate (WSJ)

• Why business loves Charlie Rose (CNN/Money)

• U.K. Faced ‘Bank Runs, Riots’ as RBS and HBOS Neared Collapse (Bloomberg)

• Office Rents Dive as Vacancies Rise (WSJ)

• Q&A: Joseph Stiglitz Sees Welcome Change at the IMF (Real Time Economics)

• Countries Billionaires Could Buy (Forbes)

• The Top 200 Albums of the 2000s (Pitchfork)

>

What are you reading ?

From the start of the recession in December 2007 through mid-2009, analysts consistently found themselves lowering forecasts for the companies they cover. Whether it was a factor of the weak economy or in reaction to poor earnings and guidance, estimates that previously looked good to the analysts started to look too high. Each week in our Earnings Estimate Revisions report...

*U.S. AUGUST CONSUMER CREDIT WAS FORECAST TO DROP BY $10 BILLION
*U.S. AUGUST NON-REVOLVING BORROWING FALLS BY $2.07 BILLION
*U.S. AUGUST CREDIT CARD, OTHER REVOLVING DEBT FALLS $9.91 BLN
*U.S. JULY CREDIT FALLS $19 BLN, REVISED FROM $21.6 BLN DROP
*U.S. AUGUST CONSUMER CREDIT FALLS $12.0 BILLION, FED SAYS

Without "cash for clunkers" it would have been significantly worse of course.  Best guess non-revolving would have been down close to $10 billion, so roughly equal to July.

There's no possible good way to spin this.  There is no sign that credit expansion has reappeared, there is no sign that we have seen a turn in employment, and there is no evidence that we are seeing real improvement in final demand.

To those who have said that "the recession ended this summer", how do you make that case when the consumer is not spending?  When credit continues to contract even with programs like cash-for-clunkers?

This is not a "trivial amount of money" either, especially when one considers that historically this has been positive by roughly the same amount, meaning that the swing is roughly double that, or about 2% of GDP.

The real economy is effectively dead.  What's worse is that the idiots at The Fed the Washington are still refusing to force the insolvent to take their marks and clear the credit markets.

As a consequence there is no meaningful evaluation of what constitutes a reasonable credit risk being made - the answer is simply "no" both for borrowers and lenders, as borrowers (correctly) see a deeply deteriorating economy while the government continues to lie.

This is not how to build confidence, yet confidence is everything.  Confidence that the numbers you see printed every month in statistics are truthful.  Confidence that when things suck, you'll be told they suck so you can prepare and try to do your best for your family, your employees, and your friends.

Instead we keep hearing cries of a false dawn, but these cries are not errors - they are intentional acts designed to do the same thing George W. Bush did after 9/11 - "Go out and SHOP!"

What the government and media crooners forget is that you rarely get to screw the same person more than once, and unlike the circumstances of the 1930s, the people who got hosed in 2001 are still alive and remember it.

Wake up folks; there's a hard rain coming and it's time to put up the storm shutters.

Consumer Credit outstanding on a seasonally adjusted basis in August fell by $12b, $2b more than expected but July didn’t fall as much as initially reported by $2.6b. It’s the 10th month in the past 11 that has seen declines. Revolving credit (mostly credit cards) fell by $9.9b and nonrevolving fell by $2.1b, a sharp improvement from the $16.6b drop in July and $10.6b in June but that is mostly due to the clunker program. The total amount outstanding at $2.46t is the lowest since July ‘07. A thriftier consumer, debt paydown, cut credit lines and rising unemployment are all combining to reduce the use of consumer credit to purchase things.

Yet another month where the decline in consumer credit comes in worse than expected: Total Credit decline from $2,475 billion to $2,463, with the bulk of the $12 billion decline consisting of Revolving Credit reduction, or $10 billion, to $900 billion. Total consumer credit is now back to July 2007 levels... and the decline has yet to decelerate. This is the seventh straight month of consumer credit declines.

For anyone who would like to sample past SMT updates I've unlocked several past reports on the premium site.

Bob Lefsetz is a music industry observer, and publisher of the Lefsetz letter:

~~~

I rented a Hyundai.

They pulled up this eggplant colored piece of shit, with the Coke-bottle flairs over the rear wheels, and I winced.  A Hyundai?  Wasn’t there anything else?

This was it.  We’d already waited in line for twenty minutes at Enterprise.  This had just come in.  Had just been cleaned.  There were no other cars.

So I got behind the wheel and took off down the expressway.

A thousand miles later, dropping off the car in downtown Boston, I regretted parting with it.  I debated making an offer for the automobile right there.  I’d become enamored of its purple color, had bonded with this machine with absolutely no rattles, great sound insulation, decent handling and phenomenal gas mileage.

That’s right, a Hyundai.

I remember the early nineties, when Eileen bought one.  For less than $5000.  A true POS.  With a carburetor after everybody had switched to fuel-injection.  This rickety machine truly decomposed on the go.  Parts were always falling off.  It’s a wonder she could drive it to the junkyard.  Where it went, when its value had been used up, but long before the death of other cars born that year.

And when people started showing up in Santa Fes a decade and a half later, I thought they were just too cheap to buy a CR-V.  Or a RAV4.  That’s how I knew someone was a cheapskate, if they bought a Hyundai.  A Korean car?

But that was before Samsung became the new Sony.  Before everything we thought we knew turned out to be wrong.

I drove BMWs for thirty plus years.  They are the ultimate driving machines, or one of them, but not only are repairs ultra-expensive, they’re frequent.  The purchase price is just the starting price.  Budget thousands a year just for maintenance.  And, if you read the car magazines, you’ll see that they’ve had numerous problems with their BMW test cars, like engines seizing up.  As for Mercedes…  Great car, but they don’t handle like a BMW.  And if you’re not looking for that handling finesse, maybe you should consider a…Hyundai?

Happened to me again in Denver.  Enterprise once again.  They were going to give us an HHR.  I’d rented a Malibu, not bad, but I’m not gonna drive around Colorado in this miniaturized imitation panel truck from the thirties.  No fucking way.  Didn’t they have anything else?

The clerk winked and said he could offer us a Hyundai…

SOLD!

That Sonata was smaller than the Azera I’d rented the previous fall, but just as lovable.  I’m telling you, if my present car got totaled this afternoon, I’d buy a Hyundai.  Why waste all that extra money on a shinier nameplate?  It’s just a car.  And, unlike its American counterparts, Hyundai is more than a car, it’s like a pet, it’s adoptable, you fall in love.

I mention all this because my eyes bugged out when I read the sales reports.  Yup, Cash For Clunkers ended, and sales swooned.  The right wingers thought the program was a disaster, everybody worried about the future.  You see GM’s sales dropped 45% from September 2009.  Chrysler was down 42.1%.  The Japanese superstars?  Toyota fell 12.6%.  And Honda 20.1%.  Granted, Ford only dropped 5.1%, and that’s good, but in the entire top ten, only three automakers showed increases.  The aforementioned BMW showed a slight uptick, of 3.6%.  But the fifth largest automaker,  Hyundai, sold 31,511 vehicles, a whopping 27.2% INCREASE!  And its Korean brother, Kia, sold 21,623 autos, a 24.4% increase! HOLY SHIT!

Seems the brand is no longer tarnished.  People don’t think twice about buying a Hyundai.   They want something good, at a fair price, and they’re flocking to the Korean manufacturers.

What this means is it’s never too late for the music industry to regain the hearts and minds of the consumer.  But it must offer good products at fair prices.

Instead, the labels have been like GM.  Help us out!  Do something about file-trading!  Meanwhile, the consumer doesn’t want this overpriced Top Forty beat-driven crap.  Not in quantity.

And concert tickets?  I’d say they’re at Mercedes-Benz level prices, but they’re more akin to the numbers for Ferrari, or Rolls Royce.  Maybe U2 and the Eagles can command such high prices, but most people can’t afford them.  And buying a concert ticket is worse than buying a car.  With the Internet, you can now comparison shop for automobiles.  The dreaded sales manager routine, the endless rip-off negotiation, has been to a great degree decimated.  But who knows what the price of a concert ticket will be until you click through to the final Ticketmaster page.  The add-ons are like undercoating and floor mats, shit you don’t want that they insist you buy.

And I don’t want to hear one more motherfucker say that lowering prices devalues the product, not fucking one.  People aren’t resisting Hyundais because they’re too inexpensive. Hell, now Hyundai is marketing the Genesis, an almost as good Lexus/Acura/Infiniti for almost ten grand less.

This is the era of value.  Rather than insist that the customer come up to your price point, come down to his.  Meet him halfway.  Show that there’s a partnership, the same way Hyundai agreed to let you return your car if you lost your job.  An idea so good, other manufacturers imitated it.

People are hurting.  They want entertainment.  But they feel priced out by the music industry.  And they’re sick of being fucked in the ass.  Time to rebuild.

–
Visit the archive: http://lefsetz.com/wordpress/

From MarketWatch: U.S. consumer credit falls for 7th straight month

U.S. consumers reduced their debt for the seventh straight month in August, the Federal Reserve reported Wednesday. Total seasonally adjusted consumer debt fell $11.98 billion, or at a 5.8% annual rate ... In the subcategories, credit-card debt fell $9.91 billion, or 13.1%, to $899.41 billion. This is the record 11th straight monthly drop in credit card debt. Non-revolving credit, such as auto loans, personal loans and student loans fell $2.10 billion or 1.6% to $1.56 trillion.

Cash-for-clunkers probably kept non-revolving credit from falling further - just wait for the September numbers!

Click on graph for larger image in new window.

This graph shows the year-over-year (YoY) change in consumer credit. Consumer credit is off 4.4% over the last 12 months. The previous record YoY decline was 1.9% in 1991.

Here is the Fed report: Consumer Credit

Consumer credit decreased at an annual rate of 5-3/4 percent in August 2009. Revolving credit decreased at an annual rate of 13 percent, and nonrevolving credit decreased at an annual rate of 1-1/2 percent.

Note: The Fed reports a simple annual rate (multiplies change in month by 12) as opposed to a compounded annual rate. Consumer credit does not include real estate debt.

<p>Just crossing the DJ newsires: US Commerce Considers Imposing Import Duties On China Pipe</p>
<p>Will update as we get more</p>

David Leonhardt has a terrific piece in the Times today on Bruce Bartlett — “the most persistent — and thought-provoking — conservative critic” of the GOP.

The discussion of tax cuts is fat too common sense to be seen in print very often:

“His conservatism starts with the idea that high taxes are no longer the problem, even if complaining about them still makes for good politics. This year, federal taxes are on pace to equal just 15 percent of gross domestic product. It is the lowest share since 1950.

As the economy recovers, taxes will naturally return to about 18 percent of G.D.P., and Mr. Obama’s proposed rate increase on the affluent would take the level closer to 20 percent. But some basic arithmetic — the Medicare budget, projected to soar in coming decades — suggests taxes need to rise further, and history suggests that’s O.K.

For one thing, past tax increases have not choked off economic growth. The 1980s boom didn’t immediately follow the 1981 Reagan tax cut; it followed his 1982 tax increase to reduce the deficit. The 1990s boom followed the 1993 Clinton tax increase. Tax rates matter, but they’re nowhere near the main force affecting growth.

And taxes are supposed to rise as a country grows richer. This is Wagner’s Law, named for the 19th-century economist Adolf Wagner, who coined it. As societies become more affluent, people demand more services that governments tend to provide, like health care, education and a strong military. A century ago, federal taxes equaled just a few percent of G.D.P. The country wasn’t better off than it is today.

Modern conservatism, Mr. Bartlett says, should therefore have two main economic principles. One, it should prevent government from getting too big. There is no better opportunity than health reform, given that the current bills don’t do nearly enough to slow spending growth. Instead of pushing the White House to do better, however, Congressional Republicans are criticizing any effort to slow spending as an attack on Grandma. They’re evidently in favor of big Medicare, just not the taxes to pay for it.”

Hard for me to disagree with what Mr. Barlett says . . .

>
Source:
Partisan Economics in Action
DAVID LEONHARDT
NYT, October 6, 2009
http://www.nytimes.com/2009/10/07/business/07leonhardt.html