6/19/04 Change Is In The Air
Microsoft has 157 staff hiring recruiters. The company announced yesterday that about 20 of them would lose their jobs. Over the past year, employment rose from 54,500 to 56,100. You don’t need 157 recruiters to hire 1,600 people. In addition, with the new campus moving to completion in India, Microsoft’s hiring focus appears to be headed outside the U.S. Top management has increasingly turned its attention to cost cutting measures. Wall Street’s recent focus is the speculation of a big share buyback announcement in July. A better alternative might be to sell the 25 puts whenever the stock trades at or near that level. In the bullish dotcom run, the company made billions selling naked puts. Why change a course that has worked so successfully?
Since Bush was elected, about 35,000 wood-furniture workers, or 28% of that sector’s workforce, have lost their jobs. John Bassett of Bassett Furniture stated “the illegal dumping by the Chinese has devastated the U.S. bedroom industry.” The U.S. will slap tariffs on Chinese furniture.
The WTO ruled that $3 billion in U.S. cotton subsidies violate trade rules.
The Houston Chronicle reports that the Justice Department’s Enron Task Force has been investigating Kenny Boy Lay, former Enron Chairman, for the past 2 ½ years. The paper stated that Federal prosecutors plan to ask a grand jury to indict Lay on charges of fraud. Lay was a heavy donor to Bush and to Bush Sr. and a friend of both. In September 2001, Lay told Enron employees that the stock is “incredibly cheap” and “talk up the stock and talk positively about Enron to your family and friends…There have been all kinds of reckless and unfounded rumors about Enron and the financial condition of Enron.”
There have also been unfounded rumors about Iraq’s WMD and ties between Saddam Hussein and Al-Qaida and 9/11. It must be the water in Texas that creates these unfounded rumors. It’s a big state with tall tales. I wonder if the American people can read the terror card.
The U.S. current account deficit widened to a record $144.9 billion in the first quarter. Can you imagine the size of the deficit had the dollar been strong? In April the trade deficit widened to a record $48.3 billion. Greenspan stated “there is an unquenchable demand to hold assets of claims against American residents largely because they are presumed to be safe and they’re presumed to have significantly higher rates of return adjusted for risk than most other areas of the world.” It should be noted that, as the Fed raises interest rates, billions more are paid out to foreigners holding our treasuries and the current account deficit widens. As the deficits increase, some investors might question the ability of the U.S. to repay the debt principal outstanding. Of course, our country is recently built on the refinancing house of cards. That Ponzi game is in the ninth inning and will not go into extra innings. Michael Metcalfe of State Street Bank observed that “the dollar needs to be funded by equity or FDI flows, but now they are both negative.”
The EU agreed to a new constitutional treaty.
Grant M. Nulle of the Ludwig von Mises Institute: “Mr. Greenspan has no one to blame for inflation but himself.”
Friday, June 18, 2004
6/18/04 Is China’s Economy Slowing Down?
Chinese officials maintain that banks are tightening credit. Is it fact or fiction? Stock traders are becoming believers. The Shanghai Composite Index is selling near 7-month lows. Many U.S. semiconductor stocks have been spooked. Sharp and Samsung have recently been on the receiving end of selling. One thing is for certain. China’s recent growth rate is unsustainable.
Ten-year Japanese bond yields are trading at their highest level in four years.
John Challenger, CEO of Challenger, Gray, & Christmas, stated that nationally about 2.2 million people in prime working age are not counted as unemployed but do want a job. He cites the latest BLS statistics. Michael Wald, regional economist for the BLS, stated that about 798,000 people age 25 to 54 are not in the workforce but say they would like a job. He remarked “one could argue that the most likely group of workers not currently in the labor force but most likely to rejoin it are those people. If they were included in the count now, the national jobless rate would be 6.6%.” The Pew Hispanic Center stated that a high proportion of new jobs required low skills and paid relatively low wages. The average time that a laid-off worker takes to find a job remains near all-time highs.
According to the third annual Principal Financial Group Global Financial Well Being Study, 49% of all U.S. respondents believe their lifestyle in retirement will be less than it is today. Only 29% of people surveyed felt that way last year. Norman Sorensen, president of Principal International, observed “we weren’t expecting this. The golden years have become the beholden years.”
According to the latest Duke University CFO Outlook Survey, “the CFOs are telling us that there are growing risks to a continued recovery. In addition to dampened capital spending growth, employment is expected to grow by only one percent next year, a notable worsening of the employment expectations expressed by CFOs just last quarter. Our analysis of this quarter’s survey suggests the economic situation is growing more fragile.” One-third of CFOs cite price inflation as a top risk. Also, rising health care costs remain a major concern for many companies.
According to yesterday’s report released by the California Association of Realtors, only 20% of households in California are able to afford a median-priced home. The minimum household income needed to purchase a median-priced home at 4453,590 in California in April was $102,550, based on a typical 30-year, fixed-rate mortgage at 5.42 percent and assuming a 20% downpayment. By comparison, the minimum household income needed to purchase a median-priced home at $176,000 in the U.S. in April 2004 was $39,790. It is not surprising that people are moving from California to other more affordable areas.
Norway is the world’s third-biggest exporter of crude oil behind Saudi Arabia and Russia. A strike by 200 Norwegian oil workers could cut that country’s output by 13% or about 400,000 bpd.
ExxonMobil’s 538,000 bpd refinery in Baytown, Texas had an unscheduled closure for at least two days. There is some speculation that the refinery could be closed for at least one week.
According to the USDA, farming and related businesses account for about 12% of the U.S. GDP and about 17% of American jobs. According to Purdue University economists, the U.S. might run an agricultural trade deficit by the end of this decade. With a current agricultural trade surplus of only $10 billion, it would not be surprising to see a deficit sooner than Purdue’s prediction. Whether it is Russia, Brazil, China, India, China, Australia or some other country, our agricultural exports face serious competition. The picnic is over.
Wal-Mart is reducing shelf space for home entertainment products. This move will have a decided impact on its suppliers.
The Pension Benefit Guaranty Corp. reported that more than 1,000 underfunded pension plans had a total shortfall of $278.6 billion in 2003. Only pension plans that had shortfalls greater than $50 million were required to file a report.
Scientists at the U.S. Geological Survey stated yesterday that the current drought in the West could be the biggest in 500 years. The Colorado River has the lowest water flow on record. It is at half the annual flow experienced during the Dust Bowl years between 1930 and 1937. In my view, if the current drought persists, there could be severe economic and sociological fallout. To make matters worse, we are headed into the dry summer season in the West. At the very least, we can expect heightened risk from forest fires.
Chinese officials maintain that banks are tightening credit. Is it fact or fiction? Stock traders are becoming believers. The Shanghai Composite Index is selling near 7-month lows. Many U.S. semiconductor stocks have been spooked. Sharp and Samsung have recently been on the receiving end of selling. One thing is for certain. China’s recent growth rate is unsustainable.
Ten-year Japanese bond yields are trading at their highest level in four years.
John Challenger, CEO of Challenger, Gray, & Christmas, stated that nationally about 2.2 million people in prime working age are not counted as unemployed but do want a job. He cites the latest BLS statistics. Michael Wald, regional economist for the BLS, stated that about 798,000 people age 25 to 54 are not in the workforce but say they would like a job. He remarked “one could argue that the most likely group of workers not currently in the labor force but most likely to rejoin it are those people. If they were included in the count now, the national jobless rate would be 6.6%.” The Pew Hispanic Center stated that a high proportion of new jobs required low skills and paid relatively low wages. The average time that a laid-off worker takes to find a job remains near all-time highs.
According to the third annual Principal Financial Group Global Financial Well Being Study, 49% of all U.S. respondents believe their lifestyle in retirement will be less than it is today. Only 29% of people surveyed felt that way last year. Norman Sorensen, president of Principal International, observed “we weren’t expecting this. The golden years have become the beholden years.”
According to the latest Duke University CFO Outlook Survey, “the CFOs are telling us that there are growing risks to a continued recovery. In addition to dampened capital spending growth, employment is expected to grow by only one percent next year, a notable worsening of the employment expectations expressed by CFOs just last quarter. Our analysis of this quarter’s survey suggests the economic situation is growing more fragile.” One-third of CFOs cite price inflation as a top risk. Also, rising health care costs remain a major concern for many companies.
According to yesterday’s report released by the California Association of Realtors, only 20% of households in California are able to afford a median-priced home. The minimum household income needed to purchase a median-priced home at 4453,590 in California in April was $102,550, based on a typical 30-year, fixed-rate mortgage at 5.42 percent and assuming a 20% downpayment. By comparison, the minimum household income needed to purchase a median-priced home at $176,000 in the U.S. in April 2004 was $39,790. It is not surprising that people are moving from California to other more affordable areas.
Norway is the world’s third-biggest exporter of crude oil behind Saudi Arabia and Russia. A strike by 200 Norwegian oil workers could cut that country’s output by 13% or about 400,000 bpd.
ExxonMobil’s 538,000 bpd refinery in Baytown, Texas had an unscheduled closure for at least two days. There is some speculation that the refinery could be closed for at least one week.
According to the USDA, farming and related businesses account for about 12% of the U.S. GDP and about 17% of American jobs. According to Purdue University economists, the U.S. might run an agricultural trade deficit by the end of this decade. With a current agricultural trade surplus of only $10 billion, it would not be surprising to see a deficit sooner than Purdue’s prediction. Whether it is Russia, Brazil, China, India, China, Australia or some other country, our agricultural exports face serious competition. The picnic is over.
Wal-Mart is reducing shelf space for home entertainment products. This move will have a decided impact on its suppliers.
The Pension Benefit Guaranty Corp. reported that more than 1,000 underfunded pension plans had a total shortfall of $278.6 billion in 2003. Only pension plans that had shortfalls greater than $50 million were required to file a report.
Scientists at the U.S. Geological Survey stated yesterday that the current drought in the West could be the biggest in 500 years. The Colorado River has the lowest water flow on record. It is at half the annual flow experienced during the Dust Bowl years between 1930 and 1937. In my view, if the current drought persists, there could be severe economic and sociological fallout. To make matters worse, we are headed into the dry summer season in the West. At the very least, we can expect heightened risk from forest fires.
Thursday, June 17, 2004
6/17/04 The Uninsured
According to the U.S. Census Bureau’s Current Population Survey, in September 2003 there were 43.6 million uninsured people in the U.S. in 2002, an increase of 14.6% over 2001. However, the survey reported many people who are uninsured for a portion of a year but not for the entire year. These people are not reflected in the Census Bureau number. Astoundingly, for those under the age of 65 without health insurance for all or part of 2002 and 2003, their analysis states there were approximately 81.8 million such people, or one out of three people in this age category, and that two-thirds of these people were uninsured for six months or more.
Sprint Corp. will lay off 1,100 employees in the portion of the company that sells to business customers. Sprint stated that the layoffs are due to continued market pressures and erosion of the long-distance business. Since October 2001, Sprint has laid off more than 23,600 people. The company indicated it has been hurt by price cutting from chief rival AT&T.
Jack Guynn, President of the Atlanta Fed: The Fed “is several hundred basis points behind what would be a more normal policy setting.”
Albert Broaddus Jr., President of the Richmond Fed: “We’re clear that we need for rates to move up.” A neutral Fed target rate “is something in the vicinity of 2.5 to 3.5 percent, but many things can affect what neutral is—it is difficult to answer with precision.”
Pimco’s Bill Gross: “Too much debt, geopolitical risk and several bubbles have created an unstable environment which can turn any minute.”
The 9-11 Commission found no evidence exists that al-Qaida had strong ties to Saddam Hussein.
The U.S. Department of Transportation reported that, for the first time, last month Southwest Airlines carried 6.5 million domestic passengers, and that exceeded all major airlines.
In the year ended March 2004, U.S. direct investment into Japan fell 41%.
The Financial Times has a comment and analysis on the prisoner abuse scandal in Iraq. The headline reads chain of Command: can torture in Iraq be linked to the White House?
According to the U.S. Census Bureau’s Current Population Survey, in September 2003 there were 43.6 million uninsured people in the U.S. in 2002, an increase of 14.6% over 2001. However, the survey reported many people who are uninsured for a portion of a year but not for the entire year. These people are not reflected in the Census Bureau number. Astoundingly, for those under the age of 65 without health insurance for all or part of 2002 and 2003, their analysis states there were approximately 81.8 million such people, or one out of three people in this age category, and that two-thirds of these people were uninsured for six months or more.
Sprint Corp. will lay off 1,100 employees in the portion of the company that sells to business customers. Sprint stated that the layoffs are due to continued market pressures and erosion of the long-distance business. Since October 2001, Sprint has laid off more than 23,600 people. The company indicated it has been hurt by price cutting from chief rival AT&T.
Jack Guynn, President of the Atlanta Fed: The Fed “is several hundred basis points behind what would be a more normal policy setting.”
Albert Broaddus Jr., President of the Richmond Fed: “We’re clear that we need for rates to move up.” A neutral Fed target rate “is something in the vicinity of 2.5 to 3.5 percent, but many things can affect what neutral is—it is difficult to answer with precision.”
Pimco’s Bill Gross: “Too much debt, geopolitical risk and several bubbles have created an unstable environment which can turn any minute.”
The 9-11 Commission found no evidence exists that al-Qaida had strong ties to Saddam Hussein.
The U.S. Department of Transportation reported that, for the first time, last month Southwest Airlines carried 6.5 million domestic passengers, and that exceeded all major airlines.
In the year ended March 2004, U.S. direct investment into Japan fell 41%.
The Financial Times has a comment and analysis on the prisoner abuse scandal in Iraq. The headline reads chain of Command: can torture in Iraq be linked to the White House?
6/17/04 The Uninsured
According to the U.S. Census Bureau’s Current Population Survey, in September 2003 there were 43.6 million uninsured people in the U.S. in 2002, an increase of 14.6% over 2001. However, the survey reported many people who are uninsured for a portion of a year but not for the entire year. These people are not reflected in the Census Bureau number. Astoundingly, for those under the age of 65 without health insurance for all or part of 2002 and 2003, their analysis states there were approximately 81.8 million such people, or one out of three people in this age category, and that two-thirds of these people were uninsured for six months or more.
Sprint Corp. will lay off 1,100 employees in the portion of the company that sells to business customers. Sprint stated that the layoffs are due to continued market pressures and erosion of the long-distance business. Since October 2001, Sprint has laid off more than 23,600 people. The company indicated it has been hurt by price cutting from chief rival AT&T.
Jack Guynn, President of the Atlanta Fed: The Fed “is several hundred basis points behind what would be a more normal policy setting.”
Albert Broaddus Jr., President of the Richmond Fed: “We’re clear that we need for rates to move up.” A neutral Fed target rate “is something in the vicinity of 2.5 to 3.5 percent, but many things can affect what neutral is—it is difficult to answer with precision.”
Pimco’s Bill Gross: “Too much debt, geopolitical risk and several bubbles have created an unstable environment which can turn any minute.”
The 9-11 Commission found no evidence exists that al-Qaida had strong ties to Saddam Hussein.
The U.S. Department of Transportation reported that, for the first time, last month Southwest Airlines carried 6.5 million domestic passengers, and that exceeded all major airlines.
In the year ended March 2004, U.S. direct investment into Japan fell 41%.
The Financial Times has a comment and analysis on the prisoner abuse scandal in Iraq. The headline reads chain of Command: can torture in Iraq be linked to the White House?
According to the U.S. Census Bureau’s Current Population Survey, in September 2003 there were 43.6 million uninsured people in the U.S. in 2002, an increase of 14.6% over 2001. However, the survey reported many people who are uninsured for a portion of a year but not for the entire year. These people are not reflected in the Census Bureau number. Astoundingly, for those under the age of 65 without health insurance for all or part of 2002 and 2003, their analysis states there were approximately 81.8 million such people, or one out of three people in this age category, and that two-thirds of these people were uninsured for six months or more.
Sprint Corp. will lay off 1,100 employees in the portion of the company that sells to business customers. Sprint stated that the layoffs are due to continued market pressures and erosion of the long-distance business. Since October 2001, Sprint has laid off more than 23,600 people. The company indicated it has been hurt by price cutting from chief rival AT&T.
Jack Guynn, President of the Atlanta Fed: The Fed “is several hundred basis points behind what would be a more normal policy setting.”
Albert Broaddus Jr., President of the Richmond Fed: “We’re clear that we need for rates to move up.” A neutral Fed target rate “is something in the vicinity of 2.5 to 3.5 percent, but many things can affect what neutral is—it is difficult to answer with precision.”
Pimco’s Bill Gross: “Too much debt, geopolitical risk and several bubbles have created an unstable environment which can turn any minute.”
The 9-11 Commission found no evidence exists that al-Qaida had strong ties to Saddam Hussein.
The U.S. Department of Transportation reported that, for the first time, last month Southwest Airlines carried 6.5 million domestic passengers, and that exceeded all major airlines.
In the year ended March 2004, U.S. direct investment into Japan fell 41%.
The Financial Times has a comment and analysis on the prisoner abuse scandal in Iraq. The headline reads chain of Command: can torture in Iraq be linked to the White House?
Wednesday, June 16, 2004
6/16/06 Silicon Valley Employment Outlook Uncertain
According to the quarterly Manpower Employment Outlook Survey released yesterday, the Santa Clara County employment outlook is one of the weakest in the nation. From this July to September, 15% of the companies interviewed plan to hire more employees while 135 intend to reduce their workforce. Another 50% expect to maintain their current staff levels and 22% are not certain of their hiring plans. In this year's second quarter, 35% of the companies interviewed predicted an increase in hiring activity while 13% planned to decrease the hiring pace. Even one year ago, 18% of companies surveyed thought employment increases were likely while 13% intended to reduce staff. According to the most recent survey, job prospects appear best in construction; non-durable goods manufacturing; finance/insurance/real estate; and public administration. Reduced staff levels are anticipated in education and services, both areas showing recent hiring strength.
According to BP's chief economist, world oil reserves rose by almost 10% last year. Peter Davies stated "there is no global oil resource or reserve shortage." J P Morgan estiates that the price of oil is headed downward to $34 a barrel. Where were oil the bears when oil changed hands at $41+ a barrel?
According to the quarterly Manpower Employment Outlook Survey released yesterday, the Santa Clara County employment outlook is one of the weakest in the nation. From this July to September, 15% of the companies interviewed plan to hire more employees while 135 intend to reduce their workforce. Another 50% expect to maintain their current staff levels and 22% are not certain of their hiring plans. In this year's second quarter, 35% of the companies interviewed predicted an increase in hiring activity while 13% planned to decrease the hiring pace. Even one year ago, 18% of companies surveyed thought employment increases were likely while 13% intended to reduce staff. According to the most recent survey, job prospects appear best in construction; non-durable goods manufacturing; finance/insurance/real estate; and public administration. Reduced staff levels are anticipated in education and services, both areas showing recent hiring strength.
According to BP's chief economist, world oil reserves rose by almost 10% last year. Peter Davies stated "there is no global oil resource or reserve shortage." J P Morgan estiates that the price of oil is headed downward to $34 a barrel. Where were oil the bears when oil changed hands at $41+ a barrel?
Tuesday, June 15, 2004
6/15/04 Where It Counts
Real average weekly earnings adjusted for inflation fell 0.4% in May. Earnings were down 0.5% from year earlier levels. Cracks are beginning to show. Business sales fell by 0.1% in May, the first monthly decline since August. Total retail sales declined by 0.6%. At the same time, inventories climbed for the 8th straight month.
Over the past year inflation has jumped 3.1%. Much of that increase can be attributed to higher energy prices; however, in the latest CPI report, food prices rose 0.9%, the biggest jump in 14 years. More disturbing was the increase in dairy prices which had their largest rise in almost 60 years. I have been writing for some time about the rising prices for eggs and milk, for example.
The Fed states they are inflation fighters. Don't believe it. Their actions talk a different game. From May 1996 thru May 2004, M3 grew by 93% or at an annual rate of 8.5% and M2 grew 7.7% during this same time period. It's no wonder that our dollar continues to erode in value, and with it, our purchasing power.
In April our trade deficit with China expanded to $12 billion and with Canada to $5.7 billion.
The new census shows almost 300 million Americans with Hispanics amounting to about 40 million and Asians to about 12 million. Multi-racial persons account for another 4.3 million. It will be interesting to see the voting patterns of these groups come the November election.
Real average weekly earnings adjusted for inflation fell 0.4% in May. Earnings were down 0.5% from year earlier levels. Cracks are beginning to show. Business sales fell by 0.1% in May, the first monthly decline since August. Total retail sales declined by 0.6%. At the same time, inventories climbed for the 8th straight month.
Over the past year inflation has jumped 3.1%. Much of that increase can be attributed to higher energy prices; however, in the latest CPI report, food prices rose 0.9%, the biggest jump in 14 years. More disturbing was the increase in dairy prices which had their largest rise in almost 60 years. I have been writing for some time about the rising prices for eggs and milk, for example.
The Fed states they are inflation fighters. Don't believe it. Their actions talk a different game. From May 1996 thru May 2004, M3 grew by 93% or at an annual rate of 8.5% and M2 grew 7.7% during this same time period. It's no wonder that our dollar continues to erode in value, and with it, our purchasing power.
In April our trade deficit with China expanded to $12 billion and with Canada to $5.7 billion.
The new census shows almost 300 million Americans with Hispanics amounting to about 40 million and Asians to about 12 million. Multi-racial persons account for another 4.3 million. It will be interesting to see the voting patterns of these groups come the November election.
Monday, June 14, 2004
6/14/04 Competition For Stocks?
As 10 year government bonds trade at a yield of 4.83%, one must begin to question whether that return begins to create formidable competition for stocks. With a pick up in yield of about 300 basis points, bonds might begin to make investors pause prior to the purchase of equities.
Wal-Mart is our nation's largest employer in the private sector. As the company approaches the roll out of another 500 stores, they anticipate adding 83,000 new employees. Their earnings should approach $2.38 per share this year.
After Ronald Reagan was shot and survived, he viewed the future as his responsibility from God to make our country a better place for all Americans. On the other hand, in my view, the present president views his actions as a reflection of a mandate from God.
Of the main crops, wheat is the cheapest to plant. At the present price range of $3.50 to $4 per bushel, farmers can make money. A bushel of grain should weigh 60 pounds; however, without a late rain prior to harvest, those bushels are weighing about 55 pounds.
The Rocket tries to make it 10-0 today.
The U.S. trade deficit widened in April to a record $48.3 billion, up from March's deficit of $46.6 billion. Importantly, our exports fell 1.5% in April. At the same time, prices of imported goods rose 1.6% in May.
Psychiatrist Dr. Justin Frank: "Bush fits the profile of a former drinker whose alcholism has been arrested but not treated."
As 10 year government bonds trade at a yield of 4.83%, one must begin to question whether that return begins to create formidable competition for stocks. With a pick up in yield of about 300 basis points, bonds might begin to make investors pause prior to the purchase of equities.
Wal-Mart is our nation's largest employer in the private sector. As the company approaches the roll out of another 500 stores, they anticipate adding 83,000 new employees. Their earnings should approach $2.38 per share this year.
After Ronald Reagan was shot and survived, he viewed the future as his responsibility from God to make our country a better place for all Americans. On the other hand, in my view, the present president views his actions as a reflection of a mandate from God.
Of the main crops, wheat is the cheapest to plant. At the present price range of $3.50 to $4 per bushel, farmers can make money. A bushel of grain should weigh 60 pounds; however, without a late rain prior to harvest, those bushels are weighing about 55 pounds.
The Rocket tries to make it 10-0 today.
The U.S. trade deficit widened in April to a record $48.3 billion, up from March's deficit of $46.6 billion. Importantly, our exports fell 1.5% in April. At the same time, prices of imported goods rose 1.6% in May.
Psychiatrist Dr. Justin Frank: "Bush fits the profile of a former drinker whose alcholism has been arrested but not treated."
Sunday, June 13, 2004
6/13/04 Driving The Economic Wagon
Samuel Gerdano, executive driector of the American Bankruptcy Institute: "We need consumers to spend money to drive the economic wagon. But when they do, that adds to the bankruptcy rate." According to the Fed, nationwide, one in 73 households filed for bankruptcy in 2003. For the past 25 years, that number has been rising steadily. On the other other hand, Greenspan says we have nothing to worry about, and that debt service is under control. In looking at the latest Fed numbers, debt as a percentage of renters' income is a rousing 32%, a sharp increase from 23% only 10 years ago. Maybe Greenspan should wander down Main Street and take a closer look at the debt service picture.
Daimler Chrysler aims to cut 10,000 jobs at its Mercedes Benz unit. Sales at that unit fell 9.2% thru May.
China's Premier Wen Jiabao: "we haven't fundamentally solved the salient problems-- the supply of coal, electricity, oil, and transport are still very tight. The size of total investment is still very big, the government still faces a tough job to slow economic growth." With the first quarter's 43% rise in outlays for factories, roads, and other capital projects, China ia well into the over-heating danger zone. The world will feel the enormous impact of China operating past the boiling point. Something will give. Try and take cover.
Samuel Gerdano, executive driector of the American Bankruptcy Institute: "We need consumers to spend money to drive the economic wagon. But when they do, that adds to the bankruptcy rate." According to the Fed, nationwide, one in 73 households filed for bankruptcy in 2003. For the past 25 years, that number has been rising steadily. On the other other hand, Greenspan says we have nothing to worry about, and that debt service is under control. In looking at the latest Fed numbers, debt as a percentage of renters' income is a rousing 32%, a sharp increase from 23% only 10 years ago. Maybe Greenspan should wander down Main Street and take a closer look at the debt service picture.
Daimler Chrysler aims to cut 10,000 jobs at its Mercedes Benz unit. Sales at that unit fell 9.2% thru May.
China's Premier Wen Jiabao: "we haven't fundamentally solved the salient problems-- the supply of coal, electricity, oil, and transport are still very tight. The size of total investment is still very big, the government still faces a tough job to slow economic growth." With the first quarter's 43% rise in outlays for factories, roads, and other capital projects, China ia well into the over-heating danger zone. The world will feel the enormous impact of China operating past the boiling point. Something will give. Try and take cover.
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