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Daily Digest - Nov 27 Happy Thanksgiving

Thursday, November 27, 2008, 9:09 AM

Food insecurity in the land of plenty, reigniting that crazy shopping flame, how much will one share buy, and the ECRI falls to lowest level ever.

Economy

 

TH*NK*NG (THANKSGIVING) 

In 2006, over 12.6 million households were "food insecure" - 10.9% of all US households. Just last week, the USDA released the summation figures for calendar 2007. In 2007, the figure is 11.1%. Given what has transpired to US/ us in 2008, one might only imagine how the numbers will skyrocket this current year. The term "food insecure" was a new one for me. It means "experiencing difficulty in providing the necessary level of sustenance for a household." This is but a lame attempt to spin that well over 35 MILLION people, including over 12 MILLION children, are going to bed hungry. They are worried about where the next day's meals will come from. Such is unconscionable in this land of abundance. Yet... it is the reality even during this week of the normal Thanksgiving feasting! 

Does Anybody Else Think Getting America Shopping Again is Crazy Talk? 

I was listening to Robert Reich, once the left end of the spectrum in the Clinton cabinet, talking with CNN's Wolf Blitzer a few days ago, and Reich, who has in the past sometimes made sense, was talking about how Americans' incomes had fallen over the last eight years of the Bush/Cheney administration and that it was necessary to get their incomes back on an upward trend, so that they could "start shopping again." 

Now I understand Reich was trying to make the case that the bailout so far has been focused on the banks and the insurance industry, and that none of this will help unless ordinary people start getting some relief, but still, there's something completely twisted and out of whack when the best we can come up with is that we need to get Americans back into the malls. 

Holiday Shopping with Deflated Stocks

Still feeling shocked by how much your portfolio has fallen in value in the past couple of months? With the holidays upon us, here is a look at the purchasing power those shares still have. After all, a share of Berkshire Hathaway can still buy you a Porsche 911.

This weekend, I was looking through the circulars in my Sunday paper and found some good uses for those "worthless" shares. First, let's consider Thanksgiving dinner. You can buy a nice 10 lb. Butterball Turkey for just one share of Microsoft. One share of AIG can add some nice frozen vegetables and a share of General Motors is worth 5 lbs of yams. Note: All share prices are as of Friday's close.

 

The Cost of Thanksgiving Dinner

ECRI Leading Indicators Fall to Lowest Level Ever 

One of the questions I seem to be getting all the time is "When is this recession going to end?" 

To answer that, I turned to Lakshman Achuthan of the Economic Cycle Research Institute (ECRI). Their leading vs coincident chart provides insight into that question.

The cyclical turns in the leading occur before the coincident - they seem to diverge now and then, and that can be telling.

The current story they tell is clearly one of a quickly worsening recession with no end in sight: 

 

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6 Comments

SkylightMT's picture
SkylightMT
Status: Silver Member (Offline)
Joined: Sep 30 2008
Posts: 125
Re: Daily Digest - Nov 27 Happy Thanksgiving
Davos wrote:

ECRI Leading Indicators Fall to Lowest Level Ever 

One of the questions I seem to be getting all the time is "When is this recession going to end?" 

To answer that, I turned to Lakshman Achuthan of the Economic Cycle Research Institute (ECRI). Their leading vs coincident chart provides insight into that question.

The cyclical turns in the leading occur before the coincident - they seem to diverge now and then, and that can be telling.

The current story they tell is clearly one of a quickly worsening recession with no end in sight: 

 

While I agree that the economy is in big, big, life-changing trouble, I looked at the ECRI indicators chart and don't see how the conclusion could be: "The current story they tell is clearly one of a quickly worsening recession with no end in sight."

When I look at the chart, what I see is: "Indicators drop sharply on a regular basis and rise even more sharply." There is nothing in the chart that forecasts worsening conditions. In fact, it looks more reassuring than worrisome. Things go down and they come back up. That's the history of the chart. Those particular indicators have no predictive value.

I believe we are in a unique economic situation where no charts - maybe not even the stock market chart from the late 20's early 30's - has much to tell us about THIS crisis. We're in uncharted territory. Its not going to be useful to use historical charts because we've never been where we are now.

Davos's picture
Davos
Status: Diamond Member (Offline)
Joined: Sep 17 2008
Posts: 3620
Re: Daily Digest - Nov 27 Happy Thanksgiving

Hello SkyliteMT:

Hey, I just want to clarify, Davos did not write that, Davos did post it though Wink

And the reason I posted it is that I thought it would be helpful as a frame of reference. These days we here folks like Soros and other expert investors saying the worst economic time of this century. Well, to me that indicates it will be worse than the Great Depression of the 1930s.

Yet, where are we, right here, right now? That blog kind of jumped out at me and screamed to be posted.

I couldn't agree with you more about how now we are in uncharted territory. Worse, our books are so Enron'd how do you compare unemployment now to the 30% then? I suppose we could use ShadowStats.com. The whole thing is nuts! 

Happy Thanksgiving and take care! 

 

SkylightMT's picture
SkylightMT
Status: Silver Member (Offline)
Joined: Sep 30 2008
Posts: 125
Re: Daily Digest - Nov 27 Happy Thanksgiving

Happy Thanksgiving, Davos :)

I definitely appreciated the link, as I appreciate all your links and posts. I also think those particular indicators are some of the most relevant in this sea of fuzzy numbers.

I saw an article recently indicating food stamp usage was at highest recorded levels. My DH recently got laid off, and I am at home with a small child unable to work much more than parttime, so I tried at the beginning of November to apply for food stamps. We were informed that the criteria for food stamp qualifications had been raised at the end of October for the state of WA. If we had applied earlier we would have qualified, but not now, because we had assets valued at $2000.00 or above (DH's 1980 Datsun, which needs a jump to start every morning and is missing a quarter panel, they valued at $2000.00). This change in qualifications was not reported in any newspapers and no one seemed aware of it. I'm only mentioning this because, as states change the qualifications for food stamps, the reported numbers cease to be comparable to previous values, just one more statistic that isn't providing relevant info anymore. So next quarter if the feds happily report food stamp usage going down as evidence that the economy is recovering, most people won't realize those data might not be at all accurate.

Davos's picture
Davos
Status: Diamond Member (Offline)
Joined: Sep 17 2008
Posts: 3620
Re: Daily Digest - Nov 27 Happy Thanksgiving

Hello SkyliteMT:

Reading this weighs heavily on me. It also makes me irate after reading the conference call that I posted a day or so ago.

That conference call post made me aware of something that I had overlooked, this "bailout" was structured to encourage healthy financial institutons to participate and that was the impedance for giving the executives bonuses to ALL executives.

Paulson is turning our country into an insane asylum by giving healthy banks money when they don't need it and giving executives of companies rewards/bonuses for screwing up their companies.

Some moron who ran his company into the ground gets a bonus with our tax dollars because an executive at a bank who didn't need a bailout got a bailout and wouldn't have taken our tax dollars to make his bank stronger if he couldn't get a bonus? If that isn't the definition of insane then someone explain please to me just what is.

And someone with a car that needs a quarter panel and a jumpstart and a place to work can't get a safety net?

Come on! Show me an ounce of common sense here.

You need to write Paulson and tell him you want your tax dollars reappropriated. Your DH needs the bonus money, not some jerk who ran his firm into the ground by investing in CDS's. It is one thing to toss capitolism and free markets out with the bath water and adopt socilistic or fascist structures but rewarding stupidity and incompetance with our tax dollars because your too stupid to differntiate a helthy company executive from an unlheathy company executive is INSANE.

Just the money AIG spent on its spa visit http://www.thesmokinggun.com/archive/years/2008/1007083aig1.html could have been a good safety net for you DH and many like him for a few years. AIG didn't need to go to a spa on our dollar, or theirs.

Hang in there, and for God's sake write that moron and ask him where the hell his brain is.

 

VeganDB12's picture
VeganDB12
Status: Platinum Member (Offline)
Joined: Jul 18 2008
Posts: 731
Re: Daily Digest - Nov 27 Happy Thanksgiving

I can validate the concerns re: food stamps, I work with several people who receive them and not only are they harder to get but I am being told that the amounts are being scaled back to as little as 45 dollars a month for a single person with SSD payments of 700. Per month. To cover rent, heat, clothing etc... In the suburbs of NYC.
Nouriel Roubini has been calling for enhancements of food stamp programs and it makes sense, but at the very least these entitlements cannot be cut back-I am genuinely surprised by this, as food stamps are probably one of the most cost effective entitlements known to man. Worthy of a call to my local representatives I think.

Davos's picture
Davos
Status: Diamond Member (Offline)
Joined: Sep 17 2008
Posts: 3620
Re: Daily Digest - Nov 27 Happy Thanksgiving

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