Crude Under 37 Dollars a Barrel... Expected?

Alright people, regardless of what anyone else has told you, after the economy began to worsen precipitously in September, there was no doubt that crude would fall as our economy did. As Global Markets have been hit extremely hard by a virtual worldwide recession, the demand for crude has dropped, while supply has not dropped to anywhere near the same extent. 

Another thing that some of you may be thinking about, is when prices will go up again, since they surely will. After the world is able to get past these rough times, then developing countries, along with America, due to their own seemingly insatiable thirst for petrol, will begin consuming the same massive amounts of crude as before, probably more.

 As I said last month, the steps Obama plans to take in order to lessen our dependence on foreign oil will thwart any future time where an oil supply shock will occur, increasing inflation, and moving us away from our potential GDP. 

Chrysler Closes Plants... A Company That Has a Brain

Yes! Chrysler's management can think! They finally feel compelled to do something productive about production, haha. This is exactly what Ford and GM should do. Closing its plants for a month is exactly what it'll take to get inventories under control, and impede any further product gluts from occurring. Although I'm unsure as to whether the autoworkers will continue to be paid, yet knowing their contracts they must be, at the very least a storied and old company such as Chrysler will be able to stay afloat for the time being. For once, I can actually compliment a move made by the Big Three for the first time in a long time.  

Apple Sales and the Target Rate

Seeing news of falling sales for Apple inc. appeared to have been a major alarm for Apple investors, sending the stock price down today after-hours, yet what else would people expect? The economy is currently and utter mess, and many are much less likely to go out and drop 1200, 1400, 1600+ dollars on a new computer. Falling sales during this time period do not prove anything about Apple, other than that its sales are also subject to the ebbs and flows of the business cycle. Furthermore, many are alarmed that Steve Jobs will not be giving a keynote address at the next MacWorld conference, something which leads many to believe that Jobs is sick and unable to give such a presentation. I believe most people are overreacting and need to realize that all of this speculation about Jobs' health isn't confirmed at all, and that even without him Apple still has many other bright individuals who can lead the company in the right path.

On another note, the Fed cut it's target rate to the lowest it has ever been, with many saying that the Fed has run out of ammunition. This is probably true, yet eventually with such lax monetary policy the economy will get going again, especially if our friends at Obama and company can ensure the passage of a stimulus package at the beginning of his term. 

Auto Bailout Passed in the House.. Will it Survive the Senate??

Yes, the the bailout plan for our Detroit automakers has made it through the House, yet the bill is a bit stripped down from what some legislators originally wanted. Apparently, a measure was removed from the bill which would bar the automakers from challenging state laws regulating greenhouse gas emissions, the removal of such seems absurd to me, and appears to be one provision worth keeping, since it's worthless to bailout these companies just to finance lawsuits against states. 

Furthermore, there is some conflict in the Senate, specifically with the GOP, whether this new position of "car czar", basically the person overseeing this plan, has enough power to force concessions. This seems like a legitimate worry, and such power should be ensured so that he or she is able to enforce what's necessary in order for this plan to work, especially since all of these companies already ran their companies into the ground, we don't want them doing it again on taxpayer dollars. 

Check out this youtube video, just in time for christmas and perfect for the economic times.

I found this a couple of months ago, and it's extremely hilarious, even though I believe the bailout is at least partially working. 

It goes well with my today's post, and I hope you all enjoy it!

The TARP Oversight Panel

According to a WSJ article, an oversight panel is prepared to report on the Troubled Asset Relief Program(TARP) which is infamously utilizing the $700 bln dollar package that came out of this economic mess. The article contained much criticism toward the Program, with House Financial Services Committee Chairman Barney Frank (Mass., D) saying that more money should be used to prevent foreclosures.

In short, the panel's reports seems to be a denouncement of the plan on the grounds that the Treasury hasn't specified the program as a "fair-deal" or a "giveaway." This sounds a tad absurd to me, that this panel seems more concerned with whether these companies really "deserve" this money as opposed to the effectiveness of the program.  This is utterly ludicrous, and nearly farcical considering the members of this panel, including the Associate General Counsel of The American Federation of Labor and Congress of Industrial Organizations (AFL-CIO), a law professor from Harvard, the superintendent of NY Banks, along with various House bureaucrats.

Now, upon hearing this list of names, it makes me think about these choices. Of these people, who really knows about Economics enough to make an intelligent decision as to the performance of this plan. Furthermore, the AFL-CIO counsel will only advocate more in favor or labor unions, especially now that the Big Three are getting caught up in the bailout mess. It seems blatantly obvious that people educated specifically in the field of economics needed to be utilized in order to get an accurate view of whether this plan is working. 

Once again, I am absolutely impressed with the outstanding ability of our government to allow important matters to be overseen by the wrong people. 

533,000 Jobs Lost In November... Yet Some Believe We Are Understating Our Unemployment... Are We?

 First, I would like to apologize to for my lack of consistent posting this week. It's been a bit hectic and haven't had  much of a chance to get some posts in... I promise this is a rarity

Alright, let's get down to business. As expected the employment (or the lack thereof) statistics were dismal. This is what we expected, and no one should be alarmed. So this "news" really isn't news, at least in my mind. Yet it does confirm our worst fears that employment is in a slide, and I don't see a recovery in the near future, thus this "news" may be a portent of things to come, along with the other numbers that have been coming up alerting us of the current economic turmoil.

One thing that I will not take from the media and it's unintelligent thoughts on the economy. Save for Bloomberg, WSJ, and other legitimate sources of economic news, the rest are undoubtedly odious, and make the most asinine comments I have ever seen. My favorite can be found here http://economix.blogs.nytimes.com/2008/12/05/workers-give-up/. David Leonhardt, the author, sufficiently insults the Bureau of Labor Statistics' (BLS) method of finding the unemployment of our nation, by claiming that discouraged workers, workers that are unemployed that aren't looking for work, deserve to be included in our unemployment, since currently they are not. Well Mr. Leonhardt, these people aren't even looking for jobs, and are being, in short, lazy bums that aren't helping themselves. People who are counted as  unemployed, those looking for work yet unable to find some, deserve to be counted seeing as they really can't find work, therefore showing a true loss of an ability to get a job, while discouraged workers only prove to the laziness that effects the relatively small group of people who aren't trying to find themselves a job. 

So David Leonhardt, don't blame the unemployment statistics for understating our labor market's situation. If you want to go out and figure out David Leonhardt's own statistic, go ahead. I won't listen, and most knowledgeable people won't. 

The prosecution rests. Have a good weekend everyone!

Ford, Bailout, Pay, and Volvo

With a half-expected Auto Bailout plan in the works, many are speculating as to the exact terms, the executive pay, or the lack thereof involved and other conditions that will have to be mad in order to secure US aid. Ford is saying that it will put greater emphasis on smaller cars, and more efficient cars, along with drastic cuts in executive pay. Upon reading this, I almost burst out of my seat, with the burning question in mind as to why they haven't tried this before? Nearly everyone and their mother could tell Ford they need cars for the 21st Century that are more in line with the Toyota principles of efficiency and compactness. 

Moreover, Ford has considered selling its Volvo unit to help sure up its finances, although currently it has fair liquidity especially considering the current situation. If Ford sells off Volvo, i believe they deserve the first hack at a Federal Bailout, considering that GM is crying about bankruptcy, and won't even accept severely cut executive pay in order to receive aid. 

In conclusion, I think Congress has to be frank with these horrendously run companies, and lay down the law in terms of what they must do in order to receive aid. The failure of these companies occurred due to despicable management, and nothing short of new management or reduced pay until greater performance of the company will help the company. These companies must be required to make better cars, and cut expenses, specifically lavish executive compensation.