the gm employee price incentives went into effect in june, that would not have shown up in their q2 financials. gm makes a smaller profit but will sell more cars utilizing this incentive program. the end of 3q may reflect this but i would wait until the 4th quarter numbers to see the difference.
Okay so what you're saying is that GM is losing money on every car sale, but they intend to make up the difference on volume?
auto exports declined 40% prior to the depression. due to the decline of those exports, some auto workers lost their job. i do not find your parallel accurate.
I'm sorry you don't see any parallels. GM is laying off 25,000 workers over the next few years and is going to lose a billion dollars in profits for 2005. Ford is also in trouble. The auto industry is historically a LEADING indicator of recession. In January 2001 just before the recession hit, automakers anounced huge layoffs and dropped about 85,000 jobs. I really don't consider this news since I'm predicting a full scale depression, but to imply that GM's troubles are meaningless is about the same as sticking your head in the sand.
And yet the government and CNBC both say that everything is fine. It's too bad that Greenspan's "uncertainties" are so "significant".
"...reality has a well-known liberal bias." -- Stephen Colbert
<< <i>Okay so what you're saying is that GM is losing money on every car sale, but they intend to make up the difference on volume? >>
gm makes a smaller profit per car but makes up for it in volume of sales. (we will see come year end)
<< <i>I'm sorry you don't see any parallels. GM is laying off 25,000 workers over the next few years and is going to lose a billion dollars in profits for 2005. Ford is also in trouble. The auto industry is historically a LEADING indicator of recession. In January 2001 just before the recession hit, automakers anounced huge layoffs and dropped about 85,000 jobs. I really don't consider this news since I'm predicting a full scale depression, but to imply that GM's troubles are meaningless is about the same as sticking your head in the sand. >>
do not be sorry. i wish you the best with your recession.
<< <i>And yet the government and CNBC both say that everything is fine. It's too bad that Greenspan's "uncertainties" are so "significant". >>
i don't give much credence to cnbc. as the us government is concerned, i'm sure they know more than they report, i'm sure what they report is not 100% accurate but i have always been under the assumption that things happen for a reason, for example - economy cycles. - no reason to stick your head in the sand, just take it in stride. not sure what worries you, after all, you guys know what's going on and you are investing accordingly- right?? .
Actually, GM is producing marginally acceptable vehicles compared to Toyota, Honda, even Hundai. Consumer product ratings for GM hoovers around 6 as opposed to Toyota's 9/9+. In short, Chevy and Ford are turning out stuff people don't want. Low resale values, cheap interior parts, shoddy construction are the reasons for this and in a competitive, consumer based economy these are not good attributes for your product (http://www.edmunds.com). I've been car shopping lately and scouring the sites and having had nothing but American vehicles since my '49 chevy deluxe in 1969 till now but I'm buying a Toyota. It is not a great conspiracy or anything, they are just putting out a bad product and reaping their just rewards.
By Jessica Hall and Charlie Zhu Reuters Wednesday, July 20, 2005; 10:15 AM
PHILADELPHIA/SINGAPORE (Reuters) - U.S. oil producer Unocal Corp. <UCL.N> endorsed a sweetened $17 billion takeover offer from Chevron Corp., preferring it to a higher bid from China's state-run CNOOC Ltd. <0883.HK>.
Chevron <CVX.N>, the second-largest U.S. oil company, raised its stock and cash bid to $63.01 per share from roughly $60, turning up the heat in an international battle for energy assets as strong demand and tight supply hold crude oil prices near record levels.
The improved offer for Unocal, which has assets stretching from Myanmar to the Gulf of Mexico, sets the stage for CNOOC to raise its $67 a share cash bid further.
"We're likely to see CNOOC increase its bid, which it has been signaling for a while," said Duane Grubert, an analyst with Fulcrum Global Partners.
A CNOOC spokesman said the company remained "comfortable" with its $18.5 billion bid and believed its offer had a "distinct advantage." A person familiar with the matter said CNOOC had anticipated a higher Chevron bid and was reviewing options on how to react.
But Chevron still remains the favorite to win Unocal, whose board has favored Chevron's bid partly due to concern U.S. regulators might reject the CNOOC deal based on national security grounds or the deal may be stuck in long review process. It recommended shareholders accept the sweetened offer at a shareholders' meeting already scheduled for Aug. 10.
"We're still making the bet that Chevron will prevail," Grubert said. "The politics against the Chinese bid are so severe."
CNOOC will try to convince shareholders that its deal would be approved by the U.S. government, the source familiar with the matter said.
"Price is only one issue on shareholders' minds. The other issue is to make people understand the 'certainty issue'," said the source, who spoke on condition of anonymity. "CNOOC is absolutely committed to the transaction and determined to win."
CNOOC has made some concessions in an attempt to woo Unocal. It agreed to set aside $2.5 billion in a U.S. escrow account that could be tapped by Unocal shareholders if CNOOC walked away from a deal. CNOOC also put $500 million in escrow to pay a break-up fee attached to the Chevron-Unocal deal.
STILL SUPERIOR
Peter Schoenfeld, chief executive officer of New York-based investment firm PSAM LLC, which holds more than 1 million Unocal shares, said CNOOC's bid remained superior provided it could be approved by the U.S. government within 90 days.
But "realistically, the Unocal Board will likely still require an improvement above $67 by CNOOC to switch allegiance," he said. He believes Unocal could be worth $74 per share based on recent transactions.
Yang Liu, a fund manager at Atlantis Investment, which does not hold CNOOC shares, said CNOOC should not rush to raise its bid. "CNOOC should cool down a bit. They should wait for Unocal shareholders to vote on the Chevron deal," Liu said.
Chevron, which has a stock market value of about $120 billion, raised the cash component of its offer to 40 percent from 25 percent, offering a total $7.5 billion in cash plus 168 million new shares, equivalent to about 7.5 percent of its enlarged share capital according to Reuters data.
Unocal's timely sale of Canadian assets to Pogo Producing Co. for a higher-than-expected $1.8 billion has helped Chevron comfortably raise its bid without straining itself financially, Grubert said.
Unocal shareholders will get $27.60 in cash and 0.618 of a Chevron share for each Unocal share. Shareholders will have a choice of taking shares or cash. But if election for all cash or all shares exceeds the 60:40 split, they will get shares and cash on a pro-rata basis.
Chevron said the higher offer remained accretive to earnings per share in 2006.
Unocal shares rose 22 cents to $65.21 in morning New York Stock Exchange trading, a 3.4 percent premium over Chevron's offer price, but down 2.4 percent from a record high $66.78 a week ago.
Chevron's bid values Unocal at 11 times analysts' forecasts for Unocal's 2005 earnings, according to Reuters data. Chevron shares trade at a 2005 price/earnings ratio of 9.4 times.
CONCERNS
CNOOC's shares initially rose 2.2 percent to HK$4.75 in Hong Kong trading on Wednesday, but pared gains to close at HK$4.675 after the news, up just 0.5 percent.
CNOOC shareholders are concerned a rise in the Chinese bid could undermine the interests of CNOOC's minority shareholders. At least one fund has sold its stake as a result.
"We expect CNOOC is now pondering whether it will raise the bid or not. It's a matter of whether it will justify shareholders' value," said fund manager Stella Mak at East Asia Asset Management Co., which holds CNOOC shares.
CNOOC's overture had sparked concern among U.S. politicians that a sale of Unocal to a Beijing-controlled company would harm U.S. national energy security. Beijing owns 70 percent of CNOOC. Its deal is backed by low- and zero-interest state loans.
This is a non-event as far as I'm concerned. China and the USA are economically linked so completely, that a simple paper transfer of ownership doesn't mean anything. Of course getting in bed with the communists is absolutely disgusting considering all the blood spilled over Korea, Veitnam, and possibly Taiwan in the future, but since when did morals and ethics get in the way of profit?
"...reality has a well-known liberal bias." -- Stephen Colbert
This is a non-event as far as I'm concerned. China and the USA are economically linked so completely, that a simple paper transfer of ownership doesn't mean anything. Of course getting in bed with the communists is absolutely disgusting considering all the blood spilled over Korea, Veitnam, and possibly Taiwan in the future, but since when did morals and ethics get in the way of profit? >>
Don’t let the name Unocal fool you these big integrated oil companies aren’t just domestic. We’ve proved we can freeze assets that are in the U.S if need, but don’t be so sure Global assets like the Unocal's of the world posses can be froze. Now with the new global ecomony and the world court it's geting harder and harder to protect our interest.
China has over 1.3 Billion people, we are indeed tied now but I don’t believe they’ll need us in a decade if the Communist government allows their economy to open up for investment. China and India are starting to get a sizable middle class with money to burn from the jobs being created via the west in the big cities. The US is the large cap's stocks of he world, while China's and India's are the up and coming Small Cap's. The profit and risk is in their favor if the government can control their impulsive nature. JMO.
Homestake Mining (now Newmont gold) initially fell in the 1929 crash along with most other stocks. However it recovered nicely and increased more than 6X during the 1930's. Strong unhedged gold shares were a good place to park money in 1930.
Gold may be considered a barbarous relic by 99.99% of the world, but it's the Central Banks (and govt's) that count. And last I checked, most of the them are still very much concerned about maintaining an adequate store of gold bullion.
Don’t let the name Unocal fool you these big integrated oil companies aren’t just domestic. We’ve proved we can freeze assets that are in the U.S if need, but don’t be so sure Global assets like the Unocal's of the world posses can be froze.
Yeah but it isn't a big deal. American citizens are getting cash out of it and China is probably going to get boned by peak oil on this investment anyway. The only strategic value would be Unocal's foreign oil inventories which aren't really corporate assets but leased from benevolent governments that can change their mind on a dime as it is. I say let the commies have Unocal.
I remember similar distress when cash rich Japan was on a US spending spree in the 1980's. They bought Pebble Beach, real estate, art, and anything else that wasn't tied down. Most of those assets got sold back to Americans at a deep discount in the 1990's after Japan entered a 10 year depression and needed to raise capital. I think what China is going to realize (far too late) is you can never win against the house.
"...reality has a well-known liberal bias." -- Stephen Colbert
I had a 1997 GM Olds Van which had a defective rack and pin steering. One week after I received a recall notice, my steering went out right on the interstate highway. I somehow managed to get the car home after 4 additional hours then had the car towed. The most frightening experience in my life.
GM refused to pay for my damaged sircoil airbag which was damaged in trying to get my car home. Pennywise/pound foolish.
No problem. I never fixed my airbag.
I will not buy another GM product again.
I will only buy a Toyota product assembled in the US.
As always there is more than one thing to comment on in this thread!
I have witnesses who will acknowledge I advocated selling the Japanese what ever they wanted back in the late 80s. There was a big outcry around here when they bought Pebble Beach. Anyway even though I have a position in Chevron I have no problems selling Unocal to the Chinese as long as they pay up.
I haven't liked any auto stocks ever since I first started buying stocks in the early 80s. There is and has been global over capacity. Each country wants to champion domestic production of autos. GM and Ford have huge pension liabilities. GM has been shedding product lines. Does GM still require you to use a different key for the door and trunk? Last time I owned a GM they did and I hated that, I never bought another...
Gold should have gone down more in the recent weeks if its price is based totally on the strength of the US dollar (because the dollar has been strong). If there are more people hedging against paper money than is generally believed than that would explain why gold hasn't gone down more. I bought some recently for that purpose.
The market got a smacked on the news of China saying it will move to a basket of currencies as a peg for their own. The long awaited gesture by the Chinese will eventually help to add balance to global trade, but in a very small way. The 5- and 10-yrs were slammed pretty hard on the news, while the wings got hit as well, but not so much. The widening of the bands within the currency will be allowed to fluctuate may be a first step, but the Chinese financial system is in far too precarious position to allow any life-like movement in the currency. The inflationary issues for weigh as the move will lower the major commodity costs for the country in dollar terms and also make the finished products they send us more expensive. The country's torrid growth is an input in the move, after the unexpected print showing yesterday GDP for Q2 grew 9.5% against an expected 9.2%. The international pressure brought to bear by world monetary policy-makers and upcoming diplomatic visits by Chinese officials also likely had a hand in the timing of the decision. The end result, because the move is really the market expected "token gesture," will be very little benefit to jobs and exports, but will likely be celebrated by policy-makers as a huge victory (as we pointed out yesterday). The yen rallied hard and saw a run from 112.50 to 110.38, gaining 1.8% against the buck and the euro took a 1.0% run to trade back above 1.22. The euro/yen currency cross, which has been a backseat driver in the markets for months also made a big move. The day has only begun and still has initial jobless claims, the newly revalued leading indicators and the potentially market moving Philly Fed report. And of course, the second round of Greenspan where there may be a disproportionate amount of self-serving back patting on the China news that may overshadow other issues. The 10-yrs ware currently -15/32nds yielding 4.218%
Not a chance. The only reason China has growth at all is that they produce products for the United States. We could send them into an instant depression if we decided to tariff Chinese imports.
"...reality has a well-known liberal bias." -- Stephen Colbert
Does the revaluation of the Yuan now make the purchase of worldwide assets by the Chinese cheaper for them?
by T. Stein / S. McIntyre
The news that China cut its currency link to the U.S. Dollar came and went with little media reaction. Headlines and live feeds out of London dominated the news Thursday, even after it was discovered that, fortunately, the subway and bus blasts didn't cause a single injury. The rest of the day's mainstream news focused on Iraq, Arnold Schwarzenegger, the Supreme Court and Sudanese diplomacy. You would at least figure that CNN.com would mention the China news as its number one business headline but, alas, what do we see? "Google Profit Soars; Shares Plummet"
So what does this mean for the future?
Thursday's Yuan move was miniscule. There is no way the Chinese are even close to done - they said so themselves. Prepare for quite a few more days like this.
Protectionist Senator Chares Schumer (D-NY) is not satisfied. He called today's news a "good first step, albeit a baby step." Schumer has sponsored legislation that would impose devastating tariffs on Chinese imports unless it revalues the Yuan by a meaningful amount, probably around 40%. So if the Chinese don't get a move on it, Schumer and his supporters will likely make their move before the 2006 election.
Another hidden story Thursday was that Malaysia also announced it was dropping its own policy tying its currency, the Ringgit, to the U.S. Dollar and would adopt a currency basket arrangement similar to China's. If other Asian nations follow suit, we could see a vicious cycle of Dollar dumping develop. We know the Asians are itching to get out of the Dollar.
The adult citizens of China, all one billion of them, have recently been given the freedom to own gold. Now the government is actually encouraging them to purchase gold as a form of savings. As the Yuan strengthens against the Dollar and other currencies, gold becomes cheaper for the Chinese to buy.
China's decision to change the nature of its currency peg means that it will no longer be in the dollar buying business, or by extension, the U.S. Treasury buying business. That means that America will be losing its biggest benefactor. China will no longer act as the principal enabler of America's irresponsible extravagance, ending its subsidies to American consumers and borrowers.
CSCOIN Here is a perfect example of my statements earlier this week concerning buying stocks and how careful one must be about all the lies and BS given out by Wallstreet.
Connecting The Dots by Tony Sagami
July 21, 2005
IBM uses hocus pocus to make its numbers
Buy now and listen later.
At least that is what the bulls did this morning after hearing IBM pat itself on the back for delivering such great Q2 results.
The problem is that IBM's great results (more below) were the result of accounting smoke and mirrors and not an improvement in operating profits.
Risk be damned, the bulls jumped on anything with a big beta today and made computer hardware, computer software, and internet stocks the biggest winners of the day.
IBM uses hocus pocus to make its numbers. IBM reported $1.12 of Q2 profits last night, which is 9 cents better than the $1.03 Wall Street was expecting. Hallelujah!
Not so fast.
1. First of all, the $1.12 excludes 10 cents of costs related to stock options. If you include those 10 cents of true, real, hard compensation expenses, IBM would have missed forecasts by one penny.
There was a trio of one-time, non-operating costs that IBM used to manufacture 2 cents of extra profit.
==> $775 million (29 cents per share) gain from the proceeds of the settlement with Microsoft.
==> $1.1 billion (45 cents per share) gain from the proceeds from the sale of IBM's PC division to Lenovo Group in May.
==> A $1.7 billion charge (72 cents per share) to cover the cost of job cuts against earnings for the cost of 14,500 layoffs.
2. The combined result was 74 cents of one-time gains against 72 cents of one-time losses; 2 cents of non-operating income profit.
If you back out the 10 cents of stock options and 2 cents of non-recurring gains, IBM would have actually missed it number by 3 cents!
3. More than 50% of IBM's business is from its technology-services division. In Q2, services revenue increased by a mediocre 6% or an even less impressive 4% if you backed out currency fluctuations.
Warren Buffett may be a winner again. The American billionaire is among the biggest beneficiaries of China's decision to scrap the peg between its currency, the yuan, and the dollar.
His company, Berkshire Hathaway, is the second-largest overseas investor in PetroChina Co., the largest Chinese oil company. PetroChina shares (ticker: PTR) jumped $5.01, or 6.43 percent, to close at $82.90 Thursday on the New York Stock Exchange. Buffett also has been betting that the dollar will decline -- and the currency fell sharply against the yen and euro.
"...reality has a well-known liberal bias." -- Stephen Colbert
“In your own words, why is the above an example? why are the one time write-offs and one time gains a bad thing?”
CSC in my own words
CSC, personal the real problem I have with most established paper investments is that there is so much BS to go through you never know what you are buying. In fact it would take months just to do good homework on any ONE S&P 500 stock you could name i.e. what are the real liabilities? What are the stock options out to employees and officers? What are the pension and medical liabilities? What type of competitors are developing now in foreign lands? Are the financials hyped? Can you buy stock in the company close to the REAL book value?
“why are the one time write-offs and one time gains a bad thing?”
Because last week when a hundred thousand folks? Bought the stock thinking that IBM was growing like crazy they were being lied to. Not only by the way the company presented the numbers but also by Wall Street who wanted to make commissions selling stock.
As this analyst pointed out the REAL earnings for that quarter was not ordinary sales growth but asset sales, money from lawsuits etc. and in addition 99% of the Wall Street sales people are telling folks to invest for the long term. Long term or even next quarter these earnings are not going to be there. So why did the stock go up? Why was Wall Street pushing IBM as a buy? Simple, the insiders on the street that owned the stock needed it to move up so they could sell, and the salesmen on the street needed to make commissions. Simple manipulation of the numbers to move the stock price.
No one will go to jail over this because I am sure that if the average investor read the 500-page report all this information is disclosed, but that is my point. There is no way the average investor that does not have hundreds of hours each quarter to devote to reading reports, and seeking out the real truth, should even be in the stock market because he CANNOT trust the main stream analysts to tell him the truth.
"There is no way the average investor that does not have hundreds of hours each quarter to devote to reading reports, and seeking out the real truth, should even be in the stock market because he CANNOT trust the main stream analysts to tell him the truth."
That quote got me to reflecting so here is just a little personal commentary on stocks offered in the interest of contributing to the thread. I do know that there are brokers and anylists on this board and this is not a jab at anyone, just my personal reflections and thoughts on the modern stock market and the regular guy. Mostly though, I realize I don't know everything about stocks but I have played in them in the recent past.
I have been so temped to get back into stocks, particularly natural resource based stocks but then my previous experiences in the market come back to me. Three things...commissions/fees getting into a stock, taxes on any gains from a sale, commissions/fees getting out of a stock. There are so many people feeding on the small investor that you have to make 10%-15% on a stock just to break even and any net gain only comes after that expense calculated. So, any stock you can get 10% or 15% on plus maybe 10% profit (we're talking 25% gain over purchase price) is a good investment. Well who the hel can find a stock that is going to gain 25% in even a 1 year period? Just think if a 10,000 DOW lost just 5% in one day, $500...the newspapers of the world would thick with red ink headlines and if it did it for two days (just a 10% loss) geezzzz, it would be a calamity, but people give that 10% up every day just getting in and out of stocks and paying taxes on gains and no one seems that upset about it. I know some stocks make that 25% in just one year, like google and there are others but surely there can't be many of those out there.
On the other hand, there are stocks that pay dividends and those are a whole different class of stocks and investments. If I could afford 5,000 shares of a dividend paying stock then I would be all over it but the stocks that pay good dividends are pretty expensive from what I see and most regular guys don't have hundred thousand dollars to put into something like that. I do have a little bank stock and it is dividend stock and I have some old mining stock that surely I will be buried with rather than lose 75% on the initial investment.
Then, you got the hinkied numbers from the companies so their stock doesn't go down with the investors, like IBM and the blatant scandals (long list like worldcom, enron...etc), and the world economic uncertainty, then you just really have to ask yourself why would I invest in stocks? I mean, isnt that real money...and in particular MY MONEY that I am putting out there to blow in the wind? So take a mutual fund or basket of stocks...same thing, but here you don't pay commissions, you pay FUND MANAGERS and you still pay taxes on gains...hummmmmm.
For me, when I find myself with some spare change, I'm looking for a piece of metal or maybe a nice gold coin that I will get to enjoy and may even make a couple of buks on. At worst, the coins and bars will leave an interesting legacy for my grand daughter while providing a little insurance for bad times or maybe to fund a discovered opportunity. If I do this then I do not pay commissions, taxes, fees, anything except a little spot differential for a transaction if it is metal and if it is a coin then some dealer/auction house makes a little off of me but it is done, there is no tax (maybe some sales tax), there is no messy paper to deal with, just a nice clean honest In-Out with not much hassle.
On the other hand, I also like US bonds, they are very stable and if I don't need the money for a while, that is where I will put the buks but I don't have any bonds right now, they are just too bland. Too much spare change and I'm looking for raw land in a good spot with good access to the transportation network and plenty of access to goods and services and planning for a 5 Yr. payout of something like 40%-50%. Hopefully, I can get some land in the 4th quarter this year but to me suburban/rural acerage near an expanding population center seems like a very good place to be with little risk, few taxes, and a minimum of paper moving around.
So stocks...hummmmm, I don't get it. Certainly no offence intended for those in or associated with the stock market, just my thoughts, MHO. Good Luck!
This graph is from the Kitco site contained in an article about interest rates. What's incredible is how irresponsible banks have become since we left the gold standard in keeping cash reserves as a percentage of their loans. This is even more evidence that the lessons of the Great Depression aren't only being ignored, but that the abuses and excesses are being taken to heights never seen before. I wish those who say that I'm being alarmist would come to this thread and try to argue that everything is okay, when almost every classical measurement of an economic collapse is present.
Banks are of course insured, and should a new recession (guaranteed) or depression (very likely) cause them to fail, the debt will be heaped onto the federal government. Our currency is now a dumping ground for irresponsible government, irresponsible industry, and irresponsible consumption. Along with peak oil, the devaluation of the dollar will be the crisis that defines this century. I don't see gold and silver as investments, I see them as the only way to keep wealth while the dollar burns.
"...reality has a well-known liberal bias." -- Stephen Colbert
I still like stocks. I am an optimist. I believe Amercians will figure out how to continue to be competitive and productive.
With online discount brokers it doesn't cost much to get into or out of a stock these days. $10/trade many places. That is %10 if you buy $100 worth of stock but %1 if you buy $1,000. For me the broker fees aren't much of a consideration anymore. With the capital gains tax reduction selling costs less than years ago. Still I own bonds, real estate and gold. If I bought raw land I wouldn't count on a profit in 5 years, I would consider it a longer term investment than that.
The Chinese were finally successful in buying a company. They just bought the English auto company MG Rover.
I still like stocks. I am an optimist. I believe Amercians will figure out how to continue to be competitive and productive.
The myth of eternal American economic superiority is built on cheap energy. It's pretty damn arrogant to think that in the 6000 years or so of recorded human history, that our 100 year success story means that we'll overcome all obstacles. Disaster, disease, war, famine, and economic hardship are the normal conditions of human existance during the last 6000 years! DO NOT confuse a very brief period of stability and comfort with how it should be, or how it's GOING to be. By any estimation, our current age represents a very strange anomaly.
Cheap energy may be permanently over, and our debt has no parallels in human history. To expect that we will continue to be competitive and productive takes far more faith then the second coming of Christ.
Carl, I hate to tellya but Chinese purchasing of the MEANS OF PRODUCTION should shout "Danger, Will Robinson, DANGER!" '
First of all, these same arguments were applied to Japan in the 1980's and all the dire predictions fell flat. Second of all, the Chinese are buying a relic of the oil economy and that oil economy might be in permanent decline. As I said originally, this is a non-event. The absolute reliance of a slave labor state such as China for all our factory production is FAR FAR FAR more dangerous than letting them purchase an old oil company. If you're worried about the means of production, please realize that China already HAS our means of production and absolute control over them.
"...reality has a well-known liberal bias." -- Stephen Colbert
I'm all for selling things. If someone has something they want to sell, be it gold, a coin or a company, and a buyer comes along with an agreeable price I say SELL!
The US is still the most productive country around. I agree with all the points about debt, trade deficits, budget deficits and the other issues with our economy. However I have issues with the economies of other countries too. The US has the most military might. We have lots of resources, including energy (coal). Energy is less important to a service economy than to a manufacturing economy. We are geographically in a good position to trade with Asia and Europe as well as the Americas. The US adapts to changes faster than other countries.
I'm sorry, but I remain optimistic about the future. I think the future looks bright for the US. I do like some global companies based in other countries but am mostly invested in the US.
<< <i>This graph is from the Kitco site contained in an article about interest rates. What's incredible is how irresponsible banks have become since we left the gold standard in keeping cash reserves as a percentage of their loans. This is even more evidence that the lessons of the Great Depression aren't only being ignored, but that the abuses and excesses are being taken to heights never seen before. I wish those who say that I'm being alarmist would come to this thread and try to argue that everything is okay, when almost every classical measurement of an economic collapse is present.
] >>
Oh come on. Cash "reserves" aren't even paper any more, just blips in a computer. So long as the economy is stable it doesn't much matter how much reserves anyone has. If they don't order enough cash they can always order more and if everyone wants to withdraw there are bigger problems than not having enough money.
China is still an extremely poor nation. The average annual income is very low. I think it is less than $1,000. Anyway they still have a control economy and huge, subsidised state companies that should be bankrupt. They have a very long way to go before they could be in a position to take over as a leading economy.
I don't know about all the kids today. I do know my daughter is bright. We will offer her good schools and she will be able to write her own ticket if she chooses to do so. If she is the only one like that the US is in trouble. I'm hoping there are lots more like her. Some of her classmates are doing well also.
If I was a pessimist I wouldn't be as happy as I am now.
I guess at 48 I'm younger than you are topstuf. I do remember the 60s. I remember crawling under my desk at school for Nuclear War attack drills. I remember great discussions about who would win a nuclear war, us or the Soviet Union. It seems clear that the world has changed from having two super powers to one super power.
However it is true I liked what little money I had in my pocket then better than now. I gotta admit I like silver coins.
Energy is less important to a service economy than to a manufacturing economy.
I don't agree. Anyone with two hands and food on the table can manufacture something. Our service economy takes cars, trucks, airplanes, lights, advertising, computers, 100 story office buildings, TVs, plastics, drugs, and a million other things that take lots of energy. In fact I could make the argument that a service economy is a bunch of people all trying to find more creative ways to manipulate larger and larger amounts of energy.
In 100 years our economy will be entirely based on coal, nuclear, and whatever hydroelectric and solar we can scrape up. Between now and then is the collapse of the US economy followed by the devaluation of the dollar and a new economy forming from the ashes. Some people don't think the world will make the transition at all, but I prefer to remain optimistic.
"...reality has a well-known liberal bias." -- Stephen Colbert
<In fact I could make the argument that a service economy is a bunch of people all trying to find more creative ways to manipulate larger and larger amounts of energy.>
It would take a lot of arguing to convince me of that. To me every company is trying to find more creative ways to produce more and better goods and services using less people and less engergy per item of production.
America uses half as much oil per unit of GDP as we did 30 years ago. In value terms oil is a much smaller percentage of commodity imports than it was in the 1970s.
Still there is no question we are very dependent on oil. Our transportation systems are especially dependent on it.
Here is my latest conspiracy theory on China revaluation of Yuan.
First, I think this was done simply to keep the U.S. congress quiet so that Chinese products can continue as usual.
Second, it may be that the Chinese have learned from the west that manipulating your currency up or down is no big deal as long as you have the Worlds reserve currency to back your derivatives, and they have $700 billion and growing. In addition just who would be dumb enough to play too heavy in the Yuan paper market and how would they cover if they were wrong? So why not let it float, manipulate it in the market like all of the other powers, and get everyone off your back.
Third, the word is that there is too much growth in the coastal cites in China and the next move is to move manufacturing to the rural areas where there is more land, and even cheaper labor. This extra rural work produces millions more Chinese consumers, and at some point in time China might even DROP the value of the Yuan in order to induce world consumers to buy what is quickly becoming over supply in certain product areas.
Fourth, This move by the Chinese also allows them to cut back on their purchases of U.S. paper by claiming that they now need to hold a basket of currencies. This will keep them diversified, as well as increase interest rates here, which will give them better earnings on rolled over past debt. It is very possible to see the ten-year rate at 7% within 24 months, particularly if other Asian countries begin their own basket holding.
To tell you the truth I cannot really see what WE got out of this revaluation, perhaps some of you can help me here?
America uses half as much oil per unit of GDP as we did 30 years ago. In value terms oil is a much smaller percentage of commodity imports than it was in the 1970s.
I haven't seen this statisic, but I don't consider it relevant. GDP is a fraudulent number because it doesn't incorporate debt and therefore can never be used to estimate a SUSTAINABLE economy. If you borrow 20 million dollars on a credit card and then go on a spending spree, you've just grown the GDP by 20 million dollars, you've helped the economy, and you've created jobs. You WILL however need to pay this money back and therefore in succeeding years you will SHRINK the GDP by 20 million dollars PLUS INTEREST, you will hurt the economy and you will eliminate jobs.
That's why we're all talking about DEBT. Not just the national debt, but private debt, trade imbalance debt, consumer debt, mortgage debt, and all other kinds of debt. Our current GDP exists on a gigantic mountain of debt that cannot be sustained and therefore is not a rational measure of anything. The real sustainable GDP that is based on the actual means and abilities of our population is currently unknown, but it will almost certainly require oil before anything else. A $200,000 home that sells 3 years later for $400,000 will increase the GDP by $200,000 over 3 years, but it has absolutely nothing to do with productivity and has zero impact on oil use. Basic needs like feeding Los Angeles however rely on a fixed amount of energy that CANNOT be altered without people going hungry. That's the difference between our paper fantasy economy and the future economy.
"...reality has a well-known liberal bias." -- Stephen Colbert
By no means do I have expertise in financial matters like most of the folks on this thread.
I would like to weigh in on the pessimism-optimism debate with some thoughts, however.
As has been pointed out here, the post-WWII era was as historically unique as it was necessarily short-lived. The US honed to robust efficiency the economic engines of free enterprise, individual freedom, free markets and exonomic self-determination. We found ourselves historically free to develop and prosper with these tools and concepts behind broad oceans on an unspoiled and resource-rich continent. We developed an industry and an infrastructure beyond historical precedent, spurred finally by a World War. We were left in its aftermath with erstwhile rivals in Europe and Asia prostrate, ruined, deplete of industrial manpower, and with the rest of the world that had not even joined the industrial world in any significant way.
In short, we were free to expand into markets world-wide without competition or opposition, except for the decidedly unappealing ideology of Communism. And we had just the means, the tools, the mind-set and the energy to do it.
Our success has been legendary and historic, to the extent that Communism has been crushingly discredited, and almost everyone has jumped on board to emulate our energies, means, attitudes, mind-sets. Islamic jihadists are doing rear-guard action, but eventually must certainly and obviously fail. Places like China are dragging their feet with respect to attitudes, but will eventually and increasingly discover that managed encomies do not allocate resources as efficiently as do free markets and the rule of law (whether they change because of the lesson or simply succumb to internal strife remains to be seen).
The fact that we now have growing and furious competition for markets means that we can no longer presume inevitable rewards for efforts and investment. It means that the rest of the world is going to see unprecedented growth and prosperity, but in many cases because of innovations and markets that earlier would have fallen to us by default.
I think we remain in denial that our standard of living is not expanding as we had become accustomed, and is even contracting in some segments. As a function of that denial, we are borrowing massively, both individually and collectively, to mask the fact. We get away with it because we had set the dollar as the global guarantor of currency, and because other producers world-wide have an active stake in keeping the US consumer engine consuming. All of this merely intensifies the distortions, however, and engorges the monster of an eventual come-uppance.
On the other hand, we as a people retain essential buffers. We retain a large, relatively educated population that is relatively conhesive and integrated socially. We retain well-regarded teaching and research institutions. We retain abundant resources for food and energy within our borders. Most importantly, we retain with only moderate erosions institutions and attitudes that inspired that world-wide economic revolution to start with: hard work, foresightedness, efficiency, innovation, respect for the rule of law, optimism, individual freedom to try new things.
In short, I expect Americans will eventually have to confront the realities of a global economy that is an historical marvel on the macroeconomic level and in the aggregate, but that will require dislocations in the near term that are acutely painful and socially disruptive in major ways.
I also expect, though, that Americans are as well equipped as any people in history to eventually acclimate after some very bad times, and prosper and compete successfully in that new world economy.
I also expect, though, that Americans are as well equipped as any people in history to eventually acclimate after some very bad times, and prosper and compete successfully in that new world economy.
I agree with this although it's not because Americans are superior to other peoples. The reason we're going to come out on the other side stronger is because we've got the largest coal reserves in the world, and coal is currently the only rational replacement for oil. It's a shame that we're going to destroy the environment in the process. The question of how long our species is going to survive after dumping billions of tons of coal carbon in the air is another question entirely.
"...reality has a well-known liberal bias." -- Stephen Colbert
Interesting article on the "boom" in San Diego. Rather than the brick and mortar type jobs that usually support real growth, it seems that the boom in San Diego (and possibly other cities) is not from new people flooding in, but rather a growth in the restaurant business (leisure and hospitality). This article suggests that the real boom is based on building houses and taking equity out of one's homes to go out to eat more and enjoy leisure activities. That's the 'boom." One would have to wonder what will follow when the equity extraction ends.
Interesting article on the "boom" in San Diego. Rather than the brick and mortar type jobs that usually support real growth, it seems that the boom in San Diego (and possibly other cities) is not from new people flooding in, but rather a growth in the restaurant business (leisure and hospitality). This article suggests that the real boom is based on building houses and taking equity out of one's homes to go out to eat more and enjoy leisure activities. That's the 'boom." One would have to wonder what will follow when the equity extraction ends.
roadrunner >>
Cmon Roadrunner, don't you realize that we don't have to create, or produce anymore? Just sell the ol house every few years and make a few hundred G's. Have a good time. You know.
Lighten up man. You libs ( libertarians) are just too.............realistic.
Comments
Okay so what you're saying is that GM is losing money on every car sale, but they intend to make up the difference on volume?
auto exports declined 40% prior to the depression. due to the decline of those exports, some auto workers lost their job. i do not find your parallel accurate.
I'm sorry you don't see any parallels. GM is laying off 25,000 workers over the next few years and is going to lose a billion dollars in profits for 2005. Ford is also in trouble. The auto industry is historically a LEADING indicator of recession. In January 2001 just before the recession hit, automakers anounced huge layoffs and dropped about 85,000 jobs. I really don't consider this news since I'm predicting a full scale depression, but to imply that GM's troubles are meaningless is about the same as sticking your head in the sand.
And yet the government and CNBC both say that everything is fine. It's too bad that Greenspan's "uncertainties" are so "significant".
<< <i>Okay so what you're saying is that GM is losing money on every car sale, but they intend to make up the difference on volume? >>
gm makes a smaller profit per car but makes up for it in volume of sales. (we will see come year end)
<< <i>I'm sorry you don't see any parallels. GM is laying off 25,000 workers over the next few years and is going to lose a billion dollars in profits for 2005. Ford is also in trouble. The auto industry is historically a LEADING indicator of recession. In January 2001 just before the recession hit, automakers anounced huge layoffs and dropped about 85,000 jobs. I really don't consider this news since I'm predicting a full scale depression, but to imply that GM's troubles are meaningless is about the same as sticking your head in the sand. >>
do not be sorry. i wish you the best with your recession.
<< <i>And yet the government and CNBC both say that everything is fine. It's too bad that Greenspan's "uncertainties" are so "significant". >>
i don't give much credence to cnbc. as the us government is concerned, i'm sure they know more than they report, i'm sure what they report is not 100% accurate but i have always been under the assumption that things happen for a reason, for example - economy cycles. - no reason to stick your head in the sand, just take it in stride. not sure what worries you, after all, you guys know what's going on and you are investing accordingly- right??
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NO THANKS, CHINA: UNOCAL BOARD BACKS CHEVRON BID
washingtonpost.com
Unocal backs sweetened $17 bln Chevron bid
By Jessica Hall and Charlie Zhu
Reuters
Wednesday, July 20, 2005; 10:15 AM
PHILADELPHIA/SINGAPORE (Reuters) - U.S. oil producer Unocal Corp. <UCL.N> endorsed a sweetened $17 billion takeover offer from Chevron Corp., preferring it to a higher bid from China's state-run CNOOC Ltd. <0883.HK>.
Chevron <CVX.N>, the second-largest U.S. oil company, raised its stock and cash bid to $63.01 per share from roughly $60, turning up the heat in an international battle for energy assets as strong demand and tight supply hold crude oil prices near record levels.
The improved offer for Unocal, which has assets stretching from Myanmar to the Gulf of Mexico, sets the stage for CNOOC to raise its $67 a share cash bid further.
"We're likely to see CNOOC increase its bid, which it has been signaling for a while," said Duane Grubert, an analyst with Fulcrum Global Partners.
A CNOOC spokesman said the company remained "comfortable" with its $18.5 billion bid and believed its offer had a "distinct advantage." A person familiar with the matter said CNOOC had anticipated a higher Chevron bid and was reviewing options on how to react.
But Chevron still remains the favorite to win Unocal, whose board has favored Chevron's bid partly due to concern U.S. regulators might reject the CNOOC deal based on national security grounds or the deal may be stuck in long review process. It recommended shareholders accept the sweetened offer at a shareholders' meeting already scheduled for Aug. 10.
"We're still making the bet that Chevron will prevail," Grubert said. "The politics against the Chinese bid are so severe."
CNOOC will try to convince shareholders that its deal would be approved by the U.S. government, the source familiar with the matter said.
"Price is only one issue on shareholders' minds. The other issue is to make people understand the 'certainty issue'," said the source, who spoke on condition of anonymity. "CNOOC is absolutely committed to the transaction and determined to win."
CNOOC has made some concessions in an attempt to woo Unocal. It agreed to set aside $2.5 billion in a U.S. escrow account that could be tapped by Unocal shareholders if CNOOC walked away from a deal. CNOOC also put $500 million in escrow to pay a break-up fee attached to the Chevron-Unocal deal.
STILL SUPERIOR
Peter Schoenfeld, chief executive officer of New York-based investment firm PSAM LLC, which holds more than 1 million Unocal shares, said CNOOC's bid remained superior provided it could be approved by the U.S. government within 90 days.
But "realistically, the Unocal Board will likely still require an improvement above $67 by CNOOC to switch allegiance," he said. He believes Unocal could be worth $74 per share based on recent transactions.
Yang Liu, a fund manager at Atlantis Investment, which does not hold CNOOC shares, said CNOOC should not rush to raise its bid. "CNOOC should cool down a bit. They should wait for Unocal shareholders to vote on the Chevron deal," Liu said.
Chevron, which has a stock market value of about $120 billion, raised the cash component of its offer to 40 percent from 25 percent, offering a total $7.5 billion in cash plus 168 million new shares, equivalent to about 7.5 percent of its enlarged share capital according to Reuters data.
Unocal's timely sale of Canadian assets to Pogo Producing Co. for a higher-than-expected $1.8 billion has helped Chevron comfortably raise its bid without straining itself financially, Grubert said.
Unocal shareholders will get $27.60 in cash and 0.618 of a Chevron share for each Unocal share. Shareholders will have a choice of taking shares or cash. But if election for all cash or all shares exceeds the 60:40 split, they will get shares and cash on a pro-rata basis.
Chevron said the higher offer remained accretive to earnings per share in 2006.
Unocal shares rose 22 cents to $65.21 in morning New York Stock Exchange trading, a 3.4 percent premium over Chevron's offer price, but down 2.4 percent from a record high $66.78 a week ago.
Chevron's bid values Unocal at 11 times analysts' forecasts for Unocal's 2005 earnings, according to Reuters data. Chevron shares trade at a 2005 price/earnings ratio of 9.4 times.
CONCERNS
CNOOC's shares initially rose 2.2 percent to HK$4.75 in Hong Kong trading on Wednesday, but pared gains to close at HK$4.675 after the news, up just 0.5 percent.
CNOOC shareholders are concerned a rise in the Chinese bid could undermine the interests of CNOOC's minority shareholders. At least one fund has sold its stake as a result.
"We expect CNOOC is now pondering whether it will raise the bid or not. It's a matter of whether it will justify shareholders' value," said fund manager Stella Mak at East Asia Asset Management Co., which holds CNOOC shares.
CNOOC's overture had sparked concern among U.S. politicians that a sale of Unocal to a Beijing-controlled company would harm U.S. national energy security. Beijing owns 70 percent of CNOOC. Its deal is backed by low- and zero-interest state loans.
This is a non-event as far as I'm concerned. China and the USA are economically linked so completely, that a simple paper transfer of ownership doesn't mean anything. Of course getting in bed with the communists is absolutely disgusting considering all the blood spilled over Korea, Veitnam, and possibly Taiwan in the future, but since when did morals and ethics get in the way of profit?
<< <i>
This is a non-event as far as I'm concerned. China and the USA are economically linked so completely, that a simple paper transfer of ownership doesn't mean anything. Of course getting in bed with the communists is absolutely disgusting considering all the blood spilled over Korea, Veitnam, and possibly Taiwan in the future, but since when did morals and ethics get in the way of profit? >>
Don’t let the name Unocal fool you these big integrated oil companies aren’t just domestic. We’ve proved we can freeze assets that are in the U.S if need, but don’t be so sure Global assets like the Unocal's of the world posses can be froze. Now with the new global ecomony and the world court it's geting harder and harder to protect our interest.
China has over 1.3 Billion people, we are indeed tied now but I don’t believe they’ll need us in a decade if the Communist government allows their economy to open up for investment. China and India are starting to get a sizable middle class with money to burn from the jobs being created via the west in the big cities. The US is the large cap's stocks of he world, while China's and India's are the up and coming Small Cap's. The profit and risk is in their favor if the government can control their impulsive nature. JMO.
Gold may be considered a barbarous relic by 99.99% of the world, but it's the Central Banks (and govt's) that count. And last I checked, most of the them are still very much concerned about maintaining an adequate store of gold bullion.
roadrunner
Yeah but it isn't a big deal. American citizens are getting cash out of it and China is probably going to get boned by peak oil on this investment anyway. The only strategic value would be Unocal's foreign oil inventories which aren't really corporate assets but leased from benevolent governments that can change their mind on a dime as it is. I say let the commies have Unocal.
I remember similar distress when cash rich Japan was on a US spending spree in the 1980's. They bought Pebble Beach, real estate, art, and anything else that wasn't tied down. Most of those assets got sold back to Americans at a deep discount in the 1990's after Japan entered a 10 year depression and needed to raise capital. I think what China is going to realize (far too late) is you can never win against the house.
I had a 1997 GM Olds Van which had a defective rack and pin steering. One week after I received a recall notice, my steering went out right on the interstate highway. I somehow managed to get the car home after 4 additional hours then had the car towed. The most frightening experience in my life.
GM refused to pay for my damaged sircoil airbag which was damaged in trying to get my car home. Pennywise/pound foolish.
No problem. I never fixed my airbag.
I will not buy another GM product again.
I will only buy a Toyota product assembled in the US.
I have witnesses who will acknowledge I advocated selling the Japanese what ever they wanted back in the late 80s. There was a big outcry around here when they bought Pebble Beach. Anyway even though I have a position in Chevron I have no problems selling Unocal to the Chinese as long as they pay up.
I haven't liked any auto stocks ever since I first started buying stocks in the early 80s. There is and has been global over capacity. Each country wants to champion domestic production of autos. GM and Ford have huge pension liabilities. GM has been shedding product lines. Does GM still require you to use a different key for the door and trunk? Last time I owned a GM they did and I hated that, I never bought another...
Gold should have gone down more in the recent weeks if its price is based totally on the strength of the US dollar (because the dollar has been strong). If there are more people hedging against paper money than is generally believed than that would explain why gold hasn't gone down more. I bought some recently for that purpose.
http://news.bbc.co.uk/2/hi/business/4703471.stm
I dont see a massive move to the euro under these current conditions.
Groucho Marx
Knowledge is the enemy of fear
I wonder if the Chinese government will seize/nationalize assets of US corporations in retaliation for not being allowed to buy US corporations?
Does the revaluation of the Yuan now make the purchase of worldwide assets by the Chinese cheaper for them?
by T. Stein / S. McIntyre
The news that China cut its currency link to the U.S. Dollar came and went with little media reaction. Headlines and live feeds out of London dominated the news Thursday, even after it was discovered that, fortunately, the subway and bus blasts didn't cause a single injury. The rest of the day's mainstream news focused on Iraq, Arnold Schwarzenegger, the Supreme Court and Sudanese diplomacy. You would at least figure that CNN.com would mention the China news as its number one business headline but, alas, what do we see? "Google Profit Soars; Shares Plummet"
So what does this mean for the future?
Thursday's Yuan move was miniscule. There is no way the Chinese are even close to done - they said so themselves. Prepare for quite a few more days like this.
Protectionist Senator Chares Schumer (D-NY) is not satisfied. He called today's news a "good first step, albeit a baby step." Schumer has sponsored legislation that would impose devastating tariffs on Chinese imports unless it revalues the Yuan by a meaningful amount, probably around 40%. So if the Chinese don't get a move on it, Schumer and his supporters will likely make their move before the 2006 election.
Another hidden story Thursday was that Malaysia also announced it was dropping its own policy tying its currency, the Ringgit, to the U.S. Dollar and would adopt a currency basket arrangement similar to China's. If other Asian nations follow suit, we could see a vicious cycle of Dollar dumping develop. We know the Asians are itching to get out of the Dollar.
The adult citizens of China, all one billion of them, have recently been given the freedom to own gold. Now the government is actually encouraging them to purchase gold as a form of savings. As the Yuan strengthens against the Dollar and other currencies, gold becomes cheaper for the Chinese to buy.
China's decision to change the nature of its currency peg means that it will no longer be in the dollar buying business, or by extension, the U.S. Treasury buying business. That means that America will be losing its biggest benefactor. China will no longer act as the principal enabler of America's irresponsible extravagance, ending its subsidies to American consumers and borrowers.
Here is a perfect example of my statements earlier this week concerning buying stocks and how careful one must be about all the lies and BS given out by Wallstreet.
Connecting The Dots
by Tony Sagami
July 21, 2005
IBM uses hocus pocus to make its numbers
Buy now and listen later.
At least that is what the bulls did this morning after hearing IBM pat itself on the back for delivering such great Q2 results.
The problem is that IBM's great results (more below) were the result of accounting smoke and mirrors and not an improvement in operating profits.
Risk be damned, the bulls jumped on anything with a big beta today and made computer hardware, computer software, and internet stocks the biggest winners of the day.
IBM uses hocus pocus to make its numbers. IBM reported $1.12 of Q2 profits last night, which is 9 cents better than the $1.03 Wall Street was expecting. Hallelujah!
Not so fast.
1. First of all, the $1.12 excludes 10 cents of costs related to stock options. If you include those 10 cents of true, real, hard compensation expenses, IBM would have missed forecasts by one penny.
There was a trio of one-time, non-operating costs that IBM used to manufacture 2 cents of extra profit.
==> $775 million (29 cents per share) gain from the proceeds of the settlement with Microsoft.
==> $1.1 billion (45 cents per share) gain from the proceeds from the sale of IBM's PC division to Lenovo Group in May.
==> A $1.7 billion charge (72 cents per share) to cover the cost of job cuts against earnings for the cost of 14,500 layoffs.
2. The combined result was 74 cents of one-time gains against 72 cents of one-time losses; 2 cents of non-operating income profit.
If you back out the 10 cents of stock options and 2 cents of non-recurring gains, IBM would have actually missed it number by 3 cents!
3. More than 50% of IBM's business is from its technology-services division. In Q2, services revenue increased by a mediocre 6% or an even less impressive 4% if you backed out currency fluctuations.
BUFFETT SCORES WITH YUAN
Warren Buffett may be a winner again. The American billionaire is among the biggest beneficiaries of China's decision to scrap the peg between its currency, the yuan, and the dollar.
His company, Berkshire Hathaway, is the second-largest overseas investor in PetroChina Co., the largest Chinese oil company. PetroChina shares (ticker: PTR) jumped $5.01, or 6.43 percent, to close at $82.90 Thursday on the New York Stock Exchange. Buffett also has been betting that the dollar will decline -- and the currency fell sharply against the yen and euro.
no more copy and paste, i can copy and paste all day.
in your own words, why is the below an example? why are the one time write-offs and one time gains a bad thing?
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Mysterious Hot Spot Sparks Fire
Is it my imagination or is this planet getting weirder?
CSC in my own words
CSC, personal the real problem I have with most established paper investments is that there is so much BS to go through you never know what you are buying. In fact it would take months just to do good homework on any ONE S&P 500 stock you could name i.e. what are the real liabilities? What are the stock options out to employees and officers? What are the pension and medical liabilities? What type of competitors are developing now in foreign lands? Are the financials hyped? Can you buy stock in the company close to the REAL book value?
“why are the one time write-offs and one time gains a bad thing?”
Because last week when a hundred thousand folks? Bought the stock thinking that IBM was growing like crazy they were being lied to. Not only by the way the company presented the numbers but also by Wall Street who wanted to make commissions selling stock.
As this analyst pointed out the REAL earnings for that quarter was not ordinary sales growth but asset sales, money from lawsuits etc. and in addition 99% of the Wall Street sales people are telling folks to invest for the long term. Long term or even next quarter these earnings are not going to be there. So why did the stock go up? Why was Wall Street pushing IBM as a buy? Simple, the insiders on the street that owned the stock needed it to move up so they could sell, and the salesmen on the street needed to make commissions. Simple manipulation of the numbers to move the stock price.
No one will go to jail over this because I am sure that if the average investor read the 500-page report all this information is disclosed, but that is my point. There is no way the average investor that does not have hundreds of hours each quarter to devote to reading reports, and seeking out the real truth, should even be in the stock market because he CANNOT trust the main stream analysts to tell him the truth.
That quote got me to reflecting so here is just a little personal commentary on stocks offered in the interest of contributing to the thread. I do know that there are brokers and anylists on this board and this is not a jab at anyone, just my personal reflections and thoughts on the modern stock market and the regular guy. Mostly though, I realize I don't know everything about stocks but I have played in them in the recent past.
I have been so temped to get back into stocks, particularly natural resource based stocks but then my previous experiences in the market come back to me. Three things...commissions/fees getting into a stock, taxes on any gains from a sale, commissions/fees getting out of a stock. There are so many people feeding on the small investor that you have to make 10%-15% on a stock just to break even and any net gain only comes after that expense calculated. So, any stock you can get 10% or 15% on plus maybe 10% profit (we're talking 25% gain over purchase price) is a good investment. Well who the hel can find a stock that is going to gain 25% in even a 1 year period? Just think if a 10,000 DOW lost just 5% in one day, $500...the newspapers of the world would thick with red ink headlines and if it did it for two days (just a 10% loss) geezzzz, it would be a calamity, but people give that 10% up every day just getting in and out of stocks and paying taxes on gains and no one seems that upset about it. I know some stocks make that 25% in just one year, like google and there are others but surely there can't be many of those out there.
On the other hand, there are stocks that pay dividends and those are a whole different class of stocks and investments. If I could afford 5,000 shares of a dividend paying stock then I would be all over it but the stocks that pay good dividends are pretty expensive from what I see and most regular guys don't have hundred thousand dollars to put into something like that. I do have a little bank stock and it is dividend stock and I have some old mining stock that surely I will be buried with rather than lose 75% on the initial investment.
Then, you got the hinkied numbers from the companies so their stock doesn't go down with the investors, like IBM and the blatant scandals (long list like worldcom, enron...etc), and the world economic uncertainty, then you just really have to ask yourself why would I invest in stocks? I mean, isnt that real money...and in particular MY MONEY that I am putting out there to blow in the wind? So take a mutual fund or basket of stocks...same thing, but here you don't pay commissions, you pay FUND MANAGERS and you still pay taxes on gains...hummmmmm.
For me, when I find myself with some spare change, I'm looking for a piece of metal or maybe a nice gold coin that I will get to enjoy and may even make a couple of buks on. At worst, the coins and bars will leave an interesting legacy for my grand daughter while providing a little insurance for bad times or maybe to fund a discovered opportunity. If I do this then I do not pay commissions, taxes, fees, anything except a little spot differential for a transaction if it is metal and if it is a coin then some dealer/auction house makes a little off of me but it is done, there is no tax (maybe some sales tax), there is no messy paper to deal with, just a nice clean honest In-Out with not much hassle.
On the other hand, I also like US bonds, they are very stable and if I don't need the money for a while, that is where I will put the buks but I don't have any bonds right now, they are just too bland. Too much spare change and I'm looking for raw land in a good spot with good access to the transportation network and plenty of access to goods and services and planning for a 5 Yr. payout of something like 40%-50%. Hopefully, I can get some land in the 4th quarter this year but to me suburban/rural acerage near an expanding population center seems like a very good place to be with little risk, few taxes, and a minimum of paper moving around.
So stocks...hummmmm, I don't get it. Certainly no offence intended for those in or associated with the stock market, just my thoughts, MHO. Good Luck!
Banks are of course insured, and should a new recession (guaranteed) or depression (very likely) cause them to fail, the debt will be heaped onto the federal government. Our currency is now a dumping ground for irresponsible government, irresponsible industry, and irresponsible consumption. Along with peak oil, the devaluation of the dollar will be the crisis that defines this century. I don't see gold and silver as investments, I see them as the only way to keep wealth while the dollar burns.
With online discount brokers it doesn't cost much to get into or out of a stock these days. $10/trade many places. That is %10 if you buy $100 worth of stock but %1 if you buy $1,000. For me the broker fees aren't much of a consideration anymore. With the capital gains tax reduction selling costs less than years ago. Still I own bonds, real estate and gold. If I bought raw land I wouldn't count on a profit in 5 years, I would consider it a longer term investment than that.
The Chinese were finally successful in buying a company. They just bought the English auto company MG Rover.
The myth of eternal American economic superiority is built on cheap energy. It's pretty damn arrogant to think that in the 6000 years or so of recorded human history, that our 100 year success story means that we'll overcome all obstacles. Disaster, disease, war, famine, and economic hardship are the normal conditions of human existance during the last 6000 years! DO NOT confuse a very brief period of stability and comfort with how it should be, or how it's GOING to be. By any estimation, our current age represents a very strange anomaly.
Cheap energy may be permanently over, and our debt has no parallels in human history. To expect that we will continue to be competitive and productive takes far more faith then the second coming of Christ.
Carl, I hate to tellya but Chinese purchasing of the MEANS OF PRODUCTION should shout "Danger, Will Robinson, DANGER!" '
First of all, these same arguments were applied to Japan in the 1980's and all the dire predictions fell flat. Second of all, the Chinese are buying a relic of the oil economy and that oil economy might be in permanent decline. As I said originally, this is a non-event. The absolute reliance of a slave labor state such as China for all our factory production is FAR FAR FAR more dangerous than letting them purchase an old oil company. If you're worried about the means of production, please realize that China already HAS our means of production and absolute control over them.
The US is still the most productive country around. I agree with all the points about debt, trade deficits, budget deficits and the other issues with our economy. However I have issues with the economies of other countries too. The US has the most military might. We have lots of resources, including energy (coal). Energy is less important to a service economy than to a manufacturing economy. We are geographically in a good position to trade with Asia and Europe as well as the Americas. The US adapts to changes faster than other countries.
I'm sorry, but I remain optimistic about the future. I think the future looks bright for the US. I do like some global companies based in other countries but am mostly invested in the US.
<< <i>This graph is from the Kitco site contained in an article about interest rates. What's incredible is how irresponsible banks have become since we left the gold standard in keeping cash reserves as a percentage of their loans. This is even more evidence that the lessons of the Great Depression aren't only being ignored, but that the abuses and excesses are being taken to heights never seen before. I wish those who say that I'm being alarmist would come to this thread and try to argue that everything is okay, when almost every classical measurement of an economic collapse is present.
] >>
Oh come on. Cash "reserves" aren't even paper any more, just blips in a computer. So long
as the economy is stable it doesn't much matter how much reserves anyone has. If they don't
order enough cash they can always order more and if everyone wants to withdraw there are
bigger problems than not having enough money.
I don't know about all the kids today. I do know my daughter is bright. We will offer her good schools and she will be able to write her own ticket if she chooses to do so. If she is the only one like that the US is in trouble. I'm hoping there are lots more like her. Some of her classmates are doing well also.
I guess at 48 I'm younger than you are topstuf. I do remember the 60s. I remember crawling under my desk at school for Nuclear War attack drills. I remember great discussions about who would win a nuclear war, us or the Soviet Union. It seems clear that the world has changed from having two super powers to one super power.
However it is true I liked what little money I had in my pocket then better than now. I gotta admit I like silver coins.
I don't agree. Anyone with two hands and food on the table can manufacture something. Our service economy takes cars, trucks, airplanes, lights, advertising, computers, 100 story office buildings, TVs, plastics, drugs, and a million other things that take lots of energy. In fact I could make the argument that a service economy is a bunch of people all trying to find more creative ways to manipulate larger and larger amounts of energy.
In 100 years our economy will be entirely based on coal, nuclear, and whatever hydroelectric and solar we can scrape up. Between now and then is the collapse of the US economy followed by the devaluation of the dollar and a new economy forming from the ashes. Some people don't think the world will make the transition at all, but I prefer to remain optimistic.
It would take a lot of arguing to convince me of that. To me every company is trying to find more creative ways to produce more and better goods and services using less people and less engergy per item of production.
America uses half as much oil per unit of GDP as we did 30 years ago. In value terms oil is a much smaller percentage of commodity imports than it was in the 1970s.
Still there is no question we are very dependent on oil. Our transportation systems are especially dependent on it.
First, I think this was done simply to keep the U.S. congress quiet so that Chinese products can continue as usual.
Second, it may be that the Chinese have learned from the west that manipulating your currency up or down is no big deal as long as you have the Worlds reserve currency to back your derivatives, and they have $700 billion and growing.
In addition just who would be dumb enough to play too heavy in the Yuan paper market and how would they cover if they were wrong?
So why not let it float, manipulate it in the market like all of the other powers, and get everyone off your back.
Third, the word is that there is too much growth in the coastal cites in China and the next move is to move manufacturing to the rural areas where there is more land, and even cheaper labor. This extra rural work produces millions more Chinese consumers, and at some point in time China might even DROP the value of the Yuan in order to induce world consumers to buy what is quickly becoming over supply in certain product areas.
Fourth, This move by the Chinese also allows them to cut back on their purchases of U.S. paper by claiming that they now need to hold a basket of currencies. This will keep them diversified, as well as increase interest rates here, which will give them better earnings on rolled over past debt. It is very possible to see the ten-year rate at 7% within 24 months, particularly if other Asian countries begin their own basket holding.
To tell you the truth I cannot really see what WE got out of this revaluation, perhaps some of you can help me here?
I haven't seen this statisic, but I don't consider it relevant. GDP is a fraudulent number because it doesn't incorporate debt and therefore can never be used to estimate a SUSTAINABLE economy. If you borrow 20 million dollars on a credit card and then go on a spending spree, you've just grown the GDP by 20 million dollars, you've helped the economy, and you've created jobs. You WILL however need to pay this money back and therefore in succeeding years you will SHRINK the GDP by 20 million dollars PLUS INTEREST, you will hurt the economy and you will eliminate jobs.
That's why we're all talking about DEBT. Not just the national debt, but private debt, trade imbalance debt, consumer debt, mortgage debt, and all other kinds of debt. Our current GDP exists on a gigantic mountain of debt that cannot be sustained and therefore is not a rational measure of anything. The real sustainable GDP that is based on the actual means and abilities of our population is currently unknown, but it will almost certainly require oil before anything else. A $200,000 home that sells 3 years later for $400,000 will increase the GDP by $200,000 over 3 years, but it has absolutely nothing to do with productivity and has zero impact on oil use. Basic needs like feeding Los Angeles however rely on a fixed amount of energy that CANNOT be altered without people going hungry. That's the difference between our paper fantasy economy and the future economy.
I would like to weigh in on the pessimism-optimism debate with some thoughts, however.
As has been pointed out here, the post-WWII era was as historically unique as it was necessarily short-lived. The US honed to robust efficiency the economic engines of free enterprise, individual freedom, free markets and exonomic self-determination. We found ourselves historically free to develop and prosper with these tools and concepts behind broad oceans on an unspoiled and resource-rich continent. We developed an industry and an infrastructure beyond historical precedent, spurred finally by a World War. We were left in its aftermath with erstwhile rivals in Europe and Asia prostrate, ruined, deplete of industrial manpower, and with the rest of the world that had not even joined the industrial world in any significant way.
In short, we were free to expand into markets world-wide without competition or opposition, except for the decidedly unappealing ideology of Communism. And we had just the means, the tools, the mind-set and the energy to do it.
Our success has been legendary and historic, to the extent that Communism has been crushingly discredited, and almost everyone has jumped on board to emulate our energies, means, attitudes, mind-sets. Islamic jihadists are doing rear-guard action, but eventually must certainly and obviously fail. Places like China are dragging their feet with respect to attitudes, but will eventually and increasingly discover that managed encomies do not allocate resources as efficiently as do free markets and the rule of law (whether they change because of the lesson or simply succumb to internal strife remains to be seen).
The fact that we now have growing and furious competition for markets means that we can no longer presume inevitable rewards for efforts and investment. It means that the rest of the world is going to see unprecedented growth and prosperity, but in many cases because of innovations and markets that earlier would have fallen to us by default.
I think we remain in denial that our standard of living is not expanding as we had become accustomed, and is even contracting in some segments. As a function of that denial, we are borrowing massively, both individually and collectively, to mask the fact. We get away with it because we had set the dollar as the global guarantor of currency, and because other producers world-wide have an active stake in keeping the US consumer engine consuming. All of this merely intensifies the distortions, however, and engorges the monster of an eventual come-uppance.
On the other hand, we as a people retain essential buffers. We retain a large, relatively educated population that is relatively conhesive and integrated socially. We retain well-regarded teaching and research institutions. We retain abundant resources for food and energy within our borders. Most importantly, we retain with only moderate erosions institutions and attitudes that inspired that world-wide economic revolution to start with: hard work, foresightedness, efficiency, innovation, respect for the rule of law, optimism, individual freedom to try new things.
In short, I expect Americans will eventually have to confront the realities of a global economy that is an historical marvel on the macroeconomic level and in the aggregate, but that will require dislocations in the near term that are acutely painful and socially disruptive in major ways.
I also expect, though, that Americans are as well equipped as any people in history to eventually acclimate after some very bad times, and prosper and compete successfully in that new world economy.
Here's a warning parable for coin collectors...
I agree with this although it's not because Americans are superior to other peoples. The reason we're going to come out on the other side stronger is because we've got the largest coal reserves in the world, and coal is currently the only rational replacement for oil. It's a shame that we're going to destroy the environment in the process. The question of how long our species is going to survive after dumping billions of tons of coal carbon in the air is another question entirely.
You can't print more gold and silver however.
Interesting article on the "boom" in San Diego. Rather than the brick and mortar type jobs that usually support real growth, it seems that the boom in San Diego (and possibly other cities) is not from new people flooding in, but rather a growth in the restaurant business (leisure and hospitality). This article suggests that the real boom is based on building houses and taking equity out of one's homes to go out to eat more and enjoy leisure activities. That's the 'boom." One would have to wonder what will follow when the equity extraction ends.
roadrunner
<< <i>Jobs boom in San Diego
Interesting article on the "boom" in San Diego. Rather than the brick and mortar type jobs that usually support real growth, it seems that the boom in San Diego (and possibly other cities) is not from new people flooding in, but rather a growth in the restaurant business (leisure and hospitality). This article suggests that the real boom is based on building houses and taking equity out of one's homes to go out to eat more and enjoy leisure activities. That's the 'boom." One would have to wonder what will follow when the equity extraction ends.
roadrunner >>
Cmon Roadrunner, don't you realize that we don't have to create, or produce anymore? Just sell the ol house every few years and make a few hundred G's. Have a good time. You know.
Lighten up man. You libs ( libertarians) are just too.............realistic.
Tom
Coin's for sale/trade.
Tom Pilitowski
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