July 07, 2009 –
A while ago I made a post suggesting that using TARP or other stimulus supplementing interest rates, bringing down homeowner's real interest rates as a result, could be a solution to avert the coming pain. I thought it would work as long as it was done quickly enough so that unemployment was nipped in the bud and prevented from taking off. Well, unemployment has taken off. [more]
June 02, 2009 –
Here is something that bears thinking about. Oil is sold in dollars. Worldwide there has been a sustained lack of development and upkeep of the oil frastructure such that capacity has not expanded but likely contracted somewhat. Any recovery will put the world right at the edge of what can be produced on a daily basis regarding consumption. With the financial world in such a state of wreckage, where is the money going to come from to finance various nation's oil purchases? Along with the dollar having to lose value for the current world system to operate with a semblance of efficiency what else needs to happen? Won't there also be a considerable amount of inflation starting to appear in various countries whose way of doing business is not conducive to a time like this? Isn't that how we can expect a considerable flow of money to come into the US, via inflationary wealth transfer as the dollar as oil currency mechanism sucks the lifeblood from every country that isn't well set up to compete with the US or the West in an oil tight market? Hyperinflation in the US might be enough to counter this, but why would that be allowed to continue once the transferred wealth starts coming in? [more]
June 01, 2009 –
The paradigm of the success of the industrial approach applied to markets has ruled earth since the industrial revolution. Nothing has changed regarding the industrial model (economies of scale and other concepts still work), but what about how it can be applied to markets? The dominant theme is to mass produce and sell across a wide range of target areas. The ability to mass produce is not the only contributor to the success of this idea. It also relies on the target consumers having either the money or the ability to finance the money to pay. It also relies on realatively cheap transportation costs. Taxes have to stay low enough so as not to stifle exchange across such a broad range so as to cause a withdrawal by consumers into purchasing only must have items. [more]
May 27, 2009 –
The past few days I have been asking myself how quickly the gains of this rally can evaporate. Worse, if they do, what will happen next? For over a month I have been convinced that the GM bankruptcy (not Chrysler) is the key to what happens next. GM has been the leader of the industrial oligopoly that was the big four (if you liked AMC), then the big three for all of living memory. What a GM bankruptcy means to wages and production is all important. Also, if there are going to be unintended consequences, they will likely begin post GM more that any other company's bankruptcy. [more]
April 26, 2009 –
I feel that a bankruptcy filing by any of the remaining three domestic automakers will precipitate a landslide of filings on the part of both of the other two and a host of supply chain companies. The reason is that wage concessions that can be gotten under bankruptcy cannot be contended with by non-bankruptcy automakers. Doing things like shedding Pontiac and furloughing plants for an extended period of time (maybe some will not re-open) are tactics that probably will have a big impact when negotiating with the UAW. [more]
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