Use access key #2 to skip to page content.

alstry (35.71)

Nobody goes HUNGRY in America!!!!

Recs

11

August 02, 2008 – Comments (4)

August 1 – AFP:  “California Gov. Arnold Schwarzenegger on Thursday dismissed 20,000 temporary state employees and slashed the pay of 200,000 more workers in the latest twist to a budget standoff. “

Will this help the following problem in CA????????????

July 28 – UPI:  “Los Angeles food bank operators say the troubled economy has produced the biggest demand for their help they’ve ever seen.  The demand is spreading from poverty-stricken residents to those in the middle and upper classes, they told the Los Angeles Times.   ‘This is probably the most people we’ve ever seen use emergency food assistance," Darren Hoffman, communications director for the Los Angeles Regional Food Bank, told the newspaper. ‘We’re seeing people who were making $70,000 a year coming into a food bank for the first time.’ Food bank operators say people who have spent their retirement savings to pay their mortgages are turning to the pantries to avoid going hungry. Some told the Times that major job losses in the banking and entertainment industries, coupled with the housing crisis, are hitting the San Fernando Valley area especially hard.”

Maybe this will help??????

July 30 – New York Times:  “Mervyn’s and the parent company of Bennigan’s both filed for bankruptcy protection yesterday, providing more evidence that the pace of corporate flame-outs is accelerating.  Only half way through 2008, billion-dollar bankruptcies are at their highest level in five years, according to BankruptcyData.com… ‘We seem to be in the midst of a ‘perfect storm’ leading to more bankruptcies: high levels of debt, high energy and raw materials costs and weakness in the U.S. economy,” George Putnam III of New Generation Research, which publishes BankruptcyData.com, said…”

Up until July 3rd, many on Wall Street have been banging the drums about a second half recovery.....until the 800 LB Gorilla came out with this yesterday afternoon(CalculatedRisk.com):

Goldman Sachs put out a research note late today lowering their projections for the second half.

"[W]e are on the cusp of a renewed deceleration in growth."

Renewed?????  When was growth not decellerating over the past year?????

Things should really start heating up over the next few weeks as states start coping with evaporating revnues.

 

4 Comments – Post Your Own

#1) On August 02, 2008 at 8:09 AM, alstry (35.71) wrote:

DETROIT (AP) -- U.S. auto sales slumped to a 16-year low in July as automakers failed to keep up with consumers' growing demand for smaller, more fuel-efficient vehicles. While production changes may help that problem, trouble in the credit and auto leasing markets will continue to take a toll on sales.

We probably have twice the dealer base we had sixteen years ago.  Not only that, sales are down on heavy discounting....very heavy discounting.  Imagine the losses being sustained by dealerships right now!!!!!

Based on simple economics, it should not be a shock if at least half the current dealers in America shut down to adjust for the new tighter credit environment.  Imagine the jobs lost, the amount of commericial space vacant, the loss of tax revenues from shutting down half the dealers?

Can someone tell me where the money is going to come from to pruduce green energy and improve infastructure?  What about continuing to pay for services to our growing retired population?  How about raise taxes on auto dealers?

These issues will all start to perculate soon as States and Municipalities are forced to start cutting.

Report this comment
#2) On August 02, 2008 at 8:56 AM, jdlech (< 20) wrote:

Simple, we can start a war in Iran.  This will stimulate demand for vehicles, munitions, aircraft, etc..  The jobs created will boost the economy.  We're already well on our way to declaring war on them anyway.  We still need to pay them back for the hostage crisis; even if that was just payback for our toppling their govt back in 1953.
Not.

Personally, I think it's just a matter of changing where we spend our tax dollars.   All we really need to do is put our military on our own borders and start a massive infrastructure rebuilding project.  Then, our military and our Govt. would be spending all its money here at home instead of handing out 10K bricks to any foreigner who wants one.  A good part of the problem is the trillion dollars ++ we've pulled out of our economy to finance a foreign war.  Fighting in Iraq like we have goes against the common sense known for over 2500 years as penned by perhaps one of the most influential generals of all time.

"He who wishes to fight must first count the cost. When you engage in actual fighting, if victory is long in coming, then men's weapons will grow dull and their ardor will be dampened. If you lay siege to a town, you will exhaust your strength. Again, if the campaign is protracted, the resources of the State will not be equal to the strain. Now, when your weapons are dulled, your ardor dampened, your strength exhausted and your treasure spent, other chieftains will spring up to take advantage of your extremity. Then no man, however wise, will be able to avert the consequences that must ensue... In war, then, let your great object be victory, not lengthy campaigns."

 "There is no instance of a nation benefitting from prolonged warfare."
-Sun Tzu, the Art of War

Report this comment
#3) On August 02, 2008 at 9:28 AM, alstry (35.71) wrote:

In the past, we were able to spend more through credit expansion....HOWEVER, for the first time in many many years.....credit is contracting as many of our financial institutions are insolvent.

Revenues to our governments is evaporating at the fastest pace in history.  There simply is not enough money to pay current obligations and spend on infastructure as well...especially at the state and local level.  In the end, government obtains money through taxes and from those willing to lend...as those willing to lend become deterred, raising taxes will be the only options...unless of course few are making an income.

If we print willy nilly, as a net importer.....all of our people will starve through hyper price inflation.

Right now, our economy is slowing at an incredible rate.  Housing sales down 50%, auto sales down 30%, state revenues down 10%-20% and acellerating ect.....

For the first time ever, even Vegas is slowing...a town that was thought to be recession proof.  There are two multi-billion dollar casino projects that have stopped midway through construction right on the strip.  Between the two we are contemplating over $7 Billion dollars of financing that is in jeopordy of defaulting. $7 Billion dollars not to mention years of potential eyesores on one of the most expensive streets in the nation.

Who woulda thunk????

Report this comment
#4) On August 02, 2008 at 3:47 PM, debtRichQuick (< 20) wrote:

"We probably have twice the dealer base we had sixteen years ago.  Not only that, sales are down on heavy discounting....very heavy discounting.  Imagine the losses being sustained by dealerships right now!!!!!"

This is an area I know farely well. You're dead on. All across the Country, I have heard recently of dealers discounting SUVs and Trucks almost 30% of MSRP just to clear the losses out.

Those that are selling Honda, Toyota, and Nissan are not feeling the pinch as much as GM, Ford, and Chrystler/Dodge. Most dealers selling these manufacturers are really really hurting. I've heard sales figures down 60%-75% (last summer to this summer). Rural areas aren't moving inventory at all. Because of sales collapsing at these dealerships, the financing of inventory has become much tougher. Which means that already strapped dealership owners need to have more cash, but sales are down. This beast is feeding itself in the sense that with slower turn times and lower sales volume, financing rates are actually going higher, which eats into profits and causes the required debt covereage ratios/NOI metrics to fail....resulting in... a default. If you have ever wanted to own a dealership Alstry, firesales are coming. With the restrictive nature of the master leases in place, Ford, GM, and Dodge will kill themselves. Toyota and honda I think know this, as they have been pushing dealers to modify dealerships, even in these times, and they are providing insaine financing insentives for this.  Honda, Toyota, and other import cars with good gas milage are retaining their value, leases are still very feasible. In fact, with the fed using inflation to avoid us realizing we are actually deflating, the import auto manufacturers leasing cars stand to gain....unless the consumer caluculates the FV of their lease and realizes they actually have an asset when it is time to turn the car in....but we know the odds of that.   

"For the first time ever, even Vegas is slowing" The dynamic in Vegas in going to be interesting too.  Vegas had a good run, but with all the billions and billions upon billions that went into casino building, there is going to be an excess supply of rooms that will make FLs condo situation look like a blessing. Back to the days of 5 star meals for a Mc Donalds price, and hotel rooms cheaper than motel six!  

"There are two multi-billion dollar casino projects that have stopped midway through construction right on the strip."

Alstry, are you sure this isn't because of a GC going bust? I heard of a couple projects last year that needed to be taken over because a large GC went bust from some South America Time Share projects. I wish I could remember the name, but some hedge funds were looking at taking the projects over. Lots of lenders have loan documents that cause a project to go dark  for a minimum of 30 days once subs start liening the property...and that is almost guaranteed if a GC goes down. 

Report this comment

Featured Broker Partners


Advertisement