Things that I have learned today...
The following is a list of the random things that I have learned over the past 24 hours. Some of them useful, some of them not so much:
- Walmart (WMT) sells 40% of the DVDs in the United States and it is reducing its shelf space for them.
- According to industry tracker R.L. Polk, which has a virtual monopoly on vehicle registration data, the median age of light vehicles in the United States today is a record 9.4 years. That's a lot older than I thought it would be. I must have a skewed perspective from living in the area that I do.
There's definitely some pent up demand for new vehicles. The question is whether people will be able to afford them, particularly now that credit is tight and HELOCs and other forms of mortgage-related finance sources have been turned off. Another question is how will the bankruptcy of Chrysler and the likely bankruptcy of General Motors impact light vehicle sales. I suspect that these companies' competitors will pick up a large percentage of their lost sales, but probably not all of them, as a result the net effect of their financial problems will likely act as a drag on auto sales for a while.
- Never, ever reach for something that you have dropped in a public toilet no matter how valuable it is: Toilets of Terror
- The Pension Benefit Guaranty Corp., which guarantees private pension payments for 44 million Americans, faces a massive, unprecedented $33.5 billion deficit for the first half of fiscal year 2009. The pension funds at the "Big 3" U.S. automakers are currently underfunded by an estimated $77 billion. Who's going to pay for that? Pension guarantor: unprecedented deficit
Pension Benefit Guaranty Corp - Protecting America's Pensions (but who's protecting us from them?)
- An increasing number of companies are forcing their employees to take several week unpaid vacations this summer.
A recent Hewitt survey of human resources executives at 518 U.S. companies found that, as of the start of April, 44% had either already undertaken or were considering implementing shortened workweeks or involuntary furloughs at their organizations.
These people still have jobs, so this sort of thing won't show up in the unemployment statistics...but it will definitely have an effect upon consumption. America goes on furlough
- Fannie and Freddie in 'critical' condition The two account for a combined share of 73% of mortgage originations in the United States during the second half of 2008. They are burning through government money like crazy and are having a tough time recruiting employees.
- Geithner's gift to Wall Street
Imagine if you were not really in the market for a house but the government came along and said that it would finance 94% of a home's purchase price with a mortgage rate of less than 3%. Still not interested? Wait, Uncle Sam has some additional sweeteners: if you do the deal and buy the house for only 6% down, you also get the equivalent of rental income every month to the tune of at least an annualized yield of 10% of the purchase price.
But wait there's still more: if, say, after two years, you decide you don't want the house any longer, you can just walk away from it. No need to pay the balance of the mortgage (it won't affect your credit rating), and you can keep the rental income received to date.
That's essentially the deal that Treasury Secretary Timothy Geithner has offered qualified professional investors who participate in the so-called TALF.
The values of many of these assets are not low because of a temporary aberration in normal markets. We are closer to what "normal" really is today than we were at the height of the bubble. Who is paying for all of this?