Now is the Winter of our Discontent
July 16, 2008 6:53 PM Subscribe
With its totemic population (pigmen and gente, riskloves and Old Maid Cards), and idiosyncratic lingo ("Q que aconteceu?") Russ Winter's blog could sometimes be mistaken for a work of speculative fiction, but in fact it's the most compulsive readable financial commentary out there... whether you agree with his massively bleak outlook or not.
Russ is cool. ~15% of what I think I know about the macro situation comes from his blog.
posted by yort at 7:42 PM on July 16, 2008
posted by yort at 7:42 PM on July 16, 2008
Does the rule "When random people on the street start giving you stock tips, it's time to get out of the market" apply in the opposite direction? I'm starting to think that when even just random people are so down on the market that it must be at it's bottom and time to get in.
posted by empath at 7:50 PM on July 16, 2008 [2 favorites]
posted by empath at 7:50 PM on July 16, 2008 [2 favorites]
(this comment isn't in reference to that blog, just the general sense of doom and gloom about the economy)
posted by empath at 7:51 PM on July 16, 2008
posted by empath at 7:51 PM on July 16, 2008
It took me an embarrassingly long time to figure out that when he says "sheet sandwich," he's bowlderizing "shit sandwich."
I thought it was some sort of high finance in-joke.
posted by Kadin2048 at 8:31 PM on July 16, 2008
I thought it was some sort of high finance in-joke.
posted by Kadin2048 at 8:31 PM on July 16, 2008
empath: I hear ya. I happened to start going long on a certain national bank's LEAPS calls starting on Friday. I was down 30% yesterday during the meltdown but am set up well to see what happens this earnings season. . .
nb: I've been playing superbear in the market and my IRA (ex-401K) has made 16% since June 2, mostly on SDS and SRS. I'm out of them now, but having ridden SRS from 101 to 112 and (again) 101 to 116, I'll be edging into that again fer sure.
My overall thesis is debt, underemployment, and the malaise associated with piss-poor capital allocation & opportunities are going to kill the US consumer going forward. I see Japanese deflation ahead, or as a certain blog commenter quipped,
"I see debt people."
It didn't have to be this way but this country just hasn't been able to get its act together this decade. GM should have done the R&D on the Prius. We should have safer nuke plants in advanced testing. The Million Solar Roofs should be a lot farther than it is. The $500B we've blown on making Iraq a Shiite state should have gone towards public infrastructure and education.
Healtchare needs to go single-payer. Those profiting from economic rents and not productive enterprise need to be taxed more so we can close the budget deficit and not be beholden to foreign capital inflows.
Etc etc.
posted by yort at 9:06 PM on July 16, 2008 [1 favorite]
nb: I've been playing superbear in the market and my IRA (ex-401K) has made 16% since June 2, mostly on SDS and SRS. I'm out of them now, but having ridden SRS from 101 to 112 and (again) 101 to 116, I'll be edging into that again fer sure.
My overall thesis is debt, underemployment, and the malaise associated with piss-poor capital allocation & opportunities are going to kill the US consumer going forward. I see Japanese deflation ahead, or as a certain blog commenter quipped,
"I see debt people."
It didn't have to be this way but this country just hasn't been able to get its act together this decade. GM should have done the R&D on the Prius. We should have safer nuke plants in advanced testing. The Million Solar Roofs should be a lot farther than it is. The $500B we've blown on making Iraq a Shiite state should have gone towards public infrastructure and education.
Healtchare needs to go single-payer. Those profiting from economic rents and not productive enterprise need to be taxed more so we can close the budget deficit and not be beholden to foreign capital inflows.
Etc etc.
posted by yort at 9:06 PM on July 16, 2008 [1 favorite]
^ utterly fascinating, BC. What a great forensic analysis of the disaster of "big government" throwing $1.5B at a glamor project with piss-poor oversight (undoubtedly its usual modus operandi). Just goes to show that innovation is Hard and often takes lateral thinking.
$1.5B of gov't funding . . . at $100k per person•year over 10 years that's 1500 people working fulltime on that, for nothing.
poignant comment:
If the price of gas had kept up w/ inflation and were now $3/gallon, supercar would be a lot more attractive. The additional gas "tax" could go to increasing availability of diesel fuel and to improving mass transit.
Submitted by M.E.
9:21 PM EST, Mar 30, 2003
posted by yort at 10:46 PM on July 16, 2008
$1.5B of gov't funding . . . at $100k per person•year over 10 years that's 1500 people working fulltime on that, for nothing.
poignant comment:
If the price of gas had kept up w/ inflation and were now $3/gallon, supercar would be a lot more attractive. The additional gas "tax" could go to increasing availability of diesel fuel and to improving mass transit.
Submitted by M.E.
9:21 PM EST, Mar 30, 2003
posted by yort at 10:46 PM on July 16, 2008
The issue is that no one really understood the stakes. Why do the Japanese get it and American's didn't? Because one of the reasons they lost World War 2, was because they couldn't get oil to fuel their industrial machine. US submarines sank their tankers.
The Japanese never forgot that.
posted by wuwei at 12:12 AM on July 17, 2008
The Japanese never forgot that.
posted by wuwei at 12:12 AM on July 17, 2008
Wuwei: I'm not sure it's really a Japanese/American national-culture thing; the problem seems to be mostly within the U.S. automakers' organizational culture.
That Supercar article really drives home the point. The Big Three with the help of the U.S. government (in a blatant subsidy attempt) spent over a billion dollars and a decade trying to make a hybrid vehicle for the mass market. They told Toyota to take a hike — Toyota did, and came back with the Prius.
If the U.S. automakers fail, it'll be because they were too conservative, too afraid of change, and too unwieldy and inflexible to make the changes when it became apparent that they were no longer competitive. Toyota, developing as it has in the shadow of the U.S. automakers, has these problems to a far lesser degree.
The auto market has demanded far more flexibility and long-term planning than the Big Three have demonstrated, historically. When they've had a success (like SUVs in the Age of Cheap Gas), they've held onto the strategy for far longer than they ought to have, and bet too heavily on it. This has left them woefully unprepared when the market changes abruptly. (To be fair, Toyota seems to have been thrown slightly by the current gas price shock, and in retrospect put way too much investment into light trucks.) You would think that they'd have learned from their past mistakes that they need to hedge their bets more, but for whatever reason, they don't.
There's no reason why American business has to be this way. The Big Three are the worst kind of dinosaurs, and have ridiculous quantities of historical baggage. When they finally collapse (as Chrysler pretty much already has), there's a possibility that we might see real flexibility and innovation in the U.S. auto market. Unfortunately, as long as they remain alive, the government will probably continue to provide life support and domestic competition that could give Toyota a run for its money on merit will remain stifled.
There's no reason why Americans can't build a better Prius than Toyota; we just need to get the current automakers out of the way first.
posted by Kadin2048 at 8:08 AM on July 17, 2008
That Supercar article really drives home the point. The Big Three with the help of the U.S. government (in a blatant subsidy attempt) spent over a billion dollars and a decade trying to make a hybrid vehicle for the mass market. They told Toyota to take a hike — Toyota did, and came back with the Prius.
If the U.S. automakers fail, it'll be because they were too conservative, too afraid of change, and too unwieldy and inflexible to make the changes when it became apparent that they were no longer competitive. Toyota, developing as it has in the shadow of the U.S. automakers, has these problems to a far lesser degree.
The auto market has demanded far more flexibility and long-term planning than the Big Three have demonstrated, historically. When they've had a success (like SUVs in the Age of Cheap Gas), they've held onto the strategy for far longer than they ought to have, and bet too heavily on it. This has left them woefully unprepared when the market changes abruptly. (To be fair, Toyota seems to have been thrown slightly by the current gas price shock, and in retrospect put way too much investment into light trucks.) You would think that they'd have learned from their past mistakes that they need to hedge their bets more, but for whatever reason, they don't.
There's no reason why American business has to be this way. The Big Three are the worst kind of dinosaurs, and have ridiculous quantities of historical baggage. When they finally collapse (as Chrysler pretty much already has), there's a possibility that we might see real flexibility and innovation in the U.S. auto market. Unfortunately, as long as they remain alive, the government will probably continue to provide life support and domestic competition that could give Toyota a run for its money on merit will remain stifled.
There's no reason why Americans can't build a better Prius than Toyota; we just need to get the current automakers out of the way first.
posted by Kadin2048 at 8:08 AM on July 17, 2008
aside from russ, mish is also a great read. i also scan denninger regularly.
this is a great 'on point' interview with martin feldstein. if you think this economy is going to pick up anytime before the end of next year, please have a listen. you can almost hear him working thru his denial phase on air.
this is a great video contrasting cnbc commentator's real estate predictions from last year with today.
and this is an interview with meredith whitney saying that we're only about 1/3 of the way thru the bank writedowns, she's been calling events pretty reliably.
and this is a chart detailing public statements during the market crash of 1929 and on, hilariously/hideously grim, especially if you imagine bush instead, telling us how strong the economy is, or bernanke saying that the subprime crisis has been contained (mission accomplished!).
oil averaging $130/barrel for the rest of this year will kill the airlines, ford/gm. many state/city/school budgets are being overwhelmed by the energy/capital crisis, (cali, for instance, has an $18 billion shortfall this year, utah is switching govt workers to a 4 day work week)
i'll leave y'all with a note i sent to friends last night:
be well, enjoy the moment, but please do start to prepare, develop an emergency contact plan for family/friends (write down critical numbers, collect out of state family landlines as a backup), make sure those who must have them have an extra month or two of meds, remember that the supermarkets & gas stations have only 3-4 days worth of supply should there be an interruption.
if we start a new war, in pakistan or iran, there is a significant likelihood that we will lose 40% or more of our oil supply. this could happen within a couple of weeks. $200/barrel will be considered cheap.
posted by kimyo at 10:57 AM on July 17, 2008 [1 favorite]
this is a great 'on point' interview with martin feldstein. if you think this economy is going to pick up anytime before the end of next year, please have a listen. you can almost hear him working thru his denial phase on air.
this is a great video contrasting cnbc commentator's real estate predictions from last year with today.
and this is an interview with meredith whitney saying that we're only about 1/3 of the way thru the bank writedowns, she's been calling events pretty reliably.
and this is a chart detailing public statements during the market crash of 1929 and on, hilariously/hideously grim, especially if you imagine bush instead, telling us how strong the economy is, or bernanke saying that the subprime crisis has been contained (mission accomplished!).
oil averaging $130/barrel for the rest of this year will kill the airlines, ford/gm. many state/city/school budgets are being overwhelmed by the energy/capital crisis, (cali, for instance, has an $18 billion shortfall this year, utah is switching govt workers to a 4 day work week)
i'll leave y'all with a note i sent to friends last night:
be well, enjoy the moment, but please do start to prepare, develop an emergency contact plan for family/friends (write down critical numbers, collect out of state family landlines as a backup), make sure those who must have them have an extra month or two of meds, remember that the supermarkets & gas stations have only 3-4 days worth of supply should there be an interruption.
if we start a new war, in pakistan or iran, there is a significant likelihood that we will lose 40% or more of our oil supply. this could happen within a couple of weeks. $200/barrel will be considered cheap.
posted by kimyo at 10:57 AM on July 17, 2008 [1 favorite]
>spent over a billion dollars
three billion, actually, counting the industry-borne costs.
posted by yort at 11:09 AM on July 17, 2008
three billion, actually, counting the industry-borne costs.
posted by yort at 11:09 AM on July 17, 2008
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