The Tesla Comes to Boulder

Sunday, October 25, 2009

The Tesla Comes to Boulder

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This is actually quite the interesting financial story. Because, the Tesla Roadster Sport, a $109,000 electric car, is highly subsidized through an old hybrid-vehicle incentive program. A temporary showroom has opened on Pearl Street here in Boulder and the offer is this... There are ten of the cars available until the end of this year in the state of Colorado with a $42,083 tax credit, or 39 percent off. I actually saw three of the cars on display this morning on my way to the Saturday morning Farmer's Market, my normal Saturday routine. People were swarming around them, test driving them, partaking of the free food and fun. There was a feeling of technology will save us in the air, too. Oh, yeah, and it goes 125 MPH and gets 0 to 60 in 3.9 seconds. And the word is most were already sold before the showroom opened, yesterday. What was my opinion of it? Cute. Very cute. Design team gets an A-plus!

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About this Site:

Each day, Monday through Thursday, this blog aims to assimilate and summarize the most pertinent economic news relevant to the unfolding of this financial crisis which is far from over. The goal is to keep a pulse on the news with the view that this situation is dynamic and ever evolving. Politics is put aside but policy is not.

Fridays are dedicated to agricultural economic news. Agriculture will again become a greater percent of our labor force and GDP, as we revert to a less affluent society, based upon our debt load and the decreased availability of fossil fuels in the not-so-distant future.

There is also an overall emphasis here on green, including biking, smart city planning, urban gardening, and energy issues.

E mail: FinancialNewsExpress (-at-) gmail (-dot-) com

NOTE: If any reader here is interested in becoming a guest contributor to this blog who enjoys writing and has expertise in the areas of economics or agriculture, or who has philosophical, literary, or arts perspectives to offer, please contact me with a sample of your writing.

Favorite Quotes this Month

We are living in a mercenary, monetary, ultramaterialistic, predominantly spiritually dead, intellectually bankrupt society that's endangering the integrity of humanity.
----Rev. Friendly

December (above)

All told the American economy is looking at rolling over about $15 Trillion in debt in the next three years, more than the present GDP of America. That doesn't include any new borrowing from the federal government, state and local governments, and private sector.
----by midtowng

The more demand you steal from the future, the less future demand there is for you to steal.
----Dallas Fed President Richard Fisher

Treasury Secretary Timothy Geithner declares the dominant public policy imperative motivating reform as "to address the moral hazard risk created by what we did, what we had to do in the crisis to save the economy". Yet there is little evidence that moral hazard is being reduced or the economy is being saved. What has been saved is the elite segment of the banking and financial industry at the expense of the long-term health of the economy, while moral hazard is now the accepted operating mode for super banks.
----Henry C K Liu

I think that trying to make safer credit default swaps is like trying to make safer asbestos.
----David Einhorn

November (above)

There is something very wrong in America, the very way it is being run by government, and run over by the big banks. It is high time for middle class America to push back, precisely because our elected officials have not only failed to do so, but have legislated all of this to make it happen. Our government has become an active agent in the gutting of the middle class.
----John Bougearel

What is so astonishing about the first expenditures under TARP was that taxpayer dollars were put into financial institutions that were still, um, left all of their shareholders intact, that were still paying dividends, that paid their creditors 100 cents on the dollar. We put taxpayer money in without saying ‘you’ve got to use up everyone else’s money first.'
----Elizabeth Warren

The middle class is what gives us political stability. It’s what gives us an America that’s all bought in to the whole process. That what we do is not just about a handful of folks at the top who profit from it. We all profit from it. And that’s why we work, and that’s why we vote, and that’s why we accept the outcome of elections, and, that’s why we’re safe to walk our streets, because we have a middle class for which this ultimately works, this country. And every time we hollow that out. Every time we take away a little piece of that. We run the risk that some of what we understood as America, some of what we know as America, begins to die. That’s what scares me.
----Elizabeth Warren

I remain of the view that the only thing worse than rescuing the system would have been not to do so.
----Martin Wolf

October (above)

$$$ Statistics

GDP (annual)
Global
60,000,000,000,000
U.S.
14,000,000,000,000
(6.1% annual decline rate 1st Qtr '09)

DEBT
U.S.
12,000,000,000,000

BAILOUT
U.S.
13,900,000,000,000 in guarantees
4,000,000,000,000 spent so far

Deposits in U.S. banks ('08)
7,000,000,000,000

Derivatives, notional value
Global
1,200,000,000,000,000

Foreign holding U.S. Treasury debt end 2008
3,100,000,000,000

Real Estate of Entire World-end 2008
75,000,000,000,000

Housing Stats for the U.S.:
110,000,000 households
75,500,000 are homeowners
51,600,000 have mortgages
27% were underwater end Q1 2009
DB estimates 50% will be underwater end 2010

World Stock & Bond Markets end 2008
100,000,000,000,000

2008 Deflation stats (source ADB)
Total global loss
60,000,000,000,000
Global stock loss
28,700,000,000,000
Loss U.S. Household Wealth
11,400,000,000,000

Banking Sector as % U.S. GDP
1990----- 4%
2006-----21%

The FDIC:
Insures 8,246 institutions
with $13.5 trillion in assets.
Estimate of amount insured by FDIC:
$ 6 trillion
Bank failures so far: 130 in '09
$ amount in '09: 28+ billion

Fannie/Freddie:
Guarantees $ 5.4 trillion/$12 trillion
of U.S. mortgage debt

Relevant Quotes

As GM goes, so goes the country.

So leap with joy, be blithe and gay,
Or weep, my friends, with sorrow.
What California is today,
The rest will be tomorrow.
--Richard Armour 1962

May your hands always be busy
May your feet always be swift
May you have a strong foundation
when the winds of change shift
----Bob Dylan

It's called the American Dream because you'd have to be asleep to believe it.
----George Carlin

If all the economists were laid end to end, they'd never reach a conclusion.
----George Bernard Shaw

Previous "Favorite Quotes this Month" Below:

The industry can cope with $4 gas. The industry can’t grow or sustain production with $4 gas…We at Chesapeake think that price has to be three times the finding costs, and that translates to $6 to $9 in the next 12 months. ----Aubrey McClendon, Chesapeake CEO I think the broader point here is that there is no one Theory That Explains Everything in economics. Neoclassical economics certainly doesn't explain everything. Neither does Minskyism. Nor Austrian business cycle theory. Nor complexity theory. It seems like the best approach would be an eclectic one that takes lots of different economic models into account. ----Justin Fox In the U.S. and many other countries, the too-big-to-fail banks have become even bigger. The problems are worse than they were in 2007 before the crisis. ----Joseph Stiglitz We have channeled hundreds of billions of dollars of taxpayer money into the pockets of some of the richest people on the face of the earth. The people who took the most imprudent risks were not punished sufficiently. Instead, those of us on the sidelines are paying the bill. For the sake of democracy and capitalism, we need to find another way. ----Russell Roberts The bloated finance industry opposes reform because it would shrink and lose power and wealth. Its ability to defeat reform has grown. Both parties put freshmen from tough districts on the House Financial Services Committee to ensure political contributions and increase the chances of reelection. The committee has grown to an absurd total of 71 members. The only hope for reform in the face of this opposition is public disclosure of the true depth of the crisis and its roots in widespread “control fraud” and the need for fundamental reform. The administration would have to marshal public outrage, document the fraud and abuses, and provide a supporting theory to have any chance of success. ----William K. Black Last fall was an awakening for me, as it was for many in our country. And yet, our Congress has yet to open its eyes, much less do anything about it. In fact conditions have never been better for the banks or worse for the rest of us. Why is this? Who does our Government work for? How much longer will we as Americans tolerate it? ----Dylan Ratigan And what makes the losers in this crisis really mad is the fact that there's now one law for the small debtors and another for big ones. If you lose your job and fall behind on your $1,500 monthly mortgage payment, no one's going to bail you out. But Citigroup can lose $27.7 billion (as it did last year) and count on the federal government to hand it $45 billion. ----Niall Ferguson October will be a big month. ----Meredith Whitney Plain fact is that the Fed and Treasury spent all the available liquidity propping up Wall Street’s toxic asset waste pile and the banks that created it, so now Main Street employers and private investors, and the relatively smaller banks that support them both, must go begging for capital and liquidity in a market where government is the only player left....the real point is the permanent diminution of economic activity in local communities caused when good community and regional banks die due to the end-result of bad fiscal and regulatory policies in Washington. ----Chris Whalen The fact that we have such patent garbage running as a front page New York Times story says either the reporter and his editors lack the ability to think critically (or find sources who could do that for them) or that we have a controlled press. Given that subscriber-driven Bloomberg has even fallen in line, I am inclined to the latter view, but I am still curious as to how this has been achieved. Is this the price of access journalism, or is something more pernicious at work? ----Yves Smith September (above) You know, let me say it this way. The question about whether or not the world as we know it has ended, depends on what you think the world is as we know it. If you think the world as we know it, are a handful of huge financial institutions, the dinosaurs that roamed the earth, then you're right. They are not going to exist without huge infusions of government money. On the other hand if what you really believe is that our economy and our world is 115 million American households you start to see it very differently. And you say, you know if the dinosaurs are gone there are still a lot of stuff to be done. ----Elizabeth Warren El-Erian also said that a gradual weakened US dollar would help a global economic recovery. "A weaker dollar helps the US to produce more and for Asia to consume more," El-Erian said. "But it has to be a slow decline. Too fast and it will hurt rather than help." ----Mohamed El-Erian Few agree with our forecast of chronic deflation. They've never seen anything but inflation in their business careers or lifetimes, so they think that's the way God made the world. Few can remember much about the 1930s, the last time deflation reigned....If we're right, then, on our forecast of slow economic growth in the next decade, unemployment will be high and chronically rising -- absent huge federal intervention. And that intervention is assured since no government -- left, right or center -- can withstand high and rising joblessness for long....debts are denominated in current dollars and therefore will grow in relation to current dollar incomes and the ability to service them. This will be the reverse of inflation, which reduced the value of debts in real terms and makes it easier to service them as incomes rise with inflation. ----Gary Shilling Considering the much more dire economic troubles at present and that the “normalized” credit markets are only so because the Fed is still holding it together, I think it is fair to say that the Fed is going to stick with zero for a lot longer than markets think. ---–Steven Blitz, Pangea Market Advisory Ginnie Mae and FHA are becoming $1 trillion subprime guarantors.....The FHA now insures $560 billion of mortgages—quadruple the amount in 2006. Among the FHA, Ginnie, Fannie and Freddie, nearly nine of every 10 new mortgages in America now carry a federal taxpayer guarantee. ----WSJ Remember, over the past decade (when we believe the secular bear market started) the total debt in the U.S. doubled from $26 trillion in 2000 to just over $52 trillion presently (peaking a few months ago at $54 trillion). This consists of $14 trillion of gross Federal, State and Local Government debt and $38 trillion of private debt. We expect the private debt to continue declining in the future as the deleveraging of America unfolds, while the government debt will very likely explode to the upside as the government tries to slow down the private deleveraging by helping out the entities and individuals in the most trouble with debt (such as over-extended homeowners). ----Comstock Partners, Inc. My fear is that zombie banks can turn us Japanese, but 20 lost years? Sheesh, I shudder to think about it. ----Barry Ritholz August (above) This is not a financial crisis. It's a political one. ----Ilargi Economic forecasting makes weather forecasting look like physics. ----Ben Bernanke "We’re in a phase of policy experimentation. We’ve never seen this." El-Erian compared the predicament of the policy makers to pilots trying to control a plane that’s caught midair in a storm. “Our assumption is that the pilots know what to do. If the cockpit door was open, we would see the pilots banging on the instruments because they’re getting readings they’ve never seen before.” El-Erian said the bankruptcy of Lehman Brothers Holdings Inc. in September gave the financial markets a “cardiac arrest” that accelerated the credit-market crisis. That week, worried about a breakdown of the banking system, he asked his wife to withdraw as much money from the cash machine as she could. ----Mohamed El-Erian The man who never recovered from his fake Nobel week nights spent on solid Stockholm aquavit, wants more stimulus. It looks to me like he always wants more stimulus. After the second one, he'll want a third, and so on. He's the stimulus monster. ----Ilargi To manage the global economy; to revive economies hit by the crisis; to avoid any deterioration of the present crisis and the greater imbalances that would result; to bring about integral and timely disarmament, food security and peace; to guarantee the protection of the environment and to regulate migration: for all this, there is urgent need of a true world political authority, as my predecessor Blessed John XXIII indicated some years ago. ----Pope Benedict XVI In the clearest signal yet that we are still in a potentially devastating global deflationary spiral, The Riksbank, Sweden’s central bank and the world’s oldest central bank, has effectively cut interest rates to minus 0.25% and has started a program of quantitative easing a.k.a printing money. These are the most dramatic moves yet by a major central bank and will be watched the world over for signs of success or failure. ----Edward Harrison Also, as in the 1930s, the opponents of action are peddling scare stories about inflation even as deflation looms. ----Paul Krugman I have long thought of cars as vampires sucking the economic life out of every household in the US. ----Jesse's "Japanese Friend" Much like John McSherry, U.S. and many global consumers gorged themselves on Big Macs of all varieties: burgers to be sure, but also McHouses, McHummers, and McFlatscreens, all financed with excessive amounts of McCredit created under the mistaken assumption that the asset prices securitizing them could never go down. What a colossal McStake that turned out to be.......a “new normal” where growth is slower, profit margins are narrower, and asset returns are smaller than in decades past based upon the delevering and reregulating of the global economy......Greed will come again. But for now, the trend is the other way and it promises to persist for a generation at a minimum. The fact is that American consumers have suffered a collapse in wealth of at least $15 trillion since early 2007. Global estimates are less reliable, but certainly in multiples of that figure......As unemployment approaches 10%, what is less well publicized is that the number of “underutilized” workers in the U.S. has increased dramatically from 15 to 30 million. Those without jobs, as well as those individuals who only work part-time and have become discouraged and stopped looking, total 30 MILLION people. The number is staggering......The new normal will not be investor-friendly unless your forecasting dial is turned to “Pollyanna” or your intelligence quotient is significantly less than 100. ----Bill Gross In just 16 months, the U.S. unemployment rate has doubled from 4.8 percent to 9.5 percent, a remarkable surge by virtually any modern-day metric. It is also likely that the 9.5 percent rate understates the extent to which labor market conditions are deteriorating. ----Mohamed El-Erian July (above) It’s a plot better suited for a John Le Carre novel. Two Japanese men are detained in Italy after allegedly attempting to take $134 billion worth of U.S. bonds over the border into Switzerland.....The dollar is, for better or worse, the core of our world economy and it’s best to keep it stable. News that’s more fitting for international spy novels than the financial pages won’t help that effort. It is incumbent upon the U.S. Treasury to get to the bottom of this tale and keep markets informed.....Other than the U.S., China or Japan, no other nation could theoretically move those amounts. In the absence of clear explanations coming from the Treasury, conspiracy theories are filling the void. ----William Pesek See, debt deflation cannot be avoided once you blow asset bubbles supported by debt - it simply can't. That cycle must end and when it does you wind up with the debt service sucking all the oxygen out of room and prohibiting growth. Once that condition asserts itself asset prices collapse and defaults go parabolic. ----Karl Denninger Optimism will get us out of this crisis only if it is founded in reality. ----Wolfgang Münchau Challenges facing central bankers are akin to heart surgery. They are building a bypass to keep the circulation going. ----Thomas Mayer We will probably be criticized for the resounding success we had in resolving the global bonds' problem. We are now a dangerous example to other indebted countries. ----President Rafael Correa (Ecuador) This is not a good place to be. We have got serious deflationary risks at the moment with all of these imbalances unwinding. People haven’t really focused on deflation yet. But I think they’re going to very soon. ----William White I believe that, before this contraction is over, all leading monetary authorities (Fed, ECB, Bank of England and Bank of Japan) would have set their official policy rates at negative levels, if they had been able to. ----Willem Buiter The amount of homes entering foreclosure and the number of Americans underwater on their mortgages was already accelerating before the recent events. Surely, if high rates persist, another stunning drop in home prices could result in further economic deleveraging - this time with commercial real estate providing wind at its back. All of this is deflationary and all of this is without mentioning the social and generational trends that suggest deflation is inevitable. ----Matt Stiles June (above) Deleverage reduces financial costs while increasing cash flow to allow zombie financial institutions to return to nominal profitability with unearned income and while laying off workers to cut operational cost. Thus we have financial profit inflation with price deflation in a shrinking economy. What we will have going forward is not Weimar Republic-type price hyperinflation, but a financial profit inflation in which zombie financial institutions turn nominally profitable in a collapsing economy. The danger is that this unearned nominal financial profit is mistaken as a sign of economic recovery, inducing the public to invest what remaining wealth they still hold, only to lose more of it at the next market meltdown, which will come when the profit bubble bursts. ----Henry C K Liu The biggest emerging new class in America is the "former middle class." ----Jim Kunstler Very few homes would sell these days stateside without Fannie Mae and Freddie Mac, which are nothing but government vehicles to buy your neighbor a home with your money. ----Ilargi The power of the convergence magnet – that mystical Anglo-Saxon model of liberalization and de-regulation where a prosperous post-industrialization phase relies on an ever-booming financial system – has weakened. No other model is able to step in at this stage. ----Mohamed El-Erian I have repeatedly commented way back when Countrywide was still an independent company that Tanzillo's gaudy suits needed to have much wider stripes. ----Karl Denninger No one was surprised to see Chrysler roll over like a possum on a county highway, but the memory of their muscle cars will linger on like a California surfing song. ----Jim Kunstler May (above)

On Influenza Pandemics

Vitamin D may provide immune protection from viruses and influenza. The proposed theory is that the seasonality of the flu virulence may be caused by Vitamin D deficiency. There is evidence that people who get adequate Vitamin D get fewer colds and viruses in general. Vitamin D affects our immune systems in hundreds of ways on the cellular level. The influenza virus makes the immune system go haywire. That is why the most virulent strains, like the Spanish Flu, caused death in young healthy age groups with healthy immune systems. Their immune systems overreacted, causing cytokine storms mimicking pneumonia. The sun's exposure to our skin provides large amounts of Vitamin D manufacture, as compared to taking supplements, which can be toxic, so just 20 minutes a day including winter months might be your best health insurance policy. Plus, your bones will thank you for it.
--Kalpa (Posted 5/4/2009)

Reference Articles:
Epidemic Influenza And Vitamin D

On the epidemiology of influenza

Epidemic influenza and vitamin D.

The Age of Pandemics

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Financial News Express

Sunday, October 25, 2009