Archive for December, 2008

  • Stat of the Day
    , December 10th, 2008 at 10:01 am

    In 2007, Toyota sold 9.37 million vehicles.
    In 2007, General Motors sold 9.37 million vehicles.
    In 2007, Toyota made $17.1 billion.
    In 2007, General Motors lost $38.7 billion.
    (Source: Mises Blog)

  • Happy 400th Birthday John Milton
    , December 9th, 2008 at 4:57 pm

    If at great things thou would’st arrive, Get riches first, get wealth, and treasure heap, Not difficult, if thou hearken to me; Riches are mine, fortune is in my hand, They whom I favor thrive in wealth amain, While virtue, valor, wisdom, sit in want.
    John_Milton_-_Project_Gutenberg_eText_13619.jpg

  • Perfect
    , December 9th, 2008 at 1:29 am

    Here’s the December calendar for a Unitarian church near me. I’m not making this up. It’ll be closed for Christmas.

  • Profits for Free
    , December 8th, 2008 at 11:21 pm

    Want to buy a dollar for 80 cents? Look at some stocks:

    Stocks have fallen so far that 2,267 companies around the globe are offering profits to investors for free. That’s eight times as many as at the end of the last bear market, when the shares rose 115 percent over the next year.
    Bank of New York Mellon Corp. in New York, Danieli SpA in Buttrio, Italy and Seoul-based Namyang Dairy Products Co. hold more cash than the value of their stock and debt as the slowing world economy wiped out $32 trillion in capitalization this year. Companies in the MSCI World Index trade for an average $1.17 per dollar of net assets, the lowest since at least 1995, and 39 percent sell at a discount to shareholder equity, data compiled by Bloomberg show.
    The cash-rich companies allow investors to pay nothing for future earnings streams, providing opportunities to buyers concerned about deflation, according to Jean-Marie Eveillard, whose $16 billion First Eagle Global Fund has beaten 98 percent of competitors this year. Microsoft Corp. and Novo Nordisk A/S, which generate the most money compared with debt, can expand even if lower consumer demand erodes profits.
    “Cash is king, not necessarily for the investor but for corporations,” Eveillard said in an interview from New York last week. His fund holds both Microsoft and Namyang Dairy. “It’s useful to sit on a ton of cash, No. 1 to survive, as opposed to going bankrupt, and No. 2 to seize opportunities either to make acquisitions cheaply or to squeeze competitors.”

    Please, cash isn’t king…it’s a dictator.

  • Tribune Co. Files for Bankruptcy
    , December 8th, 2008 at 8:55 pm

    The Tribune Company files for bankruptcy. I know because it says so in the New York Times.
    Meanwhile, the New York Times (NYT) takes out a second mortgage.

  • T-Bills Hit Lowest Rate Since 1929
    , December 8th, 2008 at 8:50 pm

    I forget. What else happened in 1929?
    Oh, right. That.

    The Treasury sold $27 billion in three-month bills at the lowest rate since it starting auctioning the securities in 1929 amid record demand for the safety of U.S. debt during the worst financial crisis since the Great Depression.
    The bills were sold at a high discount rate of 0.005 percent, the Treasury said today in Washington. At last week’s auction, the bills drew a rate of 0.05 percent. The government received bids for the bills totaling more than triple the amount sold.
    “It’s all about capital preservation,” said John Canavan, a fixed-income analyst in Princeton, New Jersey, at Stone & McCarthy Research Associates. “People are afraid to put their money anywhere else so they aren’t terribly concerned about returns.”
    The Treasury also sold $27 billion in six-month bills at a high discount rate of 0.30 percent, the lowest since at least 1958. At last week’s auction, the six-month bills drew a rate of 0.43 percent.

    Paul Krugman said recently about a stimulus that we shouldn’t worry about a size limit, and spend as much as we can. I’m still for flooding the market with a massive short-term auction. I think this would soften two problems. It would hopefully force money off the sidelines, while also raising money for the Treasury to buy high yield preferreds in troubled banks.

  • Danaher Cuts Guidance
    , December 8th, 2008 at 8:46 pm

    Today, Danaher (DHR) pared back its Q4 guidance to a range of $1.03 to $1.10 a share from its previous forecast of $1.17 to $1.25 a share. The CEO said, “Global economic conditions have continued to deteriorate over the last several weeks impacting many of our customers as well as a number of our businesses. In addition, the strengthening of the dollar against other global currencies has created additional headwinds that will negatively impact our financial results.”
    As bad as that sounds, the change in guidance is far less than what the rest of the market is experiencing. The projections for 2009 earnings at the start of 2008 were way off the mark. I was impressed to see shares of Danaher rally today on its lower forecast. The stock is still a very good buy.

  • Brad DeLong on the Crisis
    , December 8th, 2008 at 8:36 pm

    From Cato Unbound, Professor DeLong jumps to the heart of the matter.

    Things are even worse as far as the risk discount is concerned. Our models predict that in normal times, with the ability to diversify portfolios that exists today, the risk discount on assets like corporate equities should be around 1% per year. It is more like 5% per year in normal times — and more like 10% per year today. And our models for why the risk discount has taken such a huge upward leap in the past year and a half are little better than simple handwaving and just-so stories. Our current financial crisis remains largely a mystery: a $2 trillion impulse in lost value of securitized mortgages has set in motion a financial accelerator that we do not understand at any deep level but that has led to ten times the total losses in financial wealth of the impulse.

    There’s not much else to say. With this crisis, some ideological humility is needed. Someday, a bright economist will develop a theory for what’s going on today. But for right now, much of it is a mystery.
    (H/T: Arnold Kling)

  • Light Posting Today
    , December 8th, 2008 at 6:53 am

    I have jury duty.

  • The Catastrophe Capitalist
    , December 7th, 2008 at 11:10 pm

    NY Mag looks at short-seller Jim Chanos.