The Coming Recession

[waltky]

Usually what happens on Wall St. eventually trickles down to Main St.

CompUSA to close all of its 103 stores
December 7 2007: The consumer electronics store will run store-closing sales during the holidays to get rid of inventory.

Consumer electronics retailer CompUSA said Friday it will close its stores after the holidays following sale of the company to an affiliate of Gordon Brothers Group, a restructuring firm. CompUSA operates 103 stores, which plan to run store-closing sales during the holidays. Privately held CompUSA, controlled by Mexican financier Carlos Slim Helu's Grupo Carso SA, said discussions were under way to sell certain stores in key markets. Stores that can't be sold will be closed.

Gordon Brothers will also try to sell the company's technical services business, CompUSA TechPro, and online business, CompUSA.com. Terms of the transaction were not disclosed. Dallas-based CompUSA has struggled for nearly a decade with falling prices on personal computers, its most important product, and competition from big-box retailers such as Best Buy. Helu took the company private in 2000. The chain went through several CEOs and tried different turnaround strategies, such as a move this year to focus on core customers such as gadget users and small-business owners.

CompUSA closed more than half its stores this spring and got a cash infusion of $440 million to restructure. During the wind-down, Weinstein and Stephen Gray, managing partner at CRG Partners, will run the company. The chain's current chief executive, Roman Ross, will serve in an advisory role, CompUSA said. DJM Realty, a Gordon Brothers Group affiliate, will review leases of CompUSA's store locations.

Source

[waltky]

Economy Emerges as Top Concern...

Economy Replaces Iraq as Top Concern
December 11, 2007 - Deep Voodoo, Chicken Feathers, and The American Dream

23 Days Until the Iowa Caucuses. The Republican '08ers (including Alan Keyes!) take part Wednesday in a 2:00 pm ET Des Moines Register debate. The 90-minute affair, which takes place in Johnston, Iowa, will be broadcast live on Iowa Public Television. It will also be carried live around the country by the Fox News Channel, the Cable News Network, and C-SPAN 3. The GOP showdown comes on the heels of a new ABC News/Washington Post poll showing that the economy, for the first time, has surpassed the war in Iraq as the top concern among likely voters. "Among all Americans, 44 percent now say the economy's one of the top issues in their vote for president, up 15 points from last month; 37 percent name Iraq, down eight."

The coverage of Mike Huckabee's surge has largely focused on the consistency of his socially conservative views. But he also has stood apart from his Republican rivals in giving voice to economic angst. He hasn't done it with white papers (doesn't have the staff for that). Instead, he's done it with a mix of Lava soap, anecdotes from his days as a Baptist minister, and a promise to make sure that pimps and prostitutes pay their fair share. "For many people on this stage," Huckabee said at the CNBC debate, "the economy's doing terrifically well, but for a lot of Americans it's not doing so well. The people who handle the bags and make the beds at our hotels and serve the food, many of them are having to work two jobs. And that's barely paying the rent." "And you know what else?" he continued. "They don't think that they can afford for their kids to go to college. They're pretty sure they're not going to be able to afford health insurance."

Contrast Huckabee's answer with the answer given by a Gucci-wearing rival. " "I think there is no reason to believe that we're headed for a recession," said Fred Thompson. ". . . I think that not enough has been done to tell what some call the greatest story never told, and that is that we are enjoying a period of growth right now and we should acknowledge what got us there and continue those same policies on into the future." When you combine Huckabee's populist pitch with the Kirsten Fedawa-arranged meals, is there any wonder how Huckabee became what Howard Kurtz calls the media's "favorite Republican"? On the heels of his "Holy Huckabee" Newsweek cover, the former Arkansas governor has landed the cover of the forthcoming New York Times Magazine. For his part, Mitt Romney has snagged the National Review's endorsement.

New National Poll Numbers

[waltky]

Granny thinkin' `bout openin' up a apple sellin' stand for when things get tight...

Greenspan: Odds of recession are climbing
WASHINGTON -- December 13 2007: Former Federal Reserve Chairman says pace of economic growth nearing 'stall speed,' increasing the risks of recession.

Former Federal Reserve Chairman Alan Greenspan says the odds the U.S. will fall into a recession are "clearly rising" and he believes economic growth is "getting close to stall speed." Greenspan, who ran the central bank for 18 1/2 years, until early 2006, offered his views on the economy in an interview on NPR News' Morning Edition that will air on Friday. Excerpts of the interview were released on Thursday.

A severe slump in the housing market, a stubborn credit crisis and turbulence on Wall Street are endangering the country's economic health. Growth in the current October through December period is expected to have slowed to a feeble pace of just 1.5 percent, or less. Economists, including Greenspan, have warned that the chances of a recession are growing. Asked whether the economy will tip into a recession -- something that has not happened since 2001 -- Greenspan said, "It's too soon to say, but the odds are clearly rising."

He said he felt this way because of the slowing pace of growth. "We are getting close to stall speed," he said. "We are far more vulnerable at levels where growth is so slow than we would be otherwise," he added. "Indeed, it's like someone who has an immune system that's not working very well is subject to all sorts of diseases and the economy at this level of growth is subject to all sorts of shocks." Greenspan's remarks come just days after the Federal Reserve, under Chairman Ben Bernanke, sliced a key interest rate for a third time this year to prevent the housing and credit troubles from sinking the economy. The situation poses the biggest challenge yet to Bernanke since succeeding Greenspan in February 2006.

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[Martin]

Waltky, You crack me up with the granny stuff. Apple selling stand , ey?

[waltky]

Yea, Granny's real industrious.

When possum wanted a PlayStation, Uncle Ferd drove her out to the highway so she could collect enough cans to pay for it. He dropped her off an' went fishin' an' a couple hours later when he picked her up, she had a big ol' grocery bag of cans she found. Only had to do that a few times an' she had enough cans to get possum his PlayStation.

She's a real hard worker but sometimes we have to get on her about it. Like when it's hot outside an' the grass needs cuttin'. We tell her to wait until the evenin' when it's a little cooler so she won't get all tuckered out an' not feel like fixin' supper.

Uncle Ferd gets kinda cranky when he's hungry.

[waltky]

Dealing with the coming recession...

'Be prepared for a lot of bumps'
December 17 2007: As confidence on Wall Street continues to erode, Vanguard founder John Bogle, a diehard champion of the individual investor, takes your questions.

At an age when most of his peers have shuffled off into retirement or irrelevance, the 78-year-old founder of mutual fund giant Vanguard remains sprightly and energetic. With $1.3 trillion in assets, Vanguard, based in Valley Forge, Pa., is now the second-largest mutual fund company. Author, sailor, and indefatigable rabble-rouser, John Bogle is as legendary for pioneering index funds as he is for his blunt criticism of his industry's high fees and aggressive marketing - opinions that have put him at odds with his peers while endearing him to legions of investors, or "Bogleheads," nationwide.

Fortune's Matthew Boyle asked Bogle questions you submitted to fortune.com about the subprime crisis, retirement and his favorite CEOs.

What are the odds of a recession right now? - R. CIBIC, WHEATON, ILL.

I would put the odds of a recession at 75 percent. This economy is very much consumer-based, and I believe that 70 percent of the GDP is consumer spending. That's a very high number. Two things are happening there: Consumers have fewer resources because from 2001 to 2005 they took $5 trillion out of real estate. That will not recur. This is a big drop. We also see weakness in auto sales and retail spending - we even see it at companies like Starbucks. There is another, equally important factor in consumer spending, and that is confidence. Consumers are not going to spend if they are worried about the future.

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Stock selloff speeds up
December 17 2007: Wall Street wilts as investors worry about higher inflation, lower economic growth.

Stocks tanked Monday afternoon, extending the previous week's selloff, as investors continued to worry about the economic outlook amid rising inflationary pressures and slower growth prospects. The Dow Jones industrial average and the broader S&P 500 index both lost around 1 percent with 2 hours left in the session. The tech-fueled Nasdaq composite lost 1.7 percent.

"We're just in that rut right now, where people are worrying about credit and buyers are waiting for a bottom," said Ron Kiddoo, chief investment officer at Cozad Asset Management. He said that stocks are likely to remain in a funk through the Christmas holidays. Stocks tumbled Friday at the end of a tough week, after a report showing higher consumer inflation raised bets that the Federal Reserve won't be able to keep cutting interest rates, even as the economy continues to struggle.

Those worries remained in place Monday, as investors sorted through the day's economic news and geared up for the Fed's first credit auction. The Federal Reserve is offering $20 billion in 28-day credit through an auction Monday. The goal is for commercial banks to borrow from the Fed and then boost their lending to businesses and consumers.

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[waltky]

Credit card debt overwhelming the economy...

Unpaid credit cards bedevil Americans
Sun Dec 23, 2007 - Americans are falling behind on their credit card payments at an alarming rate, sending delinquencies and defaults surging by double-digit percentages in the last year and prompting warnings of worse to come.

An Associated Press analysis of financial data from the country's largest card issuers also found that the greatest rise was among accounts more than 90 days in arrears. Experts say these signs of the deterioration of finances of many households are partly a byproduct of the subprime mortgage crisis and could spell more trouble ahead for an already sputtering economy. "Debt eventually leaks into other areas, whether it starts with the mortgage and goes to the credit card or vice versa," said Cliff Tan, a visiting scholar at Stanford University and an expert on credit risk. "We're starting to see leaks now."

The value of credit card accounts at least 30 days late jumped 26 percent to $17.3 billion in October from a year earlier at 17 large credit card trusts examined by the AP. That represented more than 4 percent of the total outstanding principal balances owed to the trusts on credit cards that were issued by banks such as Bank of America and Capital One and for retailers like Home Depot and Wal-Mart. At the same time, defaults — when lenders essentially give up hope of ever being repaid and write off the debt — rose 18 percent to almost $961 million in October, according to filings made by the trusts with the Securities and Exchange Commission.

Serious delinquencies also are up sharply: Some of the nation's biggest lenders — including Advanta, GE Money Bank and HSBC — reported increases of 50 percent or more in the value of accounts that were at least 90 days delinquent when compared with the same period a year ago. The AP analyzed data representing about 325 million individual accounts held in trusts that were created by credit card issuers in order to sell the debt to investors — similar to how many banks packaged and sold subprime mortgage loans. Together, they represent about 45 percent of the $920 billion the Federal Reserve counts as credit card debt owed by Americans.

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As recession looms, government slowly reacts
Sun., Dec. 23, 2007 WASHINGTON - Experts say drastic moves necessary to avoid situation similar to early-80s

After a slow and stumbling start, official Washington is scrambling to try to prevent the unfolding mortgage crisis from pushing the country into recession during an election year. There is a strong feeling, though, that the government will need to do more to avert a financial disaster. One former Treasury secretary advocates temporary tax cuts and emergency spending on the order of $50 billion to $75 billion. Such action could help the U.S. from slipping into what Lawrence Summers, who served under President Clinton, fears could become the worst downturn since the steep 1981-82 recession.

Some Republicans are worried, too. From both Martin Feldstein, who was President Reagan's top economic adviser, and former Federal Reserve Chairman Alan Greenspan have come calls for deeper government intervention to deal with the threat. Before it is all over, the government may have to resort to measures last used in the savings and loan crisis of the 1990s. Back then, it was a new agency to take over failing thrifts sunk by bad loans. Today, it could mean a government agency to buy up billions of dollars of mortgage-backed securities that investors are shunning.

The Bush administration thus far has opted for less dramatic measures. In fact, the administration came reluctantly to the biggest step taken to date — the "teaser freezer" announced two weeks ago. A deal with the mortgage industry will freeze the low introductory "teaser" rates for five years on some subprime mortgages — loans to people with spotty credit histories. The rates were to climb much higher, making the mortgages unaffordable for many people and putting their homes at risk of foreclosure.

More As recession looms, government slowly reacts - Mortgage mess - MSNBC.com

[waltky]

Auto industry hurting...

For car sales, this year may mark worst in 10
Fri., Dec. 28, 2007 - High gas prices, housing slump, weakening economy discourage shoppers

Industry analysts are predicting a lackluster end to an already dismal year for automakers, likely the worst in nearly a decade. Holiday discounts failed to bring consumers out of their funk, and December sales are expected to fall around 4 percent, which would bring the full-year total for U.S. auto sales to 16.1 million vehicles, the lowest volume since 1998.

Sales have been hurt by consumer anxiety over gas prices, the housing crunch and the overall weakening economy. Industry watchers warn that the 2008 auto sales performance could be even weaker.

"Given the current economic challenges and the uncertainty associated with the upcoming presidential election, we do not anticipate that 2008 will be any more robust for the car business," said Jesse Toprak, chief economist for the auto information site Edmunds.com. Toprak said there is little promise for a turnaround until 2009.

More For car sales, this year may mark worst in 10 - Autos - MSNBC.com

[waltky]

Gonna be another year like Reagan's last year in office...

Recession fears sink stocks
January 2 2008: Wall Street starts 2008 on a down note after weak manufacturing report and surging oil prices spark recession fears. Fed minutes in focus too.

Stocks tanked Wednesday afternoon, the first trading day of 2008, as oil and gold prices at record highs and a report showing contraction in the manufacturing sector raised worries about the threat of a recession. The Dow Jones industrial average (INDU) lost 250 points with under an hour left in the session. The broader S&P 500 (INX) index fell 1.3 percent and the tech-fueled Nasdaq (COMPX) composite lost 1.6 percent.

Worries about how the fallout in the credit and housing markets will impact the economy dragged on stocks in the second half of last year and remained in focus at the start of 2008. Adding to such worries: a December survey showing the first contraction in manufacturing activity since January 2007 and the weakest reading since April 2003.

The Institute for Supply Management's manufacturing index fell to 47.7 from 50.8 in November, versus forecasts for a drop to 50.5. A reading below 50 signals contraction. Meanwhile, oil and gold prices spiked to new records. U.S. light crude oil for February delivery briefly topped $100 a barrel for the first time ever, before pulling back a bit. COMEX gold for February delivery surged $23.20 to $861.20 an ounce, an all-time high, rising in tune with other dollar-traded commodities.

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Housing, credit worries prompted Fed cut
January 2 2008: Federal Reserve pared key interest rate on increased uncertainty about the economy's outlook, according to meeting minutes released Wednesday.

Worsening problems in the housing, credit and financial markets drove the Federal Reserve to do an about-face in December and slice its key interest rate yet again with the hope it would help bolster an economy that was losing speed, according to meeting minutes made public Wednesday. All those problems also greatly increased uncertainty about the economy's outlook, prompting Fed policymakers to keep all their options open about their next move, the minutes of the closed door meeting on Dec. 11 revealed.

"Although members agreed that the stance of policy should be eased, they also recognized that the situation was quite fluid and the economic outlook unusually uncertain," the minutes said. Some members, however, feared that if problems grew worse, "a substantial further easing" of rates would be needed. Fed Chairman Ben Bernanke and all but one of his colleagues agreed to trim the Fed key rate by one-quarter percentage point to 4.25 percent, a two-year low. The central bank ordered its key rate to be lowered three times last year; the December reduction was most recent one.

The decision to cut rates essentially marked a reversal for the central bank, which had hinted at its previous meeting in October that the Fed's two rate cuts probably would be sufficient to help the economy survive the housing and credit stresses. But the economy's problems intensified after that meeting, forcing the Fed to change its stance. "Members judged that the softening in the outlook for economic growth warranted an easing of the stance of policy at this meeting," the minutes said.

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[waltky]

Little confidence in the future...

Worries hang over Wall Street
January 3 2008: Futures point to weak start for stocks as recession fears, surging oil prices rattle investors.

Stocks were poised for a weak open Thursday as concerns about the health of the economy hung over investors. At 6:19 a.m. ET, Nasdaq and S&P futures were narrowly lower, suggesting a flat to slightly lower start for Wall Street.

Stocks tanked on Wednesday, with the Dow losing about 221 points, after oil prices reached the $100 a barrel level before closing just below that mark. A report that showed an unexpected decline in manufacturing for the first time in 11 months also ignited new recession fears. Oil prices continued to hover near the $100 a barrel mark in early trading Thursday, with the price of U.S., light crude slipping 6 cents to $99.56 a barrel in electronic trading. But trading is likely to be volatile ahead of the release of the government's weekly inventory report, due at 10:30 a.m. ET.

Also on the economic calendar is a report on private sector employment from payroll services firm ADP, one on online job listings from Monster that showed a decline in December, as well as a report on layoffs from outplacement firm Challenger, Gray & Christmas which showed December layoff announcements well below November and year-earlier levels. All three reports come a day ahead of the government's payrolls report, which is forecast to show a modest gain of 70,000 jobs in December, down from a 97,000 increase in November. The unemployment rate is also forecast to rise to 4.8 percent from 4.7 percent. November factory orders also are on tap Thursday, as is the weekly report on initial jobless claims.

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Caution: Job losses ahead
January 3 2008: Economists say recession fears could lead to weak employment in 2008 as companies may become more cautious about adding workers.

The labor market is expected to end 2007 with a whimper, but even that modest forecast could be seen as "the good old days," since monthly job losses may become common in the year ahead, according to economists. The December employment report due at 8:30 a.m. ET Friday should see a net gain of 70,000 jobs in the month, according to economists surveyed by Briefing.com, down from the 94,000 gain reported in November.

That gain is roughly half of what is seen as necessary to keep pace with the growth in the nation's labor force, and economists are expecting the unemployment rate to edge up to 4.8 percent, a 22-month high for that key measure. Those forecasts were made before Thursday's ADP National Employment Report for December showed only a 40,000 job gain in the private sector in the month, sharply off of the 173,000 gain it calculated for November. The report uses payroll data from hundreds of businesses, both large and small.

The Monster Employment Index, which tracks online job search listings, also fell 14 points in December, with only about half of that decline attributed to seasonal factor, according to the firm. With economists looking for economic growth to stall in the months ahead, many are forecasting that employers will get very cautious with their hiring plans going forward. While much of the job weakness in 2007 was concentrated in residential construction, manufacturing and finance, many believe that weakness will spread this year.

Say good-bye to big raises