Tuesday, December 30, 2008

We interrupt this Holiday Posting Hiatus to bring you word that the federal government is now apparently bailing out GMAC which--if you can really believe the sheer audacity, stupidity and recklessness of this--will allow GMAC to lower its lending standards to provide auto loans to those just a smidge about subprime.

It's as if George Bush is attempting to morph into history's most inept president ever (and this coming from someone who, up until the last four months, remained positive about President Bush).

Folks, this is cause for great alarm. The federal government is now providing federal funds to re-enable private companies to engage in the same type of loan practices which caused this problem in the first place.

2008 is ending in the bleakest of ways. 2009 is beginning even worse.

UPDATE: More here from the Market Ticker blog on the monumental ridiculousness of this GMAC bailout. We predict that this might be the act that really gets some major attention in the New Year.

Sunday, December 28, 2008

Daily Sprawl in 2009...

...as the year winds down, we'd like to thank all of our readers. The numbers keep growing and that's rewarding to know.

Daily Sprawl will head into 2009 with a somewhat more structured format. For starters, every day, we will post the one article that we think is the daily "must read" for those who follow sprawl and related topics.

Then, twice per week, we'll recommend green and natural products (that's been a big hit with our readers based on feedback).

Finally, we'll feature at least one sprawl related book or movie each week for your reading/viewing pleasure.

We hope that this format will touch the bases with all of our interested readers.

Thanks again for a great 2009...See you on January 2nd, 2009...Chad.

Thursday, December 18, 2008

Hiding the Ball...

...the always interesting Financial Sense website has a good article discussing the current litigation between Bloomberg and the Fed related to the Fed's refusal to disclose certain financial information related to the bailouts.

What might the Fed be hiding behind Door #1?

We probably don't want to know because of the chaos that learning it might mean.

Tuesday, December 16, 2008

Toy Safety This Christmas Season...

The excellent Seventh Generation website has a great new article on tips for buying toys that are safe for our kids:
* First, avoid toys made in China, where lax regulations often mean that anything goes as far as toy safety is concerned. While not all toys from China are unsafe, the country's track record of producing hazardous goods demands a precautionary stance.
* Choose toys made in Western Europe, where countries have strong consumer protection policies. Toys made in America are a good second choice, but consumers should be cautious because lack of domestic regulation means certain hazards like phthalates (see below) may be present.
* Shop in small "boutique" toy stores and mail order catalogs. These merchants traditionally shy away from the mass-market offerings that are the most at-risk for problems and instead offer higher quality toys from more discerning manufacturers and imports from safer countries.
* Unless they're clearly labeled as "phthalate-free," avoid soft plastic toys, which often use these toxic chemicals to maintain pliability. Playthings that commonly contain phthalates include vinyl and other flexible plastic toys as well as polymer play clays. Toys made in Europe are generally safe as the E.U. has largely banned phthalates from children's products. New U.S. regulations will ban phthalates from toys starting in February 2009, but a recent regulatory ruling allows manufacturers to sell out their remaining stock of existing phthalate-contaminated items first.
* Watch out for lead, which in recent years has shown up in the paints and parts of all kinds of toys, including big name brands and vinyl items. Lead test kits are the only way to tell if lead is present in any toy you've bought. If it is, return that toy for a refund.

Grocery Store Contigency Plans

This article discusses how English grocers are game-planning for potential supply line problems. No doubt that U.S. stores are doing the same as the growing problems are apparently not bound by any border.

Thursday, December 11, 2008

The Shallowness of Humans...

...can be especially disturbing in tough economic times like these:
"I try to have Alba come once a week," says Mrs. Sirof. She says she feels "horrible" about laying off Ms. Monterrosa. But there are some perks she isn't willing to give up. "Nothing deters me from my Botox treatments."
Read the entire WSJ article here.

Wednesday, December 10, 2008

Listen to these Experts...

...and you'll get a real sense of the potential problems and their scope.

Click here for the CNN article.

Monday, December 8, 2008

Well, Here's a Real Shocker...

...not really, but some are seeming to pitch it that way.

CNBC headline: "Many Borrowers Re-Default After Mortgage Is Modified"

The problem here is that many of the decision-makers continue to ignore the fact that the current crisis is one of excess credit rather than insufficient credit. That is to say, there is too much credit in the system when compared to the assets that back the credit and the ability to repay that credit.

Simply rejiggering these loans to make them somewhat less onerous doesn't address that underlying problem. At best, it delays it. To truly reach a solution, we have to understand the reality that many of these loans should not have been written in the first place.

Tweaking, er, I mean "modifying", them in increments will not ultimately stabilize them. Instead, they have to go away (aka default) in order to bring the amount of credit back into line with the assets backing it.

Until this is understood, the crisis will continue to linger on...

When the Dust Clears...

...expect to see the rating agencies, like Moody's, among those most profusely sued and investigated.


Well, as this NYT article points out, their lack of institutional integrity is startling.

Wednesday, December 3, 2008

The Domestic Automaker Bankruptcy...

...watch continues. This LA Times story explains what we've been reporting for awhile now: GM could go under soon with Chrysler close behind.

As someone who grew up in the Detroit area, I'm a nostalgic fan of the domestic auto industry. However, what reason have these companies given taxpayers to believe that these billions in bailout dollars is not simply a PAUSE button on the road toward a final crash?

Very little from everything that I've read. Stay tuned.

UPDATE: More insightful analysis from the Econobrowser blog on the domestic automakers ongoing death dance.

UPDATE #2: "Forgive me for not believing a damn thing Ford says." So says Mish Shedlock. Click here for his explanation of why.

Tuesday, December 2, 2008

I've been told in the past that one strong indicator of prolonged economic trouble is the number of utility shutoffs. The idea is that some of the last bills to go unpaid are the gas, water, and electricity ones.

If that's the case, then this WSJ article is very concerning.

The Market Ticker Blog...

...continues to speak the truth:
The bottom line is that there is no fix for this mess nor will the economy recover until and unless the bad debt is removed from the system.