Wednesday, February 25, 2009
During my lifetime, I have only once experienced anything like the feeling of being witness to a sphinx rising from a desert of despair that I feel now. That was in 1961, when I, as a 15-year-old boy, experienced my first political crush when John F. Kennedy and his remarkable family moved into the White House. Then, it seemed a torch had been passed from the hands of an old, tired-but-wise warrior who looked like my grandfather, to another type of warrior--young, glamorous, eloquent, vigorous, compassionate. The times were much like now--menace from abroad, crippled economy at home. JFK swept in like a stiff ocean breeze, stirring souls like so many palm trees lining a beach. Suddenly, it felt as if we could make it through to the other side. America was on the move again, making the world safer for democracy and offering hope to the unfortunate.
It was Ronald Reagan who said, "It's morning in America". He was wrong. It was only the gaudy glitter of Las Vegas at night, harbinger of the greed and decadence that has brought our economy to its knees, like a street beggar tugging at the sleeve of every passing socialist for relief.
Now, Obama has risen from the desert of the Reagan Legacy, guardian of the temple, where lay our most sacred values, facing directly toward the rising sun. Vandals may take pot shots at his nose but they cannot alter his magnificence, his grandeur, his timeless wisdom. As surely as the sun will rise tomorrow, President Obama will be there to show it where its light is most needed. I know this because last night, he was truly a shooting star.
Thursday, February 19, 2009
Tuesday, February 17, 2009
DETROIT — For all the ups and downs, and more downs, that white-collar workers here have lived through, they have always managed to put on a brave face, assuring one another that the American auto industry will come back stronger than ever.
After closing plants and shrinking their blue-collar work force, Detroit’s troubled Big Three are cutting white-collar jobs in their hometown at an unprecedented pace — more than 15,000 in the last year, with more to come.
Unlike union workers laid off from idled factories, salaried workers have no safety net of health care or guaranteed income for a year. At best, it’s a small severance or buyout, and a voucher for a discount on one of the hundreds of thousands of unsold cars that G.M. or Chrysler has sitting in inventory.White-collar workers who walk out of the headquarters of the auto companies face few prospects in the Michigan economy. And with G.M. and Chrysler surviving on federal loans, facing a deadline Tuesday to submit new and broader restructuring plans to the government, the outlook grows only more bleak.
The market for the skills of auto engineers or designers in the prime of their careers has evaporated, with no hope in sight for a turnaround. Moving to another city is hardly an option when there are so few buyers for the suburban homes that would have to be sold first...
G.M., Ford and Chrysler have eliminated a total of 120,000 manufacturing jobs in the last three years. And now the cuts are drastically thinning the ranks of white-collar professionals, turning the once-bustling office towers of the companies into half-empty monuments to better days.
G.M. delivered another blow last week when it said it would reduce its global salaried work force by 14 percent, or 10,000 workers this year. In the Detroit area, that could mean an additional 3,000 workers will be out of a job by May 1. G.M.’s next round of white-collar cuts will not include buyouts. Chrysler has not said whether it plans more cuts.
The Detroit area housing market, already deeply depressed, has plummeted since the buyouts. In January, the foreclosure rate increased 102 percent from the same month a year earlier in Oakland County, Mich., home to a huge number of G.M. and Chrysler employees.The state’s unemployment rate was 10.6 percent in December and continues to climb. Job fairs routinely create mob scenes, drawing thousands of out-of-work employees of the Big Three and their suppliers...
The cuts are extending to the vast network of employees who worked on contract to the Detroit companies. Craig Meyer, employed by a supplier named Aerotek, was told by phone that his seven years as a contract designer at Chrysler were over as he was driving to the home of his in-laws the night before Thanksgiving.
Mr. Meyer has been collecting unemployment since, although the $362 he gets a week is less than half what he was making at Chrysler. “We’re just about able to pay the bills each month,” he said. “Food and gas is when we need to start to dip into savings.”
The prospects are getting worse for Detroit, not better. Last year, United States car sales dropped 18 percent, to 13.2 million, and industry executives expect just 10 million car sales in 2009 and possibly for years to come.“Those white-collar jobs aren’t going to come back any more than the blue-collar jobs are,” said Kevin Boyle, a Detroit native and author of historical books on the city. “As bad as it is everywhere, it’s not as bad as it is in Detroit right now.”
Monday, February 16, 2009
Annual traffic crash deaths are on the verge of dropping below 40,000 for the first time since the early 1960s, and it's not solely because our miserable economy is taking drivers off the roads.
The nation is in the midst of a big decline in driving....
Other reasons, too, seem obvious. Long term, more people are wearing seatbelts -- 83% nationwide, according to the transportation department. Automakers are building safer vehicles. Roads, meanwhile, have been designed in recent decades with fewer sharp curves and dangerous hills, and more safety features such as median barriers, said FHWA spokesman Doug Hecox.
But the rapid drop in fatalities is outpacing the decline in travel and advances in technology.
In a stunning sign of ecological recovery, beavers have returned to Detroit for the first time in perhaps a century....
"It's part of that larger story of ecological recovery," Hartig said, citing the return of many species to the Detroit River area in recent years. Those include sturgeon, whitefish, peregrine falcons, bald eagles, walleye, and, now, a beaver.
"If it's cleaner for them, it's cleaner for us, too," Hartig said...
The river's ecology is recovering, said Tim Payne, Southeast Michigan wildlife supervisor for the Michigan Department of Natural Resources.
"There's no question that having a cleaner river is having an impact on species coming back," he said.
Last week I said that 2009 as-reported earnings estimates for the S&P 500 would be dropping. 2008 earnings had dropped to $29.57 as I wrote the letter. They are now down to $28.60. One of my favorite analysts is David Rosenberg of Merrill Lynch. His forecast for reported earnings for 2009 is now down to $28. That puts the P/E for the S&P 500 at 30.
He also projects "operating" earnings to be $55 for 2010. And, as he writes today:
"For those looking for a silver lining, at least we are going to have a deeper bottom to bounce off. Applying a classic recession-trough multiple of 12x against a forward EPS estimate of $55 would imply an ultimate low of 666 on the S&P 500, likely by October if our estimate of the timing for the end of the official downturn is accurate."
That is a 20% drop from today's close of 829.
Thursday, February 12, 2009
Monday, February 2, 2009
And, thus, we have it--the outlines of the trap that President Obama has tripped with his neck. This quote, taken from yesterday's Washington Post, betrays more plainly than I ever could, the folly of trying to reach across the aisle to make warm-and-fuzzy with the current stripe of Congressional Republicans. The circus tiger that for years has let you put your head in its mouth and remove it unharmed--but for a little drool that tends to get in your eyes--has now shut its yap--hard. With black suits, spotless white shirts, bleached smiles, and wipe-on/wipe-off suntans, Rep. John Boehner and his minions have made a sucker out of America's smartest man.
It was our President, with his ideology of moderation and compromise, that not only stuck his head in it, but also forced that foul mouth open. His promise of reaching across the aisle gave his opponents, unable to muster even a wisp of a smile during his Inauguration, the means to make meaningless his promise of "change we can believe in". All they had to do was to play along, like the team-players they had neither the inclination or the skills to be, and, when the time came to act-not-yak, unite behind their leader (Rush?) and vote in unanimous opposition to whatever it was that their President wanted. By voting to insure Obama's failure, while praising his "bipartisanship"--and, thus, appearing to be willing to compromise if only the terms were right--they could then say, as Rep. Wamp did, that it was Obama's ineffectiveness in attempting to gain their support--a clear failure of leadership--that was the problem.
It may have been a brilliant strategy for their party, if yet disastrous for the country. I can only hope and pray that the public will see through this cynicism and short-sightedness and punish the tiger by thrashing him within a inch of his life in November 2010.