The Daily Grunt Archive
May 13, 2008
Wal-Mart profit rises 6.9 pct, beats Street view
Tuesday May 13, 7:02 am ET
BENTONVILLE, Ark. (AP) -- Wal-Mart Stores Inc. says its profit rose nearly 7 percent in its first quarter on higher sales. The results beat Wall Street's expectations.
The world's biggest retailer said Tuesday it earned $3.02 billion, or 76 cents per share, in the three months ended April 30. That was up from $2.83 billion, or 68 cents per share a year earlier.
JHK's Comment: In a contracting overall economy, this means one thing: that WalMart gets all the business while all other businesses, large, medium, and small, lose. Anybody who thinks this is cause for cheerleading misunderstands what is happening to this country. The good news behind this is that WalMart's equation for doing business will suffer hugely as the permanent oil crisis gains traction. Like the giant mammal, Baluchitherium, of the Miocene age, WalMart has assumed its greatest scale just before extinction.
May 6, 2008
The Gas Tax Holiday
This is one of the more amazingly inane ideas to come along in a long time. It appears to be supported by just about everybody except Barak Obama and Sheldon Silver, speaker of the New York Legislative Assembly. Hillary Clinton and John McCain gave it the full monte demagogue treatment.
The discussions about it so far have mostly focused on the probability that the gasoline retailers would simply raise the pump price to get it back up to exactly where it was before. A few people mentioned that gasoline taxes make up a subtantial amount of the funding for bridge and highway repairs -- an important point. But to me, the most obvious shortcoming of the Gas Tax Holiday has been completely overlooked, namely, the impossibility of coming back in the fall and restoring the tax! What politician would have the cojones to tell the public that the holiday was over?
March 17, 2008
A correspondent working for the US Dept of Agriculture brings strange tidings about government solvency.
"I'm writing you this email to tell you something which I find pretty
disturbing. USDA is the second largest federal office building in D.C. It is
massive, with hallways that stretch for three city blocks on seven floors, and
one block the other way on each floor. For the last few months, every other
overhead light in the halls has had their bulbs removed. Sometimes, two lights
in a row are dark. It's bright enough to walk down, no doubt, but still
noticeably darker. Moreoever, each floor has two banks of elevators at each
end, with three elevators per bank. For the last few months, one elevator at
each bank has been put out of commission. Further, employees are now forbidden
from putting space heaters in their offices, which many have done because the
heating in the building has been turned down to a level where even I, a
descendant of hardy Russian peasants, feel cold.
"What does this tell me? It tells me that the government of the United States of America is having difficulty paying its utility bills. Think about that.
Federal offices cannot keep all the lights on, or keep the heat sufficiently
high. (We'll see what the air conditioning is like in a few months, when D.C.
turns into a humid swamp). This is what one expects of Third World governments,
not the USA."
March 7, 2008
What a week we are having in the financial and political realms.
Too bad one of Obama's advance persons called Hillary "a monster." It was an altogether apt description, though I would have been more specific -- a monster of ambition, right out of Shakespeare's playbook.
News on the finacial front could not be more dire. This is like watching a sequoia tree topple in the forest. The boyz at Treasury and on Wall Street better load up on methdrine. It's going to be a sleepless weekend.
Feb 24, 2008
Blowing More Green Smoke Up Our Own Ass
Virgin Airlines CEO Richard Branson announced the beginning of "green" air travel with great fanfare over the weekend by flying a big Airbus jet plane on a combination of coconut and palm oil derived fuel. Now the public is supposed to rest assured that the airline industry has been "saved" by "new technology." It's possible that Branson actually believes this bullshit -- since, contrary to conventional belief, you don't have to be especially intelligent to succeed in business. But the public is sure to be disappointed as reality asserts itself and they discover that the stunt doesn't scale world-wide. That is, sure, you can demonstrate that "a" jet plane can fly on bio-fuel. But can you run the entire global airline fleet on coconut and palm oil, or even a fraction of it? Of course not -- unless you cut down the entire Amazon rain forest and replant it with oil tree crops. Not to mention that the CO2 emissions spraying out of bio-fuel jets at 38,000 feet is not materially different from regular jet fuel exhaust. This is just another tragic attempt to persuade ourselves that we don't have to change our behavior.
Feb 20, 2008
Death of the Airline Industry
I knew I was in trouble when I checked in and the Northwest departure board behind the ticket desk said the 5:39PM to Minneapolis was "delayed." That's when you know you're in for an evening of, at least, being lied to and fucked around. Up at the gate, they let it be known that the 5:39 would now leave at 6:08. That was cool. I had a two-hour layover in the Twin Cities for my connection to Duluth. As it happened, though, they didn't board us until 6:00. We pushed back at 6:30, taxied out to the runway, and then sat there for another hour. About halfway through that wait, the pilot got on the PA and said they were "waiting for their numbers." A half hour later he came back on the PA and said the plane was "over its weight limit" and we had to go back to the gate and drop some people off. Huh...? This was a small regional jet. There were 12 rows of two across, and there were a few empty seats. So, we get back to the gate and we sit there for another half hour while a technician comes on board with a clipboard and palavers with the flight crew. It's now two hours past the original schduled departure time. So even if we left that instant, I'd miss my connection to Duluth and be stuck in the Minneapolis airport all night. As it happened, the pilot asked for 13 volunteers to get off the plane. (There was some grumbling about the obvious illogic of a plane designed with 48 seats being unable to carry 36 passengers... but let's not even go there....) If they couldn't get 13 volunteers, the pilot said, they'd cancel the whole flight (and then everybody would be fucked, I inferred). I got up with a bunch of other volunteers -- thirteen, finally -- and straggled off the plane. We hung around the gate for another hour and half waiting to get re-booked for tomorrow, and to get our gate-checked luggage back. The most amazing thing about the whole misadventure is how dim the Northwest employees acted. From the flight crew to the gate agent, nobody really seemed to know what was going on or know what they were doing. I actually don't know if the plane ever did leave. It was still parked at the gate when I finally left the airport at 9:30. By the time I got home it was 10:00 PM. I have to get up at 3:30AM to make a 6:00AM flight tomorrow. (Sigh....)
February 4, 2001
I got a letter from a lady in South Africa:
"I am watching South Africa with an eye on what, when and how the global trends contributing to your Long Emergency will start taking effect. But the government here, together with some outside influences of the stock market, have plunged South Africa into the Premature Long Emergency. It has only been a couple of weeks, but the country is in dire straits. . . ."
Click this link to her commentary
February 1, 2008:
Yesterday I wrote
"Calling for a crash in the equity markets
Perhaps before the end of the week
Developments the past several days around the finace sector suggest to me that a crash in the stock indexes is imminent. . . ."
Bad call, I'd say....
The Dow then proceeded to shoot up 207 points (Nasdaq 40, S & P 23)
What happened? One of three leading bond insurers which was about to have its credit rating downgraded, Ambec Financial, retained its AAA rating -- while two other troubled "monolines," FGIC and MBIA, were indeed downgraded by Standard & Poors. The "rescue" of Ambec apparently sent the markets into a psychotic transport of manic spirits. All three of these outfits may be functionally insolvent, almost certainly incapable of meeting their obligations to pay out on losses from trash mortgage-backed securities.
I still maintain that the finance sector as a whole is hopelessly choking on losses, and that any day now we will see blood on Wall Street.
January 9, 2008
A Weird Outcome in New Hampshire:
"This campaign is about people," Hillary said, sounding more dreadfully Nixonian every day.
NPR's morning coverage asked one female Clinton voter what moved her to vote for the former first lady. The woman said it was the tears that Mrs. Clinton shed in a diner a few days before the vote. Oh great. So now we can look forward to a "weeping" campaign instead of a "listening" campaign. That would sure set America up for a soap opera presidency.
I'm still supporting Mr. Edwards, the distant third place finisher, though I liked Mr. Obama's rousing concession speech.
Dec13, 2007
From THE NEW YORK TIMES:
This Is the Sound of a Bubble Bursting
". . . .But last December, Ms. Pellegrino’s husband died unexpectedly, leaving her with the two businesses, both deeply in debt, and $207,000 she owed against her home, which is now worth about $130,000, she says.
Disabled and 53 years old, Ms. Pellegrino does not work. She says she lives on a $1,259 monthly Social Security check. Her daughter, a college student, receives $325 a month for child support for one child. Charlene Pellegrino has been looking on the Web for office work for months, but with so many people being laid off, she has come up empty, she says. They have not paid their mortgage in four months."
Dec 7, 2007
A heartwarming story that sheds light on the astounding dysfunction of our health care system:
UnitedHealth's McGuire Keeps $800 Million in Options
Dec. 7 (Bloomberg) -- UnitedHealth Group Inc.'s former Chief Executive Officer William W. McGuire will keep more than $800 million in stock options after repaying over $600 million because of a backdating scandal.
Other past and present officers have relinquished about $300 million, including $190 million that current CEO Stephen J. Hemsley gave up voluntarily a year ago, UnitedHealth said. The company announced the repayments yesterday in connection with the settlement of a lawsuit filed by pension funds and other investors on behalf of the company.
Dec. 2, 2007
OPEC CHECKS THE "NO" BOX ON PRODUCTION INCREASE
This might be construed as conclusive evidence that Saudi Arabia -- the last possible remaining 'swing producer' -- is pumping all that it can now. A slight increase of half a million barrels-a-day might have continued to moderate the price of oil for a while in the $90 range, but now all bets will be off, especially with reports about spot shortages coming out of China. It would have been in OPEC's interest to put no further strain on the US economy with high oil prices-- to keep up demand for their product -- but they didn't go that way. It seems to me that the markets had already priced in a production increase (combined with talk about US recession and 'demand destruction'), so now we may see prices inch back up through the 90s again. Interesting side note: Bloomberg had this article up earlier this morning and took it off just before 11am. How come? Not important enough?
November 30, 2007:
Where medicine is At these days
From a story in yesterday's Wall Street Journal about out-of-control hospital costs. . . . the man who is the focus of the story was charged $791 for stockings designed to improve blood circulation that are sold on the Internet for $12, and charged up to $6,675 a night for an oxygen mask to help him breathe while sleeping (rentable from outside medical supply at $250).
"I do not deny that our charges look insane," says Dr. Pont, CPMC's chief medical officer. But all hospitals operate the same way, he says. "It's the reality of the industry."
November 20, 2007
What we're seeing in the Markets
The Dow is rebounding up 225 points today at 1:45pm -- on what?
- News that Abu Dhaibi is giving Citicorp $7.5 billion -- and by the way, is that a loan or a gift?
- Another theory courtesy of the NY Times: that the economic news is so uniformly terrible that the Fed will be forced to lower interest rates again, thus benefitting Big Bankz (allowing new "carry trade" in dollars instead of yen.)
- Also, crude oil price down $3 on announcement by Saudi Arabia that they intend to increase oil production. Apparently, Wall Street hasn't heard their previous stated intentions to raise production -- which Saudi Arabia consistently failed to do.
CNN enters new depth of retardation
This past weekend CNN ran almost continuous coverage (panels, forums, replays) of a botched interview between Larry King and the plastic surgeon whose procedure seemed to lead to the death of rapper Kanye West's mother. The surgeon, Dr. Jan Adams bowed out on camera at the show's start because West's lawyers sent a threatening fax to the Larry King Show's offices. So the interview never took place. But the coverage of the non-interview bumped every other world and national event off CNN. Where's Ted Turner when we really need him?
November 6, 2007
Wall Street Magic:
Dollar Down -- $1.45.58 to Euro
Gold in Record Territory -- $824.50
Oil Inching Back to Record Territory -- $95.96
CitiGroup reporting massive losses
DOW up 60 Points at open !!
Go figure. . . .
November 1, 2007
Why gasoline prices haven't kept up with rising oil prices
NEW YORK (Reuters) - Exxon Mobil Corp. said on Thursday its third-quarter earnings declined 10 percent, missing expectations on sharply dropping profits from the production of gasoline and lower natural gas prices. . . .
My comment: crude oil prices are set on futures markets by auction, not by the oil companies. However, the oil companies do control the price of their refined products, namely gasoline sold by refineries. I think they have been desperately trying to hold the price of gasoline below $3.00 (where that is still possible, i.e. outside California) in order to avoid getting clobbered with windfall profit taxes by an angry congress.
October 31, 2007
How incredibly stupid the American news media is:
Last week, when French president Nicolas Sarkozy announced the divorce from his wife, Cecilia, he made it clear that he would have absolutely nothing more to say on the matter. A few days later, he sat down for an interview with Lesley Stahl of CBS's "60 Minutes" and what do you know --she asked about his broken marriage. Sarkozy tore the microphone off his shirt and walked out of the room.
Now the question is: just how fucking stupid is Lesley Stahl? Or how poorly prepared is her staff?
October 15, 2007
Out in Iowa last week, you could see that they had planted corn clear up to the highway on-ramps, and shiny new grain storage bins were everywhere. The ethanol program is in high gear there. It is, of course, a net energy loser when you figure in all the fossil fuel "inputs" and procedures needed in making the stuff. It was interesting to hear that a lot of "normal" Iowans regard the enterprise as exactly what it is -- an arrant government subsidy racket intended to enrich agribusiness, while blowing "green" smoke up the rest of America's ass.
October 1, 2007
Speaking of Chaos in the Airports. . .
Family Mourns Woman Who Died at Airport
NEW YORK (AP) - A traveler who may have accidentally choked herself to death while handcuffed in an airport holding cell was a "wonderful" woman and mother, according to New York City's public advocate, who is her relative.
Carol Anne Gotbaum, 45, was arrested Friday at Sky Harbor International Airport in Phoenix after she became irate when gate crews refused to let her board a flight for which she was late, officials said. . . .
(Rest of story.)
September 24, 2007
Check out Mike Morgan's Housing Bubble Report:
Morgan says:
"I have decided to cut back on writing weekly updates. I might write one a month, but I might step back and not write publicly anymore. My clients are keeping me busy on specific projects, so I have little time to spend a full day putting together a weekly update for public consumption. Folks, we have reached a point in this cycle that is a surprise even to me. . . . The deterioration of the housing markets over the past six week has been devastating. I really don’t care what we hear on the conference calls this week, because I’m here to tell you from ground zero, it is much worse than anyone has discussed, and it is going to get far worse than any of the builders wants to admit." (Click here for complete report )
September 17, 2007
Inflate-o-rama -- Post Script
First, apologies to readers. Yesterday, late afternoon brain fog caused me to write, by accident and mistake, that the Fed has raised the interest rates. of course that was a flat out error in composition. Thanks to many readers who alerted me to this embarrassing lapse in consciousness. (I really do know the difference between higher and lower rates.)
It appears that the stock markets will enjoy a kind of Indian Summer fiesta from this news, perhaps until the end of the week. It's reasonable to believe the DOW will cross back over the 14,000 mark. I stick by the idea that you can make money available, but people already over-burdened with borrowing may not avail themselves of more. I also stick by the proposition that these rate lowerings will adversly affect the dollar and send the price of oil and food much higher. By October, a clearer picture of reality may regain traction "out there."
September 10, 2007
Pemex reports pipeline explosion
Petroleos Mexicanos, Mexico's state-run oil company, suspects sabotage in pipeline explosion.
MEXICO CITY (AP) -- Several explosions believed to the result of sabotage ripped apart pipelines for Mexico's state oil monopoly early Monday, the company said. There were no injuries.
The Mexican state oil monopoly Petroleos Mexicanos, or Pemex, issued a statement saying it believed the explosions, which forced the evacuation of 12,000 people, were deliberate.
Casual Remarks by Jim Kunstler
September 7, 2007
John Williams' Shadow Government Statistics (Shadowstats.com) is a great website presenting a more reality-based picture of the US economy by analyzing the discrepancy between government numbers and actual numbers. He charges a subscription, but it's worth it. You get monthly reports and intermittent bulletins. Today's example is a good one -- and an unabashed advertisement for the site.
Money Supply Growth Explodes
Fed Liquefaction Pushes August M3 Growth Towards 14%
This afternoon's money supply release showed seasonally-adjusted M2 for the week-ended August 27th up by $64.9 billion to $7.400 trillion. M2 now has risen by $111.1 billion for the last two weeks, rising at an annualized fortnight growth rate of 48.2%.
Depending on the large time deposit numbers due for release on Friday (tomorrow) afternoon, annual M3 growth for August could jump to 14.0%, up from July's 13.0%, and up from my early August estimate of 13.6% made last week.
Despite the Fed coming close to its formal 5.25% fed funds target in the last couple of days, the liquidity crisis continues, and the financial markets remain extremely unstable and dangerous. Once again, watch the dollar!
Additional detail will follow this weekend.
August 27, 2007
I noticed something interesting last week at the Washington County Fair in rural upstate New York: hardly anyone seemed to be
spending any money.
Very few people were stepping up to the food wagons to buy a small plate of french fries for $5 (the large was $10!) or a sausage sandwich for $6. Virtually nobody was playing any of the sucker games -- knocking smurfs over with a softball or shooting basketballs into a less-than-regulation diameter hoop. I suppose there is a positive aspect to people not throwing their money away on unhealthy snacks and rigged games -- but the message I got from this was how desperately tapped out the public is these days.
August 24, 2007
There is next-to-zero information 'out there' regarding the condition of the offshore Cantarell-KMZ oil fields
in Mexico following Hurricane Dean. Pemex simply says it will resume some operations today. It may be that the oil markets have only lost several days of production from this region, say 7 to 15 million barrels.
From what I gather, over in the financial sector distressed funds have been dumping positions on the oil futures markets at a great rate the past three weeks, in a desperate effort to raise cash to cover losses elsewhere. They were described by one talking head on CNBC yesterday as ("up to their eyeballs in oil"). The US can easily cover the disruption of a few million barrels of imports via the Strategic Petroleum Reserve, if necessary. Jeffrey Brown over at TheOilDrum.com makes the astute point that the SPR has become, by default, the new "swing producer" when supplies get tight.
August 22, 2007
Hurricane Dean came out of the Yucatan much-weakened to a minimal 80mph storm. Winds that speed may not have much ability to damage oil platforms. But at this point, nobody outside the Mexican government (and perhaps not even them) knows the outcome of Dean's encounter with the Cantarell oil field complex. We do know that something like 15,000 offshore workers were evacuated, and that the production equipment was "shut-in." It may take a week or so for production to resume. Cantarell and its adjoining Ku-Maloob-Zaap fields had been producing about 2.5 million barrels a day --1.5 million barrels of that exported to the US. So, if the complex escapes damage, a week's production / imports will be lost. It's hard to explain the behavior of the oil futures markets in this light -- with the price of crude sinking below $70 -- but the following things probably account for this: 1.) leveraged investors in hedge funds and other troubled entities are dumping saleable assets to cover losses elsewhere, and these assets include positions in oil futures trades. 2.) As pointed out by others, many people trading in oil futures do not necessarily know anything about how oil is produced, or, for example, the meaning of 2.5 m/b/d of shut-in capacity on a world market that is already straining to balance demand with supply. There is an excellent discussion of Hurricane Dean-related matters on TheOilDrum.com.
August 20, 2007
The "How Much Does This Suck" Department:
After Foreclosure, a Big Tax Bill From the I.R.S.
Two years ago, William Stout lost his home in Allentown, Pa., to foreclosure when he could no longer make the payments on his $106,000 mortgage. Wells Fargo offered the two-bedroom house for sale on the courthouse steps. No bidders came forward. So Wells Fargo bought it for $1, county records show. . . . But on July 9, they received a bill from the Internal Revenue Service for $34,603 in back taxes. The letter explained that the debt canceled by Wells Fargo upon foreclosure was subject to income taxes, as well as penalties and late fees.
Rest of story
August 17,2007
From a friend in the National Guard
On Hurricane emergency duty in the Gulf of Mexico:
Best case scenario is that it keeps on rolling WNW and beats down Brownsville. Worst case is a high CAT 4 to CAT 5 just south of Houston. In either case, there's going to be some boys scrambling to batten down the hatches on those Gulf drilling rigs.
August 7, 2007
Cute Move
From Bloomberg.com:
Bear Stearns Cos.' decision to liquidate two bankrupt hedge funds in the Cayman Islands instead of New York may limit creditors' and investors' ability to get their money back.
While most of their assets are in New York, the funds filed for bankruptcy protection July 31 in a court in the Caymans, where they are incorporated. The bank also used a 2005 bankruptcy law to ask a U.S. judge in Manhattan to block all lawsuits against the funds and protect their U.S. assets during the Caymans proceedings.
August 6, 2007
MUST SEE
A real 'holy shit' moment on this clip of Jim Cramer, the CNBC stock tout, losing his cool on Friday.
July 31, 2007
Both West Texas Intermediate and NYMEX crude pushed firmly above all-time record price this morning into uncharted territory over $78.
Re: the finance sector: A Reader sent this extremely interesting blog entry:
There is no scientific proof of this, but I believe that the use of prescription anti depressants has made enough of a change in group decision making that many of the more amazing aspects of the recent credit bubble can be explained by it. (Click here for link to full blog.)
July 30, 2007
From the What-the-fuck? department of today's web news. Is it any wonder that the American public is confused?
Bloomberg.com reports:
"Stock Bulls Grow More Bullish as Global Equity Markets lose $2.1" Trillion
Bulls Load Up on Stocks in Worst Rout Since 2002
July 27, 2007
It looks like Thursday's rout in the equity markets is continuing today (Dow down 125 at 12:30 pm.) Apparently, the shock of recognition that MBS tranches = piles-of-shit is beginning to get traction out there, along with some other reality-based ideas -- such as the dollar's dubious value in relation to other things, and the implacable upward movement of oil prices. The music has finally stopped and the moment of creative destruction may be at hand.
Note: NYMEX crude crossed the $77 a barrel line this afternoon. It also went into contango with Brent Crude.
July 12, 2007
Go figure. The Dow Jones is up over 100 points at 10:30 a.m. in the face of the following headlines:
U.S. Trade Deficit Widened 2.3% in May to $60 Billion
U.S. Foreclosures Increase 87 Percent as Prices Fall
Al-Qaeda Is More Capable of Attacking West, U.S. Report Says
Crude Oil at $73.48
Euro at $1.3773
More Subprime Woes to Come
June 25, 2007
Realtors attend worship service to pray for better market
KERI HOLT Florida Freedom Newspapers
DESTIN — More than 300 people with a keen interest in the Emerald Coast’s real estate market gathered Wednesday at Destiny Worship Center to ask for God’s blessing. . . .
June 15, 2007
Very important essay from originating on TheOilDrum.com about OPEC paradigm shift
Letter from "Hurricane Jim" in Baghdad.
"Yeah, the Frankenstein Factor amidst the detritus of a poorly constructed, post-industrial meltdown. Hunter Thompson couldn't have dreamed this shit up on his worst hit of acid."