- Cant’ help taking a pot shot at the Governator! See also :
California Is Broke – Halts $3.5B in Payment, 46 States Near Bankruptcy !
California Economy Near Collapse – Pension Funds Close To Bankruptcy!
- The depression is sweeping the world like wild fire. Never have I seen such rapid decline spread across the globe in just a few months. Bloomberg reports South Korea’s January Exports Decline by Record 32.8% :
South Korea’s exports tumbled by a record 32.8 percent in January, foreshadowing a deepening slump in Asia’s export-driven economies. Shipmentsfell by the most since figures were first compiled in 1957, and at almost twice the pace of December’s 17.9 percent decline, the Ministry of Knowledge Economy said in Gwacheon today. The trade report is among the region’s first economic releases for January.
Faltering exports suggest the economy is headed for its first recession since the Asian financial crisis a decade ago and increases pressure on policy makers to accelerate stimulus measures and interest-rate cuts. South Korea’s Posco, Asia’s third-largest steelmaker, will extend production cuts for a third month in February, spokeswoman Ko Min Jin said today.
“An outright recession is inevitable,” said Kwon Young Sun, an economist at Nomura International Ltd. in Hong Kong. “This is an early indicator for the region, and the drop suggests exports in Asia won’t be good.”
The median estimatewas for a 29.1 percent export decline, according to a Bloomberg survey of economists. Imports fell 32.1 percent, and the trade deficit was $2.97 billion in January. Chung Jae Hoon, director general of trade at the ministry, told reporters that exports may drop through the first quarter.
- China is battling to keep their economy from going below 5% growth. They need 8% growth to generate sufficient jobs for the rural migrant workers. Otherwise social unrest and riots will follow. Bloomberg reports in South Korean Exports Fall by Record, China Manufacturing Slumps :
Manufacturing in China shrank for a sixth month, the CLSA China Purchasing Managers’ Index showed.
Plunging export demand is dragging down economies across Asia and the Pacific, where Japan and Hong Kong are already in recessions and Taiwan, South Korea and Australia are getting closer. South Korean steelmaker Posco will extend production cuts and Rio Tinto Group, the biggest iron-ore miner in Australia, may sell shares to raise cash after commodity prices plummeted.
“Things are getting worse as the global recession spills over to China and other emerging economies,” said Lee Sang Jae, an economist at Hyundai Securities Co. in Seoul.
The Chinese purchasing managers’ index rose to a seasonally adjusted 42.2 from 41.2 in December, CLSA Asia-Pacific Markets said today. A reading below 50 shows a contraction. The Chinese economy will “likely get much worse before getting better,” said Wang Qing, Hong Kong-based chief China economist at Morgan Stanley.
Chinese manufacturers shed jobs last month at the fastest pace since the index began in 2004, the CLSA survey showed. About 20 million migrant workers have lost their jobs because of the nation’s economic slowdown, Chen Xiwen, a senior rural planning official said at a briefing in Beijing today.
China is considering extra measures to boost growth, Premier Wen Jiabao said in an interview with the Financial Times, published today. While declining to explicitly rule out a devaluation of the yuan, he said that the government intended to keep the currency stable at a balanced and reasonable level.
The nation is rolling out a 4 trillion yuan ($585 billion) economic stimulus package. It has also lowered its key lending rate five times since September, pressured state-owned banks to increase lending, reduced export taxes and agreed to provide support for 10 industries, from steel to autos. China’s exports fell by the most since 1999 in December and economic growth cooled to 6.8 percent in the fourth quarter, the weakest pace in seven years, from 9 percent in the third.
- Not a pretty picture!
- Is America bankrupt? Well, if 46 states face insolvency and California is bankrupt, the answer has to be yes! The Federal government as we all know has been bankrupt for many many years. The only reason it could go on for so many years is : Foreigners ie China, Japan and the Middle East Oil Powers were dumb enough to buy America’s Treasury Bonds.
- The State of California has publicly said they are broke. California goes broke, halts $3.5 billion in payments :
California, the eighth largest economy in the world, is broke.”People are going to be hurt starting today,” said Hallye Jordan, speaking on behalf of the state Controller. “There’s no money.”
Since state legislators failed to meet an end of January deadline on an agreement to make up for California’s $40 billion budget gap, residents won’t be getting their state tax rebates, scholarships to Cal Grant college will go unpaid, vendors invoices will remain uncollected and county social services will cease. At least, temporarily. Services and payments will resume once state legislators come to an agreement on the budget.
“This time, there are real-world consequences,” said H.D. Palmer, spokesman for the California Department of Finance, in a report by KCRA in Sacramento. “Because we have not been able to get to a budget agreement, payments aren’t going to be made.”
“This is an issue of fairness,” said Assemblyman Ted Gaines, R-Roseville, in the KCRA report. “It hurts hardworking families the most. Refunds, in fact, will stimulate the economy, and taxpayers need their money.”
“Included are $515 million in payments to the state’s vendors and $280 million to help people with developmental disabilities. Other public assistance agencies will be left waiting for hundreds of millions of dollars,” reports CNN. “Other public assistance agencies will be left waiting for hundreds of millions of dollars.”
“I see the will during the negotiations even though these are very, very tough things that we talk about, where we go into areas that we have never, ever dreamt of going into and trying to solve,” said Governor Arnold Schwarzenegger. “So you will be very surprised when the whole thing is done. We’re still not there yet. There is still a lot of work that needs to be done but we are moving slowly forward with this process.”
“If there is no deal by Friday, state government workers will take their first furlough day,” reports the San Diego Union Tribune. “Schwarzenegger has ordered state employees to take two days off a month without pay through June 2010 to save about $1.4 billion.
“‘We’re really hoping we can work out a compromise that helps the governor achieve the savings he wants while minimizing the disruption to state services and to the lives of the employees who provide the services,’ said Jim Zamora, spokesman for the Service Employees International Union, Local 1000, which represents the state’s largest employee union with 90,000 workers.”
“Some 46 states face budget shortfalls, forcing them to slash funding for many services,” reported CNN. “But California, the largest state in the union by population, faces a deficit that totals more than 35% of its general fund.”
- 46 states face budget problems for 2009 and the following few years. There is no easy way around this! STATE BUDGET TROUBLES WORSEN :
States are facing a great fiscal crisis. At least 46 states faced or are facing shortfalls in their budgets for this and/or next year, and severe fiscal problems are highly likely to continue into the following year as well. Combined budget gaps for the remainder of this fiscal year and state fiscal years 2010 and 2011 are estimated to total more than $350 billion.
States are currently at the mid-point of fiscal year 2009 — which started July 1 in most states — and are in the process of preparing their budgets for the next year. Over half the states had already cut spending, used reserves, or raised revenues in order to adopt a balanced budget for the current fiscal year — which started July 1 in most states. Now, their budgets have fallen out of balance again. New gaps of $46 billion (over 9% of state budgets) have opened up in the budgets of at least 42 states plus the District of Columbia. These budget gaps are in addition to the $48 billion shortfalls that these and other states faced as they adopted their budgets for the current fiscal year, bringing total gaps for the year to over 14 percent of budgets.
The states’ fiscal problems are continuing into the next two years. At least 41 states have looked ahead and anticipate deficits for fiscal year 2010 and beyond. These gaps total almost $88 billion — 16 percent of budgets — for the 34 states that have estimated the size of these gaps and are likely to grow as gaps are re-estimated in the next few months.
- America is in deep deep trouble. Where are the money that is going to bail all these states out going to come from? The banksters are swallowing up all the money. The latest is that bankster’s bailout may come up to US$4T. An understated figure IMO.
- I won’t be surprise to see riots in the streets of America. People taking to the streets in violent protest against the filth in Congress. See also :
California Economy Near Collapse – Pension Funds Close To Bankruptcy!
- Car sales are collapsing worldwide. If you thought December car sales were bad, January’s crashed even more spectacularly. Bloomberg reports GM, Ford Say Sales Tumbled at Least 40%; Toyota Dives :
Feb. 3 (Bloomberg) — General Motors Corp. and Ford Motor Co. said U.S. sales plummeted at least 40 percent in January and Toyota Motor Corp. dived by almost a third, dragging the world’s biggest auto market toward the worst month since 1982.
The declines were 49 percent at GM, the largest U.S. automaker; 40 percent at Ford and 55 percent for Chrysler LLC. Toyota dropped 32 percent, Honda Motor Co. fell 28 percent and Nissan Motor Co. was down 30 percent.
Today’s reports showed the toll of sinking confidence among car and truck buyers. GM, Ford and Chrysler said January deliveries may have tumbled to an annual rate of fewer than 10 million vehicles, after full-year sales averaged about 16 million this decade.
“In this downward spiral, as a company it’s hard to plan your business and as a consumer it’s hard to change your sentiment,” said Joe Barker, an analyst at consulting firm CSM Worldwide Inc. in Northville, Michigan. “We’re all looking for some sense of stability in the sale rate.”
Weak consumer and business demand adds to the challenges facing GM and Chrysler as they work to restructure with the help of $17.4 billion in federal loans, and ratchets up pressure on Ford, which says it doesn’t need government aid.
“If 20 percent to 30 percent retail declines persist, it would be more difficult” for Ford to avoid accepting U.S. loans, Standard & Poor’s equity analyst Efraim Levy in New York wrote in a report today. He rates Ford shares as “hold.”
Annual Sales Rate
Light vehicles haven’t sold at an annual pace of fewer than 10 million units in any month since the 9.8 million rate posted in August 1982, according to Autodata Corp. of Woodcliff Lake, New Jersey. The last full year of fewer than 10 million sales was 1970, according to trade publication Automotive News.
Hyundai Motor Co. was alone among large automakers with a gain, saying sales rose 14 percent.
January’s industrywide sales rate may have slipped to fewer than 10 million vehicles, Chrysler President James Press said today in an interview. Ford also raised that prospect, and Michael DiGiovanni, the chief sales analyst at Detroit-based GM, estimated the rate at 9.8 million. December’s figure was 10.3 million and November’s was 10.2 million, the lowest in 26 years.
GM said January sales fell to 129,227 cars and trucks, including a 58 percent decline in cars and 43 percent drop in light trucks. The automaker said it will cut North American first-quarter production 57 percent to keep pace with flagging demand.
Ford’s sales to non-business customers were in line with company expectations and retail demand “appears to be stabilizing,” the Dearborn, Michigan-based automaker said in a statement. Ford initially released a tally that didn’t include Volvo, showing a 39 percent drop for its domestic brands.
January had 26 selling days, 1 more than a year earlier. Some automakers release results adjusted for sales days, meaning the totals will be about 4 percent lower than unadjusted numbers. Bloomberg uses unadjusted figures.
Plummeting sales hamper efforts by GM and Chrysler to pare labor costs, cut debt, trim dealers and idle plants to reduce cash use and make a case to keep $17.4 billion in loans from the U.S. Treasury that kept them from slipping into bankruptcy. The companies face a Feb. 17 federal deadline for a progress report.
GM and Auburn Hills, Michigan-based Chrysler are offering cash and vehicle vouchers to entice more factory workers to leave and ended a 25-year-old program that assured union employees most of their pay even when there weren’t any tasks for them to perform.
- In Japan things are just as bad. Bloomberg again Toyota Leads Drop in Japan Car Sales on Economy Slump :
Feb. 2 (Bloomberg) — Toyota Motor Corp. and Honda Motor Co., Japan’s two largest carmakers, led the biggest drop in the country’s auto sales in 35 years last month as a recession cut wages and jobs and crippled consumer demand.
Sales of cars, trucks and buses fell 28 percent to 174,281 vehicles in January, excluding minicars, the Tokyo-based Japan Automobile Dealers Association said in a statement today. It was the biggest monthly drop since May 1974, the group said.
Honda slashed its full-year profit forecast 57 percent on Friday as sales plunge in Japan, the U.S. and Europe. Japan is headed for its worst postwar recession as factory output slumped an unprecedented 9.6 percent in December and unemployment surged.
“Since this autumn, the very bleak economic climate has replaced high gasoline prices as the biggest reason” for the drop in car sales, said Mitsuru Kurokawa, senior market analyst in Tokyo at consulting company IHS Global Insight. “We won’t hit bottom until the second half of this year.”
Toyota, the world’s largest carmaker, sold 81,985 vehicles excluding its Lexus brand, down 22 percent, and sales at Honda dropped 31 percent to 22,087 units. Sales at Nissan Motor Co., Japan’s third-largest automaker, fell 31 percent to 30,786 vehicles last month.
Toyota shares lost 1.4 percent to close at 2,885 yen in Tokyo. Nissan fell 2.9 percent and Honda declined 1 percent.
- Cars are the quintessential durable goods, this severe plunge in car sales tells us that we are in a depression. Consumers do not have job security so they cut back on buying new cars and real estate.
- See also :
Auto Sales Bloodbath!
Excess Capacity – Automotive Industry