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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Haim R. Branisteanu who wrote (12175)	9/23/2004 3:19:51 PM
From: mishedlo	Respond to of 116555

Watch those long bonds! [daily reckoning] Instead of going down with higher interest and higher inflation rates, they're going up. They're telling us to beware... George W. Bush tells us that the economy is strengthening and Iraq is on the road to peace and ballot boxes. He appears to be wrong on both points. Yesterday, the Dow seemed to notice. It slipped toward 10,000 - again. And all over the country, people are having trouble keeping up with their obligations. The city of San Diego has $1.2 billion in pension benefits it can't seem to cover. General Motors has a glut of unsold 2004 models - so many it is offering 0% financing for six years to get rid of them. But it also owes so much in pension and health care costs for its employees it is almost impossible for the company to ever make any money. Over at Honda, each car costs the company $107 in pension and health care costs. But at GM, the cost is $1,360. You can imagine what the cost is for Chinese manufacturers. How can GM compete? How can it stay in business? What do you do when you get in this situation? "Welcome to the bankruptcy economy," says Jim Jubak over at TheStreet.com. You cut prices... forced by competition, of course... but you can't cut your costs - especially the promises you've made to employees. Then, you declare bankruptcy. What else can you do? Delta and US Airways, for example, were greased up by the bankruptcy courts and are now wiggling out of their obligations to pilots. The steel industry, says Jubak, showed the way. Nucor, for example, "employs far fewer steelworkers at far lower total wage and benefit costs than it did in 1975." Go bankrupt. Cut costs. Cut payrolls. Cut spending. Not something to look forward to. But something to expect.

To: Haim R. Branisteanu who wrote (12175)	9/23/2004 3:32:11 PM
From: mishedlo	Respond to of 116555

A comment on hurricane damage... [from the daily reckoning] "I'm sick of reading how the Florida hurricanes are going to help the economy in the long run. How stupid. But if it's somehow true that a catastrophe like this is good for the economy, then I think I have a great idea to save a lot of money. How about we abandon all our anti-terrorist activities worldwide? That would save about $85 billion in Iraq alone. Then we do away with all this airport security crap and save another bundle. Then when the terrorists start blowing up targets around the country, there will be a great stimulus of the economy as we rebuild. It seems like a win-win situation."