Posted on 02/04/2009 9:21:08 AM PST by TigerLikesRooster
TH*NK*NG (INVENTORIES)
by Fred Cederholm
Economic Analysis Column
Columnist, Baltimore Chronicle & Sentinel
February 2, 2009
Ive been thinking about inventories. Actually Ive been thinking about Christopher Columbus, the Obama stimulus putsch, housing, and unemployment. An inventory refers to a categorical listing of things. It can be used by an individual, business, or governmental unit to take stock in what is available for consideration in making their forward moving decisions. It is an accounting of items at a snapshot in time - a benchmark reckoning. After all how can you plan for where you are headed, if you dont have an inking of what youve got on hand when you started out?
You see Christopher Columbus knew where he wanted to go, and what he wanted to accomplish. He just wasnt certain where he was relative to his goal destination. When he started out, he lacked an honest sense of direction he forged ahead. Progress was in days transpired. When he arrived, he really didnt know where he was. When he returned and claimed success, he really didnt know where he had been. And he did all of it on borrowed money! Sound familiar? Humm!
Planet Earth is about to undertake similar voyages of collective discovery. The major global economies are looking at a systemic meltdown - economically, financially, and monetarily. All are embarking on their individual quests to fix their messes, yet few are considering what the impact of any successes (or failures) will have on the rest of the group. All talk about the astronomical costs, yet none have inventoried (or accurately quantified) those impending costs behind their malaise/ travails. Since the US economy has been the driving force behind the worlds consumption of goods and services, Uncle $ugars recent apocalyptic downturns and the newly installed Obama Administrations stimulus planning are under the microscope and the spotlight of all global parties.
As snips and snippets of the Obama team intensions leak out, it becomes clear that the economic crises (and the costs of resolution/ turnaround) are escalating on every front. The numbers still continue to grow, we have yet to see any progress from the TRILLIONS spent to date from the previous administration, and we dont have a clue as to the ultimate costs and polices ahead. Housing, unemployment, and consumption HAVE been IDed as central targets for the stimulus. Yet, do we know where we are as far as the bottom? In a word NO! The Administration is pushing hard to begin their turnaround, but toward what end? And to what definition of success?
A comprehensive inventory of non-performing loans at the major US banking/ financial giants, including the GSEs Fannie, Freddie, and Ginnie has not been performed! They have tapped into 100s of BILLIONS of assistance to date, and are now returning to the public coffers for more. We dont have a clue what the summation difference is between market value and the outstanding mortgages. Are they multiple BILLION underwater, or mega TRILLION? As more properties default into the resale market and prices continue to drop, what is the growth in deficiencies (losses) for each 1% decline in resale market value(s)? If those inside the Administration, the US Treasury, or the FED know, they certainly arent telling the public! Without such quantification, I strongly suspect we are only ONE-THIRD to the Real Estate bottom. We seen a majority of the Sub-Primes loans unwind, the Alternative-A category is only beginning, and the Lions share of the negative amortization interest only ARMs looms on the horizon. ONE THIRD may be a correct presumption.
The Obama team has (for now) upped their job creation goals to 4 MILLION new jobs in two years. Employment fell by 1.9 MILLION in the last four months of 2008. We are now looking at losses of 500,000 to 600,000 a month for 2009. Do the math, is this enough? The Obama plan calls for mega buck infusions for infrastructure to create jobs. Such may work fine for those unemployed from the construction sector, but what about those from banking/ Wall Street, retailing, mfg, and services? How equipped are they to build roads, bridges, schools, railroads, airports, and the like. What ARE the skills of our unemployed? Then too, how many of them are the newly green carded (or illegal) aliens matriculated into the US economy during the boom years? What is our responsibility for them? Im Fred Cederholm and Ive been thinking. You should be thinking, too.
They don't really have the "luxury" to care at this moment that additional amount of astronomical debt piled up by rescue package would do the future economy.
Ping!
“The Obama plan calls for mega buck infusions for infrastructure to create jobs. Such may work fine for those unemployed from the construction sector,....”
Not if they do away with the E-Verify System, which they are very much intending to do!!
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