patrick.net

HeadSet,

IMO, availability of food is not going to be a problem. The problem will be whether you can afford food or not. Food has been very inexpensive for a long time and has only recently start to rise in price. The cost of fuel, fertilizers, feed and demand for acreage has been the real reason food has risen so dramatically at the supermarket.

Believe it or not, we are about to see a surplus of food available and that is going to drive the cost down. Oil is down so it will be cheaper to deliver it and there is a glut of some commodities (I only know frozen... not grains, rice, potatoes etc.) available in warehouses across the country. Manufacturers are cutting their production and there is a lot of pressure to turn sitting inventories into cash.

A much more serious problem would be the inability to get food to distribution centers like supermarkets and food service distributors. That could happen when fuel becomes unavailable. Unless there is a worldwide fuel shortage, distribution of food is safe. That is why it is absolutley critical that this nation (and the world) seriously solves the alternative energy puzzle immediately. If there is no fuel our entire food distribution system collapses and you better be living close to good agricultural land or you are going to starve. (Hello Las Vegas and Pheonix)

WOW, Dow! What happened at 3:00 EST?

That's one hell of a PPT!

Believe it or not, we are about to see a surplus of food available and that is going to drive the cost down

I have no trouble believing that. Las Vegas and Phoenix may not have the problems with distance from farmland. It may be that the inefficient truck based delivery will be replaced by rail.

HeadSet,

The US rail system has horribly poor infastructure at the moment. They mostly run on diesel too, BTW.

A 3 day truck trip could end up as a 14 day rail trip. Also, unless your warehouse has a rail connection you need diesel to get from the rail yard to your warehouse.

A significant amount of capital to update our rail system would be a significant improvement.

well i would go with a balance of stopping power and magazine capacity. but then again nothing beats the winchester defender for just good old fashioned blasting.

but what's the fuss all about, can't they just pry up some of the gold bricks that line the streets of the bay area?

well i would go with a balance of stopping power and magazine capacity.

Magazine capacity? You mean 10+1 in Kalifornistan?

damenace,

You are correct.

The savings I am talking about would be inter-city. Trains are very efficient at moving large amounts over long distances, burning a small fraction of the fuel trucks would use ("our trains can move a ton of freight 423 miles on a single gallon of fuel"). True, the product will need to be shuttled from the railheads (no different really from wholly truck delivered freight "shuttling" to the warehouse from thier arrival at the edge of town), but the waste of using cross country trucks would be eliminated.

A central Virginia paper company recently switched from using trucks to using CSX rail to ship their products to the Hampton Roads ports. This move took 200 trucks a day off Interstate 64 between Richmond and Norfolk. The decision was driven by high fuel prices.

Can we declare the death of the JIT model?

Can we declare the death of the JIT model?

LOL! For serious users, that would only mean a longer planned lead time. Possibly more co-location and perhaps a product modification to use locally obtainable materials.

damenace, Headset,

I think it would be fantastic if we modernized our rail system.

But I'm not in favor of big-spending boondoggles such as SF-LA bullet trains. I think what is needed is smaller, smarter and more strategic investments. Invest in the rolling stock and not only in fancy tracks.

Most of all, train travel has to become sexy and glamorous again, not just a means of transporting goods, but also people. That probably has not been the case for, oh maybe 80 years. Some ideas:

1. sleeper trains SF-LA and SF-NY (etc etc). Board at SF at 11pm and wake up in LA at 7am, ready to go to a meeting.

2. broadband connections. Work on the train while traveling on business, communicate while traveling for pleasure.

3. entertainment on board

4. meeting rooms and business railcars

5. food services must be several tiers including high-end

6. choice of coach, business class and 1st class travel

7. railroad hotels

Many of the amenities exist in some form, but everything needs to be taken up several notches, and people have to learn that taking the train is where you have a good time and meet cool people.

It's a challenge, but I think it can be done. It is all about the glam factor.

PS: I also noticed that CSX radio ads that stated ”our trains can move a ton of freight 423 miles on a single gallon of fuel”. It is good start, but I think it was unfortunately mostly a PR campaign to stave off the recent drop in CSX stock price. Good try, though.

Headset,

For me it was hard to see exactly hat was going on in the market today. The pundits have not spoken yet, but I think some of the factors were

1. Bush speech
2. LEH CDS sellers must cover $0.92 on the dollar
3. JPM up and MS down because of LEH stuff?
4. G-7 meeting underway, hope for "solution" Monday.
5. ABA lobbying SEC about banning shorting of the 799+ stocks again
6. pundits had noted that market always crashes in the afternoon, time for a headfake

justme Says:
October 10th, 2008 at 6:30 am
I predict large donations of surplus canned food to the food banks come Christmas.

Yup.

Isn't the Fed increasing "liquidity" faster than any asset price deflation we are seeing?

Isn't hyperinflation already here? Just hidden?

no “bank failure friday” update today? What gives?

Have a nice weekend, folks! :)

Finance should not be banned but banksters should be allowed to fail.

LET THE BANKSTERS EAT CAKE!

I'm concerned that if banksters pick tomatoes, the price of tomatoes will soon go through the roof.

Uh-oh, Paulson is not going to try and get any voting power in the banks he capitalizes:

Paulson went out of his way to say existing shareholders would be protected, saying the government would only make the purchases through a "broadly available equity program" without any voting power, "except with the market standard terms to protect our rights as investors."

Isn’t the Fed increasing “liquidity” faster than any asset price deflation we are seeing?
I barely can stand to look at this week's H.4.1 report. The Treasury "bake sale" (aka. supplementary financing account) raised $140B more for the Fed, bringing the total to over $400B injected. This isn't a problem until it becomes one (read: central banks and SWF stop buying our Treasuries).

TOB, you got the quote wrong.
surfer-x says: Now, I am become Debt, the destroyer of wallets.

Ed Jew, former SF supervisor, plead guilty to federal extortion and bribery charges. He still could face charges relating to the fact that his "primary residence" wasn't in Ess Eff. Oh, and that's right -- my favorite part -- he also claimed on a mortgage application that his primary residence would be in Arizona. He's not being prosecuted for that though... I mean, it's a victimless crime -- how could anyone be hurt by that?

>>no “bank failure friday” update today? What gives?

The celebration was premature. Two bank failures have been announced.

No more value judgment. Banksters are not evil. But they are the enemies. Let them eat cake!

actually the quote is from Oppenheimer… who was a Jew who did something tangible…. smashing atoms.
Geeesh... I was joking. :-) And surely you, of all people, know what Oppenheimer was quoting...

And on this blog we still have haters, quibblers, and the tragically distracted.

For what its worth, the G7 meeting looks to be a flop.
Pualson is giving off the smell of FEAR.

We take 1 step forward and 2 steps back.

Nationalism and protectionism seem to be built into our genes.

In any event, look for capitualtion in the near term. Monday?

As for housing, which is the basis of this blog.

What used to pass as pretty spirited debate here, the notion of stickiness, will still hold out. Job loss, wealth destruction, and the loss of credit still take time to manifest. The fortress has still only gone down 10% and yet its rise was well over 100%. I think it will take 6 months to tell that tale. Look for incresed inventory and price declines in PA, MV, LA, Cup, etc starting then. Of course, what makes these places so desirable is excellent public schools. Considering the CA budget is a joke and the single largest expense, by far, is education - expect to see something radical within the year.
Other than greatly expanded class sizes (as they lay off teachers) I think we will see more and more emergency municiple bond measures be created and subsequently voted down.
I am trying to recall, have we had 4 day weeks before?
In any event, the great entitlement of education will be reshaped in the wake of what is happening.

No more race-baiting on my thread. :)

I am mostly anti-PC, but blaming anyone is not going to help us.

"Cain't we all just get along?"

Sorry, I've been waiting to use that line for ten years.

I'll.......stfu now. :)

Wow, Peter P claimed this thread.

As if I didn't have enough to pester me today, it's now snowing heavily in Boise. This is the earliest snowfall in Boise since records were kept starting in 1940. :(

Dennis, it is global warming. :)

Speaking of trains, here are the results for the Capitol Corridor (September 2008). Inexpensive Bay Area housing is just a train ride away.

144,747 passengers +24.7% vs. 2007
This is a new September record, and keeps the Capitol Corridor third
busiest route in the country, by a wide margin
Passengers for 12 months of FY 2007-08: 1,693,580, just 6,420 passengers
shy of 1.7 million riders. (12 months of FY 2007-08: +16.6%)
Just for comparison, 10 years ago, FY 1997-98, ridership was only 463,000
for the year!

$1,953,836 September revenue +27.9% vs. 2007 (FY 2007-08: $23,634,341 for +22.0% growth)

TOB, why should you care what mike thinks? All I care is that you often have good points.

Heck I have ancestors in the Blackfoot nation.

Are you guys all ready for Bill Ayres as Secretary of Education? :( Kids will be trained to turn their parents into the authorities for conservative actions.

The average Joe has no business "investing" in Wall Street. Mutual Funds, puts, calls, stock picking, and commodities should be done for fun with money you can afford to lose. Fun money, like at the horse track. Basically, any "investment" that requires paying a commission should be avoided. The only time Joe should see a "finance professional" is his insurance agent for a term life policy.

Joe should pay off credit card bill in full every month. This beats leaving a balance because Joe sent the payoff money to his "broker" for this months "dollar cost averaging."

Joe should buy a car he can pay off in 3 years yet drive for 6. Make the payments to the bank for three years, then make that payment to himself for 3 years. You could buy the next car for cash.

Joe should buy a house he could afford to have paid off by the time he is 45.

By not paying interest on Credit Cards, and by reducing interest on house and car loan, Joe will have some bread to save.

Put the extra into insured accounts (IRA, self directed 401k, other savings). FDIC is like "privatize profits, socialize risks" for the common man. Play "investor" by shopping for the highest insured rate.

Having no house or car payments at age 45 allows one to really pack away the savings. Some for retirement, some for trips, some to lose in Wall Street.

Good luck convincing Joe. Realtors and bankers want Joe in the biggest house with the biggest loan, finance types want Joe to "invest" rather than get out of debt, and there is the peer pressure to out-bling the neighbors.

The average Joe should not be bailed out either. The best way to educate is to live and let fail.

We learn best from failures and their associated pain.

The average Joe should not be bailed out either

Right. What got me started on that rant was that a "Republican" running for president wants to use tax money pay off the "excess" of one's mortgage over the current house value.

Obama wants to buy votes with a $1,000 stimulus check, McCain wants to buy votes with mortgage redux. McCain may have miscalculated. There may be far more renters and responsible mortagage payers to be angered by this, than slackster overextenders who will benefit.

How about this simple regulation:

Loans cannot be sold. All loans must be serviced by the banks who made the original loan.

That would eliminate third party fees and insure banker diligence in qualifying borrowers. It would also straighten out the appraisal industry. No Fannie/Freddie. No MBS debacles. Banks would prefer lower risk 20 year instead of 30 year mortgages, or charge a premium for the longer term loan. Housing would be affordable, as upward price pressure from speculaters and Joe HowMuchAMonth would be reduced by banks wanting down payments.

damenace,

very happy that you are on this blog, please share more about the industry knowledge with us, it is very comforting to know that our food supply chain is still intact.

What are the major regions from which the frozen food companies source from? China?

Actually I am now less worried about the actual disruption of the food chain (at least the frozen part) than the broken trust in the society.

Since we don't grow our own food, sew our own clothes and build our own house any more, our society is almost entirely trust-based. I trust when I drive on the street someone will not try to run me over for no reason, I trust that at the end of the pay period my employer will put in his direct deposit in my account.

But somehow in the last couple of months, the trust that we have for our government and the trust we have for the system is greatly shaken. Every country and society has corruption, inefficiency, glitches here and there and we all accept it as a part of life. But if such corruption and glitches are getting too big to be swept under the rug, we start to lose trust.

Bank runs are now initiated just through rumors and perceptions, people are getting nervous about their job prospect and their retirement money, our very heightened and sensitive collective nerves are not going to be very forgiving at the moment. I don't believe in Mad Max situation, but I won't be surprised that there will be many irrational herd behaviors when we feel our survival condition may be compromised.

It is of utmost importance that our government restores more confidence in our system and our society asap. This administration's lack of foresight is just astounding.

Another way to recapitalize the bank, now the bank gets to collect your mortgage but not pass it on to the MBS holders. Oh wait, who holds the MBS papers? Congrats, remember that $700B? You proud renters and homeowners.

So, homeowners now get to pay mortgage twice, once to the bank, and once through holding the stinking MBS papers at an unrealistic price. Hey, don't be so happy renters, you get to hold these papers too, and you still need to pay your rent. Hey come on, show some brotherly love to Wall Street.

SAN FRANCISCO (MarketWatch) -- Fannie Mae (FNM 1.08, +0.07, +6.9%) said Friday it will begin to allow all institutions servicing its mortgage-backed securities (MBS) to continue to hold the principal and interest payments from loans in their MBS in their depository institutions and in the process, free up additional liquidity for these institutions. The move comes after the Federal Deposit Insurance Corporation adopted an interim rule, effective immediately, to simplify the deposit insurance rules for accounts held at FDIC-insured institutions by mortgage servicers. (Updates with details on FDIC's interim rule.)

two weeks ago you might get some coupon payments from the mortgages, now you are getting nothing, period.

I think China also holds a load of MBS papers, I want to see how our biggest debtor likes this new program. Perhaps we can convince them to park the coupon payments in Fed's custody.

Mike-Orange,

I gave up long ago on the idea that the banksters will get the lessons about the down side of capitalism. You should make the rules work for you rather than try and challenge it. You may be right, but you will get killed and it won’t matter that you were right.

I got smart and took action. 5 weeks ago I shorted myself by taking the most I could out of a 401k in the form of a loan. As long as I stayed employed (I am a power plant operator and have no fear of being out of a job), I will pay it back with depreciated dollars without paying any fees/IRS crap. I can pay it off now if I like and get all my stocks back plus more :)

I still have the money in my bank and it raised my cash position by 33%. I am now planning on buying about 7.5 acres that is a few miles from my work. It is a bit more than what I need, but 1 acre lots and this 7.5 acre lot cost about the same amount of money. I will be getting this property in an all cash transaction later this week. I will then probably get a construction loan to build what I want rather than trying to find a 100 year old home that is not complete shit.

Get what you can now while you can. It is going to get interesting when the roller coaster ride of deflation and inflation on the different asset classes takes hold.

The best part about this land is the small development of 250k to 300k homes right beside it. They have a home owners association that I will probably piss off. If you have ever heard the crack of an AR-15 or SKS, you will know why these people will love me :) I love how people build residential neighborhoods in unincorporated areas.

On another note,

I just saw 20/20 and the kids in my generation. I am so ashamed about how stupid these kids were. Most could not state how many states there are, the number of Senators we have, or what Roe vs. Wade is.

These people are stupid! It is shit like this that get convinced to sign the dotted line for a shitbox home.