patrick.net

"Today, the excess manufacturing capacity of the US lies in China, we are retreating from an unsustainable excess demand."

Perhaps that's actually a bit of good news for the US, since our factories weren't recently tooled for what may soon be non-existent demand of retail goods? But of course, there are those US auto factories...

Regarding the US, I wonder how much "excess capacity" is represented by the retail sector, specifically in retail development projects? In particular, the once-lauded "Euro" retail concept, ie townhouses piggy-backed on retail strike me as double-whammy during the downturn.

On a local note, this the downturn does not seem to faze Sunnyvale govt., which has diverted public funds into a retail/residential development that's still under construction. Rumor has it they're not finding enough merchants. Taking this fiasco further, Sunnyvale also plans to convert the Onizuka AFB into an auto mall. Brilliance!

BAI. Obama is in a tight spot. He could have made someone like senator Bernie Sanders or Paul Krugman the new SOT (sec of treasury), but van you imagine the blowback? Or is it Ron Paul you would like ;-).

Breaking News - $15,000 joke of a tax credit in the now agreed upon stimulus bill has been eliminated. HORRAAAAYYYYY!!!! I bet the NAR is super pissed off today.

Or is it Ron Paul you would like ;-).

Ron Paul will actually fix the system.

Breaking News - $15,000 joke of a tax credit in the now agreed upon stimulus bill has been eliminated.

tannenbaum: do you have a link for that?

@justme

I like how you're already making excuses for him. Still hoping he's different I guess, so you have to.

I'm not a Ron Paul fan.

How about Taleb or Roubini? That would make waves, not Krugman!

Sure, bring on Roubini. Or George Soros.

A good explanation of the purpose of currency swaps:

http://seekingalpha.com/article/120039-bond-expert-the-emperor-has-no-clothes?source=headline1

Quote from the comments section:

FED prints dollars. ECB prints euros. FED and ECB swap currencies and now the FED owns the euros and the ECB own the dollars.
Next step: ECB buys Treasuries with their dollar, FED buys Schatz with their euros (or whatever).
Financial media in US proclaims: high demand for US Treasuries!!

What a joke.

Patrick: Here you go:

http://news.yahoo.com/s/ap/congress_stimulus

It's near the bottom, 7th pragraph from the end.

Here's another more relevant article about the tax credit elimiantion for home buying:

http://www.mlive.com/business/ann-arbor/index.ssf/2009/02/tax_break_for_home_buyers_out.html

What a great day. Honestly, every person in real estate I know was salivating over this. Their collective balloon just got popped.

Basically, rather than the Fed buying Treasury directly in return for printed dollars, they print dollars, swap against EUR/GPB/whathaveyou, and then buy european bonds, while the europeans do the same for us.

In other words, it is a scheme to disguise the printing by involving the co-operation of a third party, and in a way that ensures a balance between the currencies.

This is nothing short of brilliant. Finally I understand it.

This is nothing short of brilliant. Finally I understand it.

Nothing brilliant. We are just dumb. :(

Change!

Why is Obama delaying the shut-off of analog TV signal?

Because we ran out of coupons for digital tuner/converter boxes.

Because we ran out of coupons for digital tuner/converter boxes.

Why do we even need coupons at all?

>> can i marry your wife?

He can reply by saying:

can i marry your daughter?

And it can go downhill from there ....

Bay Area, Silicon Valley executives expect more layoffs

Bay Area businesses are anticipating many more layoffs than hires in coming months, according to a new quarterly survey of 505 executives across the nine-county region that found business confidence at a record low.

"We clearly have not hit bottom," said Jim Wunderman, chief executive of the Bay Area Council, a business group that promotes the regional economy. Half of the executives said they expect economic conditions to be worse in six months, while only 21 percent said they expected improvement.

"Unfortunately, significantly more layoffs and business failures seem inevitable in every industry and every corner of our region," Wunderman said. "Indeed, some of our regular survey participants were unable to respond because their company was now gone."

The survey's business confidence index registered 31 on a 100-point scale, one point below its last reading in November.

Unlike previous surveys, this one found no part of the economy immune to layoffs. Overall, 42 percent of respondents said they expected to decrease their work force, while only 10 percent plan to make increases. The latter figure was down from 13 percent in November.

Previous surveys have generally shown that Santa Clara County, the heart of the greater Silicon Valley, was stronger economically than the region as a whole. But this survey showed little difference: 39 percent of Santa Clara County executives said they anticipate layoffs, while 11 percent predicted hiring.

Telik Inc. said Wednesday it will cut about 43 jobs and reorganize to focus on its "most advanced preclinical and clinical drug development programs."

Palo Alto-based Telik (NASDAQ:TELK) said the restructuring will involve a workforce reduction of 44 percent, primarily in early-stage discovery and support positions. Employees directly affected by the restructuring plan will receive severance payments, continuation of benefits and outplacement assistance, the company said.

The company estimates it will take about $900,000 in severance-related charges in the first quarter.

Telik is a clinical stage drug development company focused on discovering and developing small molecule drugs to treat cancer and inflammatory diseases.

Applied Micro Circuits Corp. said Wednesday it plans to cut about 100 jobs in an effort to reduce annual operating expenses by $14 million to $16 million.

Sunnyvale-based Applied Micro Circuits (NASDAQ:AMCC) said the cost reduction is expected to take effect by fiscal year 2010.

The company did not say where the jobs would be cut or what positions would be effected.

Here in Silicon Valley, the housing market has been struggling to stay afloat. According to real estate Web site Zillow (which we've been trying not to check lately; it's just too depressing), home values in the beautiful (if bureaucratically named) San Jose-Sunnyvale-Santa Clara metropolitan statistical area plunged 17.2 percent in the last three months of 2008 compared with a year earlier. Even worse, about one-fifth of homes in the Valley of Heart's Delight are "underwater," meaning owners can't sell them to pay off the mortgage.

Lost your job recently in Silicon Valley? Part of San Jose’s growing army of job-seekers? We’re looking for volunteers for Pink Slip 2.0

Lost your job? We should talk.

The Mercury News is looking for people recently laid off in Silicon Valley. We’ll select three of you to follow in your job search over the coming months, chronicling the same dramatic saga that’s spinning off thousands of new job-seekers every month.

In the pages of the newspaper, and across an online landscape of nteractive and social-networking tools at mercurynews.com, your stories will become part of a much larger narrative. As readers share in your own hopes and fears, false starts and lucky breaks, you’ll become the emotional hub of a sprawling virtual community. Over time, your stories will tie together folks looking for work and people looking to hire, career experts and seasoned veterans of past slow-downs, family and friends and even those currently employed but bracing for a pink slip.

In fact, in the spirit of networking, we’re calling the project Pink Slip 2.0.
Just as the dreary unemployment picture it mirrors, we expect this collective tale to gather steam in the coming months. Beyond the continuing series of cliffhangers featuring our three main job-seekers, the project will become a burgeoning one-stop shop for all things jobless - coping techniques and emotional red flags, how-to tips on navigating the unemployment bureaucracy, health care and tax relief, job retraining and tricks for connecting with others out there re-inventing themselves.

And with online user forums and live chats from career consultants, the goal is more than simply narrating your personal stories. It’s pulling together the thousands of strands of a local community let loose in this global economic maelstrom.

To help make the project as practical, transparent and technologically savvy as possible, we’ll also create social-networking components like Facebook and Twitter, as well as blogs and multimedia presentations, to help us all tell the story together. If you do find a job, we’ll look for a replacement, but still occasionally check in with you. To volunteer, make sure you’re comfortable publicly sharing the financial and emotional aspects of your own joblessness. Then send me an email at pmay@mercurynews.com.

We’ll email you a brief questionnaire, then narrow down the list to a dozen people we’ll bring in for final interviews. From those, we’ll select three people to follow.

Thanks!

http://seekingalpha.com/article/119619-how-the-world-almost-came-to-an-end-on-september-18-2008

This is a scary article. I somehow think the bankers still don't get it. They are not going to be happy till angry mobs show up with tar and feathers.

This is a scary article.

... Democratic Representative ...

Oooh. Enough said.

Nvidia Corp. said Wednesday it will take a $150 million charge to buy employees' underwater stock options.

The Santa Clara-based graphics chipmaker (NASDAQ:NVDA) said the offer applies to all employee-held outstanding stock options with an exercise price of $17.50 per share or more. Some executives and board members are not eligible.

The company said that as of Jan. 25 there were about 33 million eligible options out of 537.6 million outstanding, and estimated they will cost about $92 million.

On Tuesday the company reported a fourth quarter loss of $147.7 million, or 27 cents a share, compared to net income in the same period last year of $257 million, or 42 cents a share.

As the Orange County Probation Department began to lay off dozens of workers this week to deal with a projected $8.2-million budget shortfall, its officials are pointing affected employees toward Los Angeles County, where the probation department is looking for new applicants.

On Tuesday and Wednesday, 100 employees in the department received notices that they might be laid off, although only 58 positions will be eliminated, said Colleene Preciado, the county's chief probation officer.

Some of those notified were senior county employees who can opt to take a demotion in order to keep their jobs, Preciado said. Laid-off employees will work their last day Feb. 27.

Conventional wisdom is that there is always something to buy in a bear market and sell in a bull market. However, if the long-term deflationary debt unwind thesis is correct, the point of recognition will result in the simultaneous decline of virtually all financial assets.

Under those circumstances, shopping for bargains among the rubble is like groping around in a pile of knives. This is a difficult concept to grasp, especially given the length and magnitude of the secular bull market in social mood and, subsequently, financial assets, that brought us to this point. But the reality is that during a deflationary debt unwind there are no good long-term investments other than cash.

FWIW, Greenspan will go down in the history books as the biggest villain in the current financial mess and a whole lot of people already see it that way.

It's also galling to picture Greenspan getting a medal from GW Bush. That really says more about Bush than Greenspan.

(It's a lot like "You're doin' a heckuva job, Brownie!" It shows how lame Bush is. But, beware: Obama is not looking any better at this point! It's just more of the same old garbage, I'm afraid.)

While history will show Greenspan is a loser, the top 10 list is correct to point out that people can only blame themselves in the end.

Some of us didn't fall for the 'Good Times' temptations offered by nearly free money.

Some of us were raised to believe "There's No Such Thing As A Free Lunch" and to be VERY suspicious when something (like a half million dollar McMansion with nothing down, 125% financing and interest only payments at 1%) looks too good to be true.

I'm a saver and I've worked very hard and saved very hard for decades to pay off my house and have a wad of cash. I intentionally live way below my means.

1. Good Times
2. Alan Greenspan (lost to a 1970s comedy series?)
3. Twisted Regulation
4. Wall Street
5. The Homeownership Obsession (not HGTV?)
6. Too Much Money (see #2)
7. The Myth of the Rational Market (damn economists)
8. You and Me (hey, speak for yourself)
9. George W. Bush
10. Commodity Futures Modernization Act

My plan was to earn 5-6% interest in bank CDs and retire early and live off the money.

That plan isn't working out so well with interest rates at ridiculously low levels and, to me, the threat of runaway inflation too real.

I avoided the stock market because, as a finance major in college, a former banker and bankruptcy lawyer, I could see that it was a corrupt, Vegas-style, gambling mess with no real substance and huge risk at the ridiculous price levels for almost all stocks.

I had adjusted to the fact that our government encourages borrowing by making the interest deductible and discourages saving by taxing the interest.

I honestly never thought it would go so far as it has to punish savers and reward borrowers. The current 'bailout' fad is simply stunningly unfair.

Greenspan's policies (and now Bernanke's) have made it hard to justify saving money. It's such an insult to get the paltry 1% interest each year and then have to pay taxes on it!

I heard Obama and his surrogates openly state that they want to "get Americans back to where they can borrow money to buy the things they want again."

To me, that is just an amazing thing to admit. You know we're in deep trouble when the new POTUS can say that and almost no one even notices or objects.

Debt is a way of life in America and it will sink us.

I have said for years that I feel as if I'm a 3rd class passenger who is locked below decks aboard the Titanic. I didn't do anything wrong but I'm screwed.

It's a little worse than that because I could see the iceberg coming and I've been yelling to anyone that would listen for years. But no one in power, except Ron Paul, seemed to hear me or agree with me.

That's how I found this blog and I then began to realize that thousands of people saw it coming, too. If all of us 'regular' people could see it coming, how is it that all the powerful geniuses in Washington and on Wall Street couldn't see it coming?

I decided that these powerful people are either liars or wildly incompetent - or BOTH! For that final conclusion, Greenspan is the poster boy.

Obama will still be conducting and his musicians will still be playing as the stern of the USS AMERICA slowly sinks into the dark, cold abyss.

It's a sad story...

People borrowing for large purchases does stimulate the economy. I think you might be taking Obama slightly out of context. To me it seems like it has been a failed Republican strategy to encourage debt to buy foreign goods, because in destroying the labor market with foreign outsourcing that is the only way that someone who used to make $25/hr can buy something when they now only make $15/hr.

The reason I am encouraged by Obama is because he seems to get it. He understands that the way to bring the country back to health is to get people working on worthwhile jobs which pay well. When this happens a lot of other problems go away. People will have the same purchasing power but won't need debt to subsidize their normal standard of living, and having a large middle class creates all sorts of opportunities for the private sector.

Fuck the democrats. Fuck the Republicans. Debating this is like talking about the difference between a louse and a flea.

Let's talk about what you're shorting.

California may have to cut prison population by 40 percent

Hey I have a brilliant idea; legalize pot, tax it 100% and let all the heads out of jail!

Free Willie, man!

Perma,

Good list of the perpetrators, especially for who it did NOT list.

There have been too many lists floating around that are trying to smokescreen the real perps by trying to place the blame in wrong places.

Let’s talk about what you’re shorting.

So... what are you shorting? :)

California may have to cut prison population by 40 percent

Fast-track Death Penalty is the way to go. It is ridiculous to put someone behind bars for more than 10 years.

Alrighty, then.

What is worst is California prefers to take the abilities of the law abiding citizens to defend themselves away.

What is worst is California prefers to take the abilities of the law abiding citizens to defend themselves away.

I agree. If guns are outlawed then only outlaws will have guns.

Short US Treasuries!

The odds seem good that rates must rise to deal with inflation and uncertainty, and this will drive down bonds which pay nearly nothing.

How exactly to short Treasuries is beyond me. I don't like mutual funds of any kind (been burned by taxable "distributions") and I don't understand futures.

The sweeping $789 billion stimulus bill is expected to create thousands of clean-tech jobs in Silicon Valley, gin up new business for many of the region's tech companies and put hundreds of dollars in the pockets of most residents.

Parts of the bill of special interest to the valley include $30 billion for a smarter electricity grid, improved batteries and energy efficiency; $20 billion in tax incentives for renewable energy and energy efficient projects; and $19 billion to create electronic health-care record systems.

It also provides tax credits of up to $400 per worker and $800 a family, phasing out for individual taxpayers earning $100,000 per year and couples earning $200,000.

Another feature of the package allows consumers to deduct sales and excise taxes paid when buying new cars and trucks. Stephen Smith, president of the Silicon Valley Auto Dealers Association, said the incentives could spur on "many new car buyers who have been on hold for some time."

Valley clean-technology companies said Thursday that they anticipate adding thousands of employees in the next few years as result of the stimulus bill that's headed for President

"We'll be hiring hundreds of people over the next 12 to 18 months," said Kevin Surace, president and chief executive of Serious Materials, a Sunnyvale company that makes green building materials. His company's ultra-insulated windows fit perfectly with the stimulus bill's goal of spending $5 billion to weatherize up to 1 million homes a year, he said. Serious Materials is adding factory space to meet the anticipated demand.

The stimulus plan will "catapult the U.S. to be the world's largest solar market by the end of 2010," predicted Suvi Sharma, CEO of Solaria, a solar-cell maker in Fremont.

Solaria and SunPower, the San Jose solar-module maker, said the stimulus package could speed up their plans for U.S. production.

"For some time, we've considered expanding our manufacturing footprint in the U.S. beyond our modest facility in Richmond," said Julie Blunden, a SunPower vice president. "This could certainly accelerate our thinking about where and when we could deploy."

Nationwide, the Solar Energy Industries Association forecasts that the stimulus package will create 67,000 solar jobs in 2009, and 119,000 in total through 2010.

Networking companies Cisco Systems and Juniper Networks are sure to get a chunk of business from the billions of dollars being funneled into broadband and smart-grid projects. Likewise, Intel will be able to provide processing technology to various new infrastructure work, including high-speed rail projects, which will receive $8 billion in federal funding.

"They all will get some pop," said Silicon Valley tech analyst Rob Enderle.

Even Internet companies, from Google to e-commerce start-ups, could eventually garner indirect benefits from the $7 billion in grants that will be available for companies and public entities to expand broadband to rural and inner- city communities.

"If more people are wired, then more people will be consuming advertising," Enderle said.

Sun Microsystems, which does more than $1 billion in business with the federal government every year, expects to compete for hundreds of millions of dollars in new business, from providing software for the electronic health-care initiative to selling energy-sipping servers, said Bill Vass, president of Sun's federal division.

Sun, like other valley companies, doesn't expect an immediate uptick in job hires, he added.

"This will ease up the cutting at first," Vass said. "As this government spending occurs, it will spawn demand and we will go through a hiring cycle."

Patrick,

It is very likely that inflation is coming. And that will eventually drive longer rates up accordingly.

But there could be a sizeable lag on that. Treasurys could stay in favor for a while as investors all over the world continue put their money into the safest parking space in the world - US Treasury Bonds.

So shorting Treasury bonds could be painful for a long time. This might seem irrational to some. However, as Keynes once said: Markets can stay irrational longer than you can remain solvent.

We are currently in a negative mania/panic. Don't bet the farm on rational behavior taking hold in the near future. It is an old saying: You will never go broke betting on people's stupidity.

The nest egg of the typical American family is smaller now than it was seven years ago, according to Federal Reserve data released Thursday.

The inflation-adjusted net worth of the typical family increased 17.7% to $120,300 from 2004 through 2007, the Fed said Thursday in its Survey of Consumer Finances, the most detailed look at family finances available. Net worth is defined as assets minus liabilities.

"But a lot has happened" since the end of 2007, a Fed economist said. As of October, median net worth had fallen to $98,900, down 3.2% from the end of 2007 and 2% below the level reported in the 2001 survey that was conducted after the dot.com bubble burst. Since October, stock prices have fallen another 15%, while home prices have fallen at least 2%.