Tuesday, December 30, 2008
Monday, December 29, 2008
US: Christmas marked by declining sales as unemployment climbs
By Joe Kishore
27 December 2008
Early figures confirm an extremely bleak holiday shopping season in the US, as broad sections of the population have been hit hard by a deepening economic recession.
Total retail sales, excluding automobiles, fell 8 percent in December through Christmas Eve over the same period last year, according to MasterCard Inc.'s SpendingPulse. Sales for November fell 5.5 percent. If gasoline is excluded, the drop was a more modest 2 to 4 percent.
The holiday numbers come a few days after a Labor Department report showed that the number of US workers filing for first-time unemployment benefits increased 30,000 to 586,000 last week. The four-week moving average rose to 558,000. Both figures are the highest they have been since November 1982.
The sales declines are two to five times more severe than most analysts expected. It is the first time that holiday sales have fallen in the US in at least 40 years. SpendingPulse noted in its report that the 2008 shopping season was "one of the most challenging...we've faced in modern times."
The figures are based on sales from the company's credit card, with estimates for other forms of spending.
Declines were deep and broad-based, affecting all types of goods. Sales of expensive luxury goods, including jewelry, fell 34.5 percent. Apparel sales declined about 20 percent, and electronics goods fell by 26 percent. The decline in electronic sales was driven in part by a sharp fall in sales of more expensive products, as consumers cut back on large purchases and have had greater difficulty getting credit.
Even online sales declined 2 percent as compared to the 2007 holiday season, after soaring more than 20 percent last year.
Another research firm, ShopperTrak, reported Friday that visits to retail stores before Christmas fell 24 percent from last year. According to ShopperTrak's figures, overall sales declined 5.3 percent over last year.
These figures are sharply worse than ShopperTrak had predicted only a month ago. The firm expected visits to fall only 10 percent and sales to fall by 1.5 to 2 percent.
The Wall Street Journal quoted Mary Delk, a director in the retail practice at consulting Firm Deloitte LLP, as saying, "This will go down as one of the worst holiday sales seasons on record. Retailers went from ‘Ho-ho' to ‘Uh-oh' to ‘Oh-no.' "
Retailers introduced sharp discounts on many items in the weeks leading up to Christmas, with some sellers in panic mode, in an attempt to unload excess inventory. Sales are continuing into the post-Christmas period, but they will do little to improve figures for the month and the year as a whole.
Declining holiday sales are only the latest consequence of the deepening economic recession in the US. Hundreds of thousands of jobs have been eliminated in recent months, and wages continue to deteriorate. US consumers, already deeply in debt, are confronting difficulties getting credit as banks have ceased lending.
The end of the winter shopping season will likely mean a surge in layoffs. Retail stores already shed more than 90,000 jobs in November, and several major firms have declared bankruptcy or begun liquidation (including Circuit City, Linens ‘N Things, Steve & Barry's, and Mervyn's). This list of casualties will mount as the final results of 2008 come in.
A US Commerce Department report this week showed a 0.6 percent decline in spending in November. Incomes for the month fell by 0.2 percent. Sales of existing homes fell 8.6 percent in the same month, according to the National Association of Realtors.
American corporations have only begun to take measures in response to the economic crisis, shedding jobs, reducing hours, and cutting wages and benefits.
The top economist at the International Monetary Fund, Olivier Blanchard, warned earlier this week that continued declines in consumer spending would set off a global depression. "Consumer and business confidence indexes have never fallen so far since they began. The coming months will be very bad," he told the French newspaper Le Monde, as reported by Agence France-Presse.
"It is imperative to stifle this loss of confidence, to restart household consumption, if we want to prevent this recession developing into a Great Depression."
The US gross domestic product (GDP) fell 0.5 percent in the third quarter (July-September) from the same period a year ago. The fourth quarter decline will be much steeper—around 5 percent. Production in the other advanced capitalist countries, including in Europe, is also declining.
The news from Japan is even worse. Industrial output in the second largest economy in the world fell by 8.1 percent since October.
The Financial Times noted, "The fall was the most rapid fall in industrial output since the current index was introduced in the 1950s, and the Ministry of Economy, Trade and Industry said its survey showed manufacturers expected the decline to continue, with an 8.0 per cent contracted forecast for this month."
Some countries are already in the midst of economic conditions on the scale of the Great Depression. In Ukraine, industrial production fell by a massive 28.6 percent in November, following a nearly 20 percent decline the month before. In other words, nearly half of the country's industrial production has been eliminated in the space of two months.
As the world enters the New Year, the Great Crash of 2008 is turning into the global depression of 2009.
Newsletter of the year? Harry Schultz. Really.
Commentary: His prescient call of the ‘financial tsunami’ is the reason why
By Peter Brimelow, MarketWatch
Last update: 11:14 p.m. EST Dec. 28, 2008
NEW YORK (MarketWatch) — My choice for investment letter of the year: The International Harry Shultz Letter.
I usually say that my selection method is highly scientific (I choose whoever I feel like). And I have to say it particularly loudly this year.
Schultz was Letter of the Year in 2005. See Dec. 29, 2005 column, which explains his nuanced gold-bug philosophy in more detail
But over the past 12 months through November, Schultz is down a heart-stopping 76.05% by Hulbert Financial Digest count, vs. negative 36.68% for the dividend-reinvested Dow Jones Wilshire 5000.
This loss has wiped out Shultz’s strong post-2000 run, when he benefited from the gold and commodities boom. Now, over the past 10 years, the HFD shows the letter achieving an annualized loss of negative 8.73%, even worse than the negative 1.16% annualized loss for the total return DJ-Wilshire 5000.
And it’s an unpleasant arithmetical fact that even future triple-digit gains (which aren’t impossible) will not dig Schultz out of this hole.
(But, if you’re a new investor starting at the bottom, who cares?)
The reason I pick Schultz: the extraordinary prescience he showed in predicting what he called a "financial tsunami" well over a year ago. See Oct. 19 column
Well? He was right, wasn’t he?
Sunday, December 28, 2008
Saturday, December 27, 2008
Ohio prof develops CCTV people-tracker 'ware
Paging Mr Orwell
Posted in Policing, 19th December 2008 10:22 GMT
Boffins in Ohio have taken another step towards the global surveillance panopticon of the future, developing software which can autonomously track an individual through a city using CCTV cameras.
James W Davis, associate prof at the Ohio State computer science and engineering department, developed the new spyware with the aid of grad student Karthik Sankaranarayanan.
Davis and Sankaranarayanan's code works by using a pan-tilt-zoom camera to create a panoramic image of its entire field of view, and then linking each ground pixel in the picture to a georeferenced location on a map. This means that when the camera sees a person or vehicle, the computer also knows in terms of map coordinates where it is looking.
That in turn makes it possible for a new camera to be trained on the target as he/she/it passes out of the first one's field of view. In this way, a subject can be followed automatically anywhere that the monitoring computer has CCTV coverage. There's no need for a human operator to manually train cameras around, using up man-hours and sooner or later making a mistake and losing track.
"That's the advantage of linking all the cameras together in one system - you could follow a person's trajectory seamlessly," says Davis.
For now, such camera networks are small and localised. However, the Home Office here in the UK has said it would like to "create an effective cross country strategic CCTV network". Such a network, combined with Davis and Sankaranarayanan's new software, would allow plods or spooks to track people completely hands-off. That said, until facial-recognition software gets a lot better the computers would lose their target as soon as he or she left CCTV coverage.
Not content with his efforts so far, Davis wants to go even further and write code which can pick out people "engaging in nefarious behaviour".
"We are trying to automatically learn what typical activity patterns exist in the monitored area, and then have the system look for atypical patterns that may signal a person of interest," he says.
Such systems are already being trialled, and are known to be more than a bit flaky. The panoramic-map software with its people-tracking abilities seems more promising - from a surveillance operator's point of view, anyway. ®
Friday, December 26, 2008
By John Embry
Now that physical shortages of gold and silver are more pronounced, the theatre of the absurd continues to play out, as the paper price of both metals plunge.
The sharp drop in price should come as no surprise to anyone who is aware of what is really occurring in gold and silver.
Put simply, the entire fiat money system is in crisis - perhaps a terminal one - judging from the calls for a new Bretton Woods agreement by European leaders.
As a result, the powers that be in the US appear to be prepared to do virtually anything to obscure this reality from an increasingly terrified populace - one that’s now seeing its savings destroyed by the carnage in real estate.
In the eyes of the authorities, gold and silver must not be seen as attractive alternatives to financial assets; thus, the prices of both metals are crushed.
As I have said many times, it’s actually very easy to manipulate gold and silver prices in the paper market because the bad guys (i.e. the anti-gold cartel) have a lot more muscle than their adversaries.
Thursday, December 25, 2008
Wednesday, December 24, 2008
By Stanley White and Shigeki Nozawa
Dec. 24 (Bloomberg) -- Japan should write-off its holdings of Treasuries because the U.S. government will struggle to finance increasing debt levels needed to dig the economy out of recession, said Akio Mikuni, president of credit ratings agency Mikuni & Co.
The dollar may lose as much as 40 percent of its value to 50 yen or 60 yen from the current spot rate of 90.40 today in Tokyo unless Japan takes “drastic measures” to help bail out the U.S. economy, Mikuni said. Treasury yields, which are near record lows, may fall further without debt relief, making it difficult for the U.S. to borrow elsewhere, Mikuni said.
“It’s difficult for the U.S. to borrow its way out of this problem,” Mikuni, 69, said in an interview with Bloomberg Television broadcast today. “Japan can help by extending debt cancellations.”
The U.S. budget deficit may swell to at least $1 trillion this fiscal year as policy makers flood the country with $8.5 trillion through 23 different programs to combat the worst recession since the Great Depression. Japan is the world’s second-biggest foreign holder of Treasuries after China.
The U.S. government needs to spend on infrastructure to maintain job creation as it will take a long time for banks to recover from $1 trillion in credit-market losses worldwide, Mikuni said. The U.S. also needs to launch public works projects as the Federal Reserve’s interest rate cut to a range of zero to 0.25 percent on Dec. 16. won’t stimulate consumer spending because households are paying down debt, he said.
U.S. President-elect Barack Obama wants to create 3 million jobs over the next two years, more than the 2.5 million jobs originally planned, an aide said on Dec. 20. Obama takes office on Jan. 20.
Japan should also invest in U.S. roads and bridges to support personal spending and secure demand for its goods as a global recession crimps trade, Mikuni said.
Japan’s exports fell 26.7 percent in November from a year earlier, the Finance Ministry said on Dec. 22. That was the biggest decline on record as shipments of cars and electronics collapsed.
Combining debt waivers with infrastructure spending would be similar to the Marshall Plan that helped Europe rebuild after the destruction of World War II, Mikuni said.
“U.S. households simply won’t have the same access to credit that they’ve enjoyed in the past,” he said. “Their demand for all products, including imports, will suffer unless something is done.”
The plan was named after George Marshall, the U.S. secretary of state at the time, and provided more than $13 billion in grants and loans to European countries to support their import of U.S. goods and the rebuilding of their industries
The Japanese government could use a new Marshall Plan as a chance to shrink its $976.9 billion in foreign-exchange reserves, the world’s second-largest after China’s, and help reduce global economic imbalances, Mikuni said.
The amount of foreign assets held by the Japanese government and the private sector total around $7 trillion, Mikuni said.
Japan will also have to accept that a stronger yen is good for the country in order to reduce excessive trade surpluses and deficits, he said. The yen has appreciated 23 percent versus the dollar this year, the most since 1987, as the credit crisis prompted investors to flee riskier assets and repay loans in the Japanese currency.
“Japan’s economic model has been dependent on external demand since the Meiji Period” that began in 1868, Mikuni said. “The model where the U.S. relies on overseas borrowing to fuel its property market is over. A strong yen will spur Japanese domestic spending and reduce import prices, thereby increasing purchasing power.”